Mukund G Rajan on Ratan Tata: A titan of our times who elevated India's stature

The Tata Indica

Ratan Tata’s top priority when I joined his office was to successfully launch India’s first indigenous passenger car, the Tata Indica. For Tata Motors, a specialist in commercial vehicle manufacturing, getting into the more refined space of passenger vehicles presented qualitatively different challenges. Moreover, it had to break into a liberalized Indian market where globally renowned car companies were entrenched, including Suzuki, Ford, Daewoo and Hyundai. Ratan Tata famously outlined his ambition for the new car—“the size of the Maruti Zen, the internal dimensions of an Ambassador, the price of a Maruti 800 and the running cost of a diesel vehicle".

In this ambitious effort to build a winner, Ratan Tata demonstrated a trademark willingness to bet on youth. He tasked my predecessor in his office, Rajiv Dube, to lead the marketing and sales of Tata Indica, appointing him as the youngest general manager in Tata Motors. In an inspiring moment for all Tata employees, the new car was unveiled at the Auto Expo in Delhi in January 1998 to thunderous applause, with the chief guest, the then Union commerce minister Murasoli Maran, hailing the Tata Group as the ‘Kohinoor’ of India. The stylish car, with its distinctive vertical taillight assembly, met the key parameters Ratan Tata had promised, and racked up an unprecedented 110,000 bookings, a record in Indian automobile history.

The TCS IPO

Ratan Tata carried the weight of history of the over century-old Tata Group on his shoulders. I received an object lesson in honouring the past and valuing the future from the way he dealt with the IPO of Tata Consultancy Services (TCS).

During the dotcom boom in the US, when companies were being listed on Nasdaq at unbelievable valuations, a note was put up to Ratan Tata by one of his key financial advisors. It suggested that were Tata Sons to list TCS and dilute a small percentage of its equity, the proceeds would be sufficient to permit the Tata holding company to buy out the public shareholding of every other listed Tata enterprise.

Taking flagship listed Tata companies private would have fulfilled one of Ratan Tata’s important goals at the time, to secure Tata Sons’ right to control and manage Tata companies by shoring up the holding company’s equity stake in them. Yet, after some deliberation, Ratan Tata turned down the advice.

He was convinced that retail investors in an IPO taking place in a very frothy market would feel short-changed when the markets turned. A Tata company, he felt, ought not to take unfair advantage of a short-term bubble to mislead investors about its real value.

After witnessing this remarkable lesson in good corporate governance, I was fortunate to see, after the dotcom boom and inevitable bust, TCS in 2004 becoming the most successful IPO in Tata Group’s history.

Standing up to government

Ratan Tata’s willingness to take tough calls also played out in confrontations with both Central and state governments. In the mid-1990s, the Assam government accused Tata Tea of illegal parlays with a banned extremist organization—the United Liberation Front of Assam (ULFA)—to maintain peace in the company’s tea plantations. Ratan Tata took on the government, stoutly defending the company’s actions on the basis that they were undertaken with the full knowledge and endorsement of central intelligence agencies. Eventually, the cases against the company were withdrawn.

In the early 2000s, the Tata Group was confronted with repeated stalling tactics by elements within the ruling coalition government at the Centre headed by Prime Minister Atal Bihari Vajpayee to prevent it from acquiring Air India, the flagship national carrier earmarked for disinvestment. After the necessary approvals failed to materialize despite a patient wait, Ratan Tata went public with his decision to withdraw the Tata bid. He also authored a private letter to the prime minister, with possibly the harshest language I have witnessed from an industry leader to a head of government, castigating the latter for allowing vested interests to block the Tata Group.

And who can forget his famous words in response to the agitation mounted by opposition parties in West Bengal in 2007-8 against land acquisition for the Tata Nano plant in Singur: “If somebody puts a gun to my head, you either pull the trigger or you take the gun away because I will not move my head". Amid arson, violence and harassment of company employees, Ratan Tata issued an ultimatum to the state government to restore law and order, and when this did not yield results, to the consternation of the state government, he ordered a complete pull-out from Singur.

Going global

Having initiated a quality improvement movement in the 1990s by adopting the Tata Business Excellence Model, and sharpening company strategies through the Business Review Committee process recommended by McKinsey, by the early 2000s Ratan Tata felt the Tata Group was ready to venture overseas. At the annual group management meet in 2003, he called for a greater thrust towards internationalization.

What followed was a spectacular wave of overseas growth, fuelled by a series of acquisitions such as Tata Communications’ purchase of the world’s largest submarine cable fibre optic network built by Tyco; Tata Chemicals’ acquisition of US-based General Chemicals, the world’s largest producer of soda ash; the acquisition of the truck business of Korea’s Daewoo Motors by Tata Motors; and ultimately, the largest-ever foreign buyouts by any Indian firm up to that point: Corus Steel by Tata Steel (for $12.1 billion) and Jaguar Land Rover (for $2.3 billion) by Tata Motors.

It was Ratan Tata’s dream to see the Tata Group become a global enterprise, and he succeeded, growing group revenues to over $100 billion by the time he was ready to hang up his boots in 2012.

A titan of industry

There were disappointments and tragic accidents along the way. But save that history for another time. Today, let us mourn the passing of a great champion of Indian industry—a larger-than-life figure whose significant contribution to elevating India’s stature in the world and injecting an unprecedented level of ambition in Tata Group will be remembered with pride.

Mukund Govind Rajan served as Ratan Tata's executive assistant and then principal staff officer from 1996 to 2008. He was also chairman of Tata Global Sustainability Council, and chief ethics officer and head of international operations at Tata Sons from 2016 to 2018.