BUSINESS MAHARAJAS

-Gita Piramal

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Ratan Naval Tata

The Tata family tree

Ratan Naval Tata

Born in Bombay, on 28th December 1937, to Soonoo and Naval Hormusji Tata.

He had 5 siblings: Jimmy, Noel, Shireen, Deanna and Geet.

He did his graduation from Cornell with a B.Sc. Degree in architecture with structural engineering in 1962.

On 25th March 1991, he took over the position of Chairman of Tata Sons, from Jehangir Ratanji Dadabhoy, ‘J.R.D. Tata’ (1904-1993).

Close bondsFrom childhood, Ratan was uneasy with the ostentatious display of wealth. He prefers simple lifestyle till date!

His father Naval was adopted by Lady Navajbai from an orphanage.

Ratan’s parents did not get along with each other and were divorced when Ratan was about seven.

Brought up by Lady Navajbai, his paternal grandmother at Tata Palace, Bombay.

She played a significant role in his life and imbibed in him the importance of dignity, keeping promises and being dependable.

Meanwhile, father Naval married a Swiss, Simone and soon Ratan acquired a step brother, Noel.

Mother, Soonoo married Sir Jamsetji Jejeebhoy and had three daughters: Shireen, Deanna and Geet.

After graduation, Ratan went to Jamshedpur on his first assignment with Tatas.

Six years later he returned to Bombay and stayed with Naval and Simone at Tata Palace but soon moved to Colaba.

He had real close bonds only with his mother Soonoo and grandmother Lady Navajbai.

He was a devoted son and would share all his joys and troubles with Soonoo.

Ratan was much inclined to stay in the U.S. for furthering his career.

However, Lady Navajbai thought differently, so he returned to India.

He had an American girlfriend whom he expected to follow him to India, but she apparently never came.

In Bombay, he would date on and off, once even got engaged, but broke it before the cards could be printed.

J.R.D Tata’s stepping downJRD’s declining health forced him to step down from his throne.

On March 25, 1991, JRD scheduled a board meeting of Tata Sons, for laying down the speculation about the heir to his throne.

JRD had many favourites, Russi Mody, Nani Palkhivala, Nusli Wadia and more.

The blood relationship between JRD and Ratan Tata was tenuous .

Ratan Tata was seen as the apparent heir, never the heir apparent.

Ratan Tata’s career with the Tatas

A formal invitation from JRD to join the Tatas had arrived, to which Ratan Tata expressed his sincere gratitude and thanks by serving the firm with the best that he could do.

His first posting was in Bihar which was challengng after a college lifestyle in the US.

He spent 6 years in Jamshedpur’s Telco and Tisco complexes.

Ratan Tata’s immediate bosses were impressed and JRD sent him to Australia on a short-term assignment for a year.

He later rubbed shoulders with aristrocratic mill-owners such as Nusli Wadia and upcoming ones such as Dhirubhai Ambani.

The experience was traumatic as he had to take over ailing Central India Textiles.

His first directorship was that of Nelco and the status of that company forever had been against him.

Soon after Ratan Tata’s appointment, subject of Nelco’s huge losses led to criticism in the Tata Sons meeting.

He had nothing to do with the past performance of the company and was being penalized for it.

JRD came to his rescue and saw Ratan Tata’s determination in Nelco and supported his plans against the views of many other seniors within the group.

Nelco stiffened Tata’s spine and made him learn business the hard way.

Telco was the first company in which he could actually do something, unlike in other companies.

Chairmanship of Ratan TataJRD bequeathed on Ratan Tata, 84 companies of which 39 are listed, whose sales topped INR 240 billion.

The group contributes 3% to the national GDP and annually pays out 35 billion INR in taxes.

The group had 2.6 million shareholders and constitutes about 8% of national stockmarket capitalization.

Since Ratan Tata became the chairman in 1991, he has been trying to push the group into a higher gear.

He wants the group to shed it’s lethargy and become more agile, modern, consumer-oriented and united.

His concept of what the Tata Group should be is clear.

In over legendary 50 years, Ratan Tata established unrivalled standards of probity and professionalism in management.

Russi Mody As an outstanding man-manager in his heyday with a hands-on style which earned him the Padma Bhushan, Moday had many precedents.

He was appointed as Tisco’s Managing Director in 1974 and became the chairman in 1984.

He displayed a singular lack of finesse during his last few years with Tatas.

He was to officially retire on May 21 1993, but was sacked on April 19, 1993. Had he behaved with greater decorum, he could’ve had a much more graceful exit and assured himself pride of place in Tata history.

Mody had accused Ratan Tata (Tisco’s then deputy chairman) and Jamshed. J. Irani (its managing director) of mismanaging Tisco’s affairs and causing it’s share prices to crash.

He aslo threatened to launch a campaign to mobilize support for himself from shareholders and financial institutions.

Since he refused to agree with the management policies, he was unanimously voted out and was fired.

Mody wanted to move up Aditya Kashyap (corporate executive director), his protege and Ishaat Hussain (executive director of finance) as Tisco’s future chairman with Hussain as his number two.

In designing his coup, Mody had totally neglected Ratan Tata’s reaction. Naturally it upset Ratan Tata.

There were other arguments stacked against Mody.

Palkhivala, the group’s legal expert discovered that Mody had violated Tisco’s articles of association by not informing the board of the changes prior to sending out the circular.

On January 1 1993, a compromise had been hammered out making Mody the managing director for Tisco along with Irani.

Mody wanted an extension to his retirement even at the age of 75, but was firmly refused by the Bombay House.

Finally his term with the Tata had a very disgraceful end.

Ratan Tata’s perseverance and commitment to principles had managed to bring down Mody from the high pedestal he had assumed for himself.

Cabbages, Kings and Ratan

When flying Indian Airlines, Ratan Tata uses VIP seats but generally has no personal assistants or other staff accompanying him.

Most of the time he buries his head in paperwork.

The Government’s various ministries continue to exert stifling control over business, especially in the core and infrastructure related sectors.

In the mid-80’s Telco tied up with Honda, but the government dilly-dallied until Honda lost patience.

The only new business activity the group entered into was watches (Titan).

Indira Gandhi’s administration turned down virtually every major application the group came up with, which is why Rajiv Gandhi’s attitude towards the group came as a surprise after he became the Prime Minister in 1984.

The relationship between Ratan Tata and Rajiv Gandhi was warmer than his relationship with Indira Gandhi.

Their friendship and mutual admiration brought about a major change in the group’s attitude towards the government and vice versa.

Many Tata project applications, which had been buried under mountains of paper, were approved during this period.

The new understanding which Tatas had with the government did not survive Rajiv Gandhi’s assassination.

Thank you!