Ratan Tata

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Ratan Naval Tata (born December 28, 1936, in Mumbai) is the present Chairman of the Tata Group, India's largest conglomerate established by earlier generations of his family. He was instrumental in setting up the Tata Foundation, which sponsors a multitude of social causes.

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[edit] Early years

Ratan was born into an old Parsi family of Bombay (present-day Mumbai), the first child of Soonoo & Naval Hormusji Tata. Ratan's childhood was troubled, his parents separating in the mid-1940s, when he was about seven and his younger brother Jimmy was five. His mother moved out and both Ratan and his brother were raised by their grandmother Lady Navajbai.

In 1962, after graduating from Cornell University with a degree in Architecture and Structural Engineering, Ratan joined the family business. Ratan turned down a job offer from IBM, following the advice of J.R.D. Tata, and entered the family business. Today, Ratan maintains that he came back because of his ailing grandmother who had raised him. Ratan joined the Tata Group in December 1962, when he was sent to Jamshedpur to work at Tata Steel. He worked on the floor along with other blue-collar employees, shoveling limestone and handling the blast furnaces.

[edit] Career

In 1971, Ratan was appointed the Director-in-Charge of The National Radio & Electronics Company Limited (Nelco), a company that was in dire financial difficulty. Ratan realised the opportunity that Nelco provided and assumed that hi-tech was the way to go in the future. He conveyed this vision to J.R.D. Tata and asked for further investment. J.R.D. was reluctant due to the historical financial performance of Nelco which had never even paid regular dividends. Further, Nelco had 2% market share in the consumer electronics market and a 40% of turnover as loss when Ratan took over. Nonetheless, J. R. D. followed Ratan's suggestions.

From 1972 to 1975, Nelco eventually grew to have a market share of 20%, and wiped out its losses. In 1975 however, India's Prime Minister Indira Gandhi declared a state of emergency, and the demand for consumer goods slumped. This was followed by union problems in 1977, so even after demand improved, production did not keep up. Finally, the Tatas confronted the unions and, following a strike, a lockout was imposed for seven months. Ratan continued to believe in the fundamental soundness of Nelco, but the venture did not survive.

In 1977, Ratan was entrusted with Empress Mills, a textile mill controlled by the Tatas. When he took charge of the company, it was one of the few sick units in the Tata group. Ratan managed to turn it around and even declared a dividend. However, competition from powerlooms had made a large number of companies unviable, including those like the Empress which had large labour contingents and had spent too little on modernisation. On Ratan's insistence, some investment was made, but it did not suffice. Without the market for coarse and medium cotton cloth (which was all that the Empress produced) turning adverse, the Empress went into an inevitable financial tailspin. Bombay House, the Tata headquarters, was clearly unwilling to divert large funds from other group companies into an undertaking which would need to be nursed for a long time. So, some Tata directors, chiefly Nani Palkhivala, took the line that the Tatas should liquidate the mill. In a later interview with the Hindustan Times, Ratan would claim that the Empress needed just Rs 50 lakhs to turn it around. But Palkhivala opposed further investment and the mill was closed down in 1986. Ratan was severely disappointed with the decision.

The important point that the troubles brought home to the senior directors in Bombay house was what had been clear to Ratan for quite a while: that the group's lack of cohesiveness was turning into a major disability. Thus, while the Birlas bailed out Jay Shree Textiles through a merger with India Rayon and the Bangurs arrived at a similar arrangement between Hastings Jute Mills and Shree Digvijay Cement, very little of such "blue-sky thinking" could be done for the Empress. Perhaps some lessons were learnt, and in 1988 (with ACC), the Tatas reasserted control at Ratan's behest.

In 1981, Ratan was named Chairman of Tata Industries, the Group's other holding company, where he became responsible for transforming it into the Group's strategy think-tank and a promoter of new ventures in high-technology businesses.

In 1991, he took over as group chairman from J.R.D. Tata, pushing out the old guard and ushering in younger managers. Since then, he has been instrumental in reshaping the fortunes of the Tata Group, which today has the largest market capitalization of any company on the Indian Stock Market.

Under Ratan's guidance, Tata Consultancy Services went public and Tata Motors was listed on the New York Stock Exchange. His dream was to manufacture a car costing Rs 1 lakh (approx. US$2200). In 1998, Tata Motors introduced his brainchild, the Tata Indica.

On January 31st, 2007, Ratan Tata successfully pulled off one of the biggest acquisitions in Indian corporate history. Corus Group - an Anglo-Dutch steel and aluminum producer, was acquired by Tata Sons for an astounding £6.7 billion at the rate of 608 pence per share against a Brazilian steel company that had bid 603 pence. With the merger, Ratan Tata became a celebrated personality in Indian corporate business culture. The merger created the fifth largest steel producing entity in the world.

Another feather of success got attached with this man when he presented the latest Tata four-wheeler model Tata Eligante at Geneva on March 6, 2007. This model was appreciated by all the global dealers of four-wheelers. In the meeting he told the press about his Singur-small-car plant. According to him, manufacture is going to start there soon and the first small car costing around Rs 1 lakh is going to be launched by the end of 2008.

[edit] Recognition

Mr. Tata was honoured by the Government of India with the Padma Bhushan on 26th January 2000, on the occasion of the 50th Republic Day of India. He serves in senior capacities in various organisations in India and he is a member of the central board of the Reserve Bank of India and of the Prime Minister's Council on Trade and Industry.

Ratan Tata's foreign affiliations include membership of the international advisory boards of the Mitsubishi Corporation, the American International Group, JP Morgan Chase and Booz Allen Hamilton. He is also a member of the board of trustees of the RAND Corporation, Ford Foundation and of his alma maters: Cornell University and the University of Southern California. He also serves as a board member on the Republic of South Africa's International Investment Council and is a Asia-Pacific advisory commitee member for the New York Stock Exchange. Tata is on the board of governors of the East-West Center, the advisory board of RAND's Center for Asia Pacific Policy and serves on the programme board of the Bill & Melinda Gates Foundation's India AIDS initiative. In February 2004, Ratan Tata was conferred the title of honorary economic advisor to Hangzhou city in the Zhejiang province of China.

[edit] Bibliography and further reading


Chairmen of the Tata Group

Jamsetji Tata • Dorabji Tata • Nowroji Saklatwala • J. R. D. Tata • Ratan Tata
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