The Reformer

Ratan Tata’s death on the night of October 9 marks the end of a corporate journey that not only reshaped the Tata Group but also established Indian industry on the global stage. Today the group boasts a revenue of $165 billion but back in 1991 when Ratan became chairman succeeding the charismatic JRD Tata, the annual turnover was only $4 billion.

Born to Soonu and Naval Tata on December 28, 1937 in Bom­bay, Ratan grew up in the Tata Palace (now the headquarters of Deutsche Bank in the Fort area). Naval had been adopted by Navajbai (Lady Ratan Tata), since Jamsetji Tata’s two sons, Dorabji and Ratanji, had no heir. Ratan schooled at three pres­tigious institutions: Campion School and Cathedral and John Connon School in South Mumbai and Shimla’s Bishop Cotton. He grew up living a life of great privilege but was always a little uncomfortable with ostentatious displays of wealth. He was embarrassed when as a boy he was dropped off to Campion School in the family Rolls Royce. Unfortunately, his parents separated in the mid-1940s when Ratan was only seven. Soonu moved out, but Ratan and his younger brother Jimmy, contin­ued to live with Lady Navajbai. Ratan formed a strong bond with his grandmother and always remembered her with great affection. She doted on him and he imbibed the values which he considered important to him from her. Some 10 years after his divorce, Naval married a Swiss national, Simone, in 1955.

Initially starting out as an engineering student, Ratan went on to get a B Arch Degree from Cornell University. He worked briefly with Jones and Emmons in Los Angeles before return­ing to India and the Tatas in 1962. Beginning with TELCO and TISCO in Jamshedpur (where he spent a total of six years), he returned to Bombay where he was put in charge of two sick companies, NELCO and Central India Textiles, supposedly to train him. Ratan later said that his first directorship was that of NELCO and the status of that company was forever held against him. Still, JRD saw the potential in Ratan and appointed him his successor in 1991. Ratan realised that he had big shoes to fill and some thought that the shy, introverted 54-year-old was perhaps not the best choice for the job. The naysayers could not have been more wrong.

Ratan, who inherited a fragmented and bureaucratic em­pire, faced a formidable challenge from the old guard. Senior leaders like Russi Mody, Darbari Seth and Ajit Kerkar (the so-called ‘satraps’) ran their businesses like personal fiefdoms. The diffusion of chairmanships during JRD’s time had dis­solved the links between Tata Group companies, a process which had started with the termination of the managing agency system. Ratan had warned JRD of this policy but he was not taken seriously. Now Ratan had the difficult task of reversing that trend. It was not an easy task because, as his father Naval had once warned, “Theres’s a Mughal emperor in each of the Tata companies.”

When his authority was challenged, Ratan introduced a series of reforms, starting with a retirement policy which mandated that directors retire at 75. Russi Mody was the first to go. In fact, he was sacked in April 1993 a month before he was to retire; his acrimonious exit is too well-known to re­count here. Darbari Seth of Tata Chemicals and Ajit Kerkar of Indian Hotels followed. The latter left under a cloud when he was accused of violating foreign exchange laws.

When Ratan retired in 2012, Tatas had crossed the $100 billion mark, the first Indian group to do so. He tightened the grip on group companies and made them pay royalty to use the Tata brand. This culminated in a new blue-coloured logo whose brand value rose from $300 million in 1998 to a staggering $11 billion by 2012. Central to his success was his overhaul of corporate governance, ensuring that all group companies derived their strength from Tata Sons, the holding company. The company increased stakes in key companies to over 26 per cent, shielding them from hostile takeovers.

Collaborations with international giants like Cummins, AIA, and Starbucks, and acquisitions like Corus (India’s largest overseas deal) and Jaguar-Land Rover (JLR) not only expanded the group’s portfolio but also gave it international prominence. Ratan recognised that acquisitions were the only path to propelling the conglomerate onto the global stage. Starting with Tetley in 2000 (India’s first overseas ac­quisition), Ratan orchestrated the acquisition of more than 60 brands, including brands like St James Court, Eight O’ Clock, British Salt and NatSteel, into the Tata fold. By the end of his tenure over 60 per cent of the group’s revenues came from abroad. In 2004 he took Tata Consultancy Services (TCS) pub­lic, raising $1.2 billion in India’s largest IPO at the time. The capital raised through the IPO allowed for further acquisitions and increased stakes in Tata companies, strengthening the group’s finances.

Ratan had his share of challenges. The launch of the Indica car in 1998 resulted in a loss of `500 crore for Tata Motors in fis­cal 2000. This upset shareholders and Ratan offered to resign. Nevertheless, his commitment to innovation led to the launch of the Nano in 2005, advertised as the worlds’ cheapest car (`1 lakh when it was launched). This was the project closest to Ratan’s heart. He saw the car as providing middle-class Indians with an affordable four-wheeler. Unfortunately, it proved to be an ill-starred venture. Apart from the contro­versy over the relocation from Singur to Sanand, there were sporadic incidents of fire which raised questions about safety. Perhaps the biggest mis­calculation was in marketing it as “the cheapest car”. Ratan later admitted that its image of being a poor man’s car had acted as a stigma. Production was discontinued in 2019 after many years of low buyer interest.

Not every acquisition went smoothly. The 2002 purchase of VSNL became controversial when authorities objected to the use of the company’s funds to support the group’s other telecom ven­ture, Tata Teleservices. Similarly, the acquisition of Corus for $13 billion faced criticism as an “aspirational mistake” given that the British unit continues to depend on its Indian parent. The attempt to acquire Orient Express Hotels also ended in failure when that company was reluctant to associate with an Indian brand. Ratan also faced a major financial scandal in 2001 when a `500 crore fraud was uncovered at Tata Finance. Ratan assured investors that their money would be repaid, as indeed it was. His biggest challenge came in November 2008 when the terrorist attack on the iconic Taj Mahal Hotel un­folded before his eyes. Its aftermath was managed with his trademark dignity and compassion.

Ratan retired in 2012 but continued to control the Tata Trusts. He appointed Cyrus Mistry, the scion of the Shapoorji Pallonji Group construction conglomerate, as his successor. His family owns more than 17 per cent of Tata Sons. But some­thing went seriously wrong and Mistry was ousted in 2016 without as much as a word of explanation or an opportunity to defend himself. Mistry retaliated by accusing Ratan of mismanagement and listed all the problems that could be traced to Ratan’s term as chairman. These included an ailing steel business in the UK, bad acquisitions of hotels, losses at­tributed to Nano, entry into aviation, and a telecom business run into the ground before his appointment.

In his scathing letter, he predicted nearly $18 billion of potential write-offs as a result of poor investment decisions taken during Ratan’s time. He also complained of constant interference from Ratan and the Tata Trusts, who were now exercising control as a majority shareholder. This unhappy interlude—one in which Ratan’s decisions were being ques­tioned—certainly took some sheen off corporate India’s most visible public face. Mistry tragically died in a car accident in September 2022. Ratan may have condoled his death privately, but there was no public acknowledgement of the fact. Neither Ratan nor any senior Tata executive attended the funeral, with only Simone Tata, Ratan’s stepmother, attending the cremation. Even in death, Ratan’s resentment had not yet run its course.

Ratan was an avid aviator, owned a fleet of very expensive cars, and loved animals, especially dogs. After retirement, he became an angel investor in numerous startups such as Snapdeal, Ola, Upstox, Paytm, and Lenskart. His ideas gave shape to many valuable strategies and provided young startups with much-needed capital. With over 13 million followers on X and nearly 10 million on Instagram, he was an unlikely social media sensation who could rival any mega-influ­encer. It also helped keep him in the public eye. Ratan was many things to many people, but there is no denying the fact that he was the cement that held the group together when it was under cen­trifugal stress in the mid-1990s. He was also the man responsible for its exponential growth, and for making it the mega-conglomerate it is today.

About The Author

Bakhtiar K Dadabhoy

Bakhtiar K Dadabhoy is the author of Jeh: A Life of JRD Tata, Zubin Mehta: A Musical Journey and, more recently, Homi J Bhabha: A Life