The Importance of Being Ratan Tata

The panel set up to pick the new Tata Group boss will not have it easy. And the reasons are many.

The Tata Group has taken a vital step to find the answer to the $71 billion question: who will succeed the mighty Ratan N Tata when he finally hangs up his boots in December 2012? Tata Sons, the holding company of the group, has set up a five-member selection committee to pick a successor to the iconic ‘RNT’ who has led the group since 1991. 

To be sure, the panel does have a most challenging task at hand. Ratan Tata has never ceased to surprise his critics and inspire awe in those who admire him. A gentleman to a fault and a man with a steely resolve, Tata has driven the group through a most eventful and exciting period in the group’s 142-year-old existence. Having taken over the reins from the legendary JRD Tata, RNT had the responsibility of guiding the group through the initial period of liberalisation and then saw it through the exciting phase of India’s rapid transformation into a market which attracts global investors by the day. 

Now, as the five wise men appointed by Bombay House sit down to deliberate on who might be the right man to step into RNT’s shoes, Ratan Tata’s stamp is all over the Tata Group, which has metamorphosed over the years from a conservative giant often perceived as slow and stodgy, to a nimble, aggressive global conglomerate which is not afraid to take on the mightiest rivals in the world. So, right from Tata Tea’s bold acquisition of Tetley by way of a leveraged buyout to the listing of Tata’s crown jewel Tata Consultancy Services, to the latest twin acquisitions of steel giant Corus and iconic car brands Jaguar Land Rover (JLR), Ratan Tata has shown how ambition can be translated into execution.

Along the way, there were severe challenges. The Tata Finance fiasco tested the group to the hilt and threatened to hit where it would hurt most: the fabled Tata Group governance system. But after unhesitatingly admitting to the existence of a problem and its severity, Ratan Tata decided to put the group’s full might behind the troubled Tata Finance and its depositors and aggressively pumped in funds to ring-fence the trouble and arrive at a swift solution. Critics who scoffed at Tata’s dream of coming up with a car from the Tata Motors stable were confounded when the Indica was born. And subsequently, Tata Motors, which witnessed a dramatic turnaround after a sharp reversal of fortunes, has churned out the Indigo and the much talked about Nano, better known in India as the ‘one lakh car’.   

Critics may say that the reserved and soft-spoken Tata has often pushed ahead a tad too quickly with his plans, and shareholders haven’t always voted in favour of those. Tata’s bold $12 billion acquisition of Corus in a nail-biting auction is still being talked of as an overpriced buy, and there are challenges which the group is facing in dealing with it. But equally, the Corus deal has propelled the group as the biggest manufacturing company in Britain and has been hailed as the clear sign of a new, aggressive India which is ready to take on the best in global business. The JLR turnaround, announced recently, has also proved Tata correct and Tata Motors’ first quarter profits have been propelled in large part by JLR’s stellar showing. 

And it’s not been all about pushing through ambitious plans.  Tata has also walked away from deals when the situation warranted. The Energy Brands (Glaceau) deal, where Tata Tea acquired a strategic stake in the American enhanced water company, was one where Tata did not hesitate to walk out with a handsome profit once he saw Coca-Cola acquire a strategic stake which would have resulted in a needless confrontation. 

And so, Ratan Tata’s shoes will not be easy to fill. The panel searching for his successor knows that only too well. The next man at the corner room at Bombay House will need to have a mix of resolute will, global ambition, an impeccable value system and genuine vision. A CV which has all of these may prove to be rather hard to come across.

These are the author’s personal views. He  can be reached at majumdar.sourav@gmail.com 

About The Author

Sourav Majumdar

Sourav Majumdar was a financial journalist for nearly two decades. He has now crossed over to the other side to get a first-hand taste of corporate life.