So, Ratan Tata is going to stay on as head of the Tata empire till 2012. That, at least, is the way the media have reported the story.
And certainly, there’s no doubt that Tata Sons has gone back to its old policy of requiring company chairmen to retire at seventy-five and not at seventy.
Except that Ratan Tata himself is not at all sure that he’s going to stay in the job for that long. ‘I see colleagues, people who have been chairmen of companies, who act as though their lives are over when they step down. I always say to them “have a life of your own, outside of the office”,’ he explains.
‘I am actually quite looking forward to the opportunity to do other things; to take a break from having to work morning and evening.’ So, is it possible that he’ll step down before he has to?
‘Oh yes, it is quite possible.’
How does he feel about the change in the retirement rule, one that many people believe, was made only to benefit him? He’s slightly offended by the suggestion that, having instituted a retirement policy to rid the Tata group of the great satraps of the JRD-era, he’s quietly changed the rule to ensure his own continuance. First of all, he says, the retirement age was seventy-five when the satraps departed – it was changed to seventy much later. Secondly, it wasn’t his idea. It was a major Tata company (which he refuses to name but which we all know is Tata Steel) that first asked Tata Sons to review the retirement policy for the group. And when the discussion took place, he left the room, aware that he could be regarded as an interested party. So, he played no part in the final decision. There is a tinge of indignation in the tone but you have to strain to catch it. For most of the hour we spend in the Presidential Suite of Delhi’s Taj Mahal Hotel (Ratan is, of course, chairman of Taj group), he is remarkably relaxed, willing to answer any question, unperturbed by criticism and eager to talk about the controversies that dogged the early part of his tenure as head of the Tatas.
Some of this confidence stems from the fact that he has pulled off what nobody ever thought he could. He’s turned around all the major Tata companies, the group has never been in better financial shape, the international acquisitions continue apace and he’s now the darling of the global media. (He was on the cover of Newsweek, 4 July 2005.) Plus there’s the satisfaction of knowing that his is a very Tata success. He’s never deviated from the path of ethics and honesty taught to him by his father Naval and by J.R.D. Tata, his predecessor as head of Tatas.
But most of all, the willingness to talk honestly seems to come from deep within him.He is not an evasive guy.Ask him a straight question and he’ll give you a straight answer.
I prefer a young successor
Just suppose, I ask him, that the retirement age had not been extended. He would have stepped down in a couple of years. Had he found a successor?
No, he says candidly, there was no obvious candidate. He had spent a long time looking for a successor but he had achieved only 60 to 70 per cent success. One good thing about the extra time is that he now has the breathing space he needs to find the right successor – and yes, he repeats, he isn’t necessarily going to wait till 2012.
What qualities is he looking for in his successor? Is there a job description?
‘ Some qualities are pretty self-evident,’ he says. ‘ The new man must believe in Tata values, he must demonstrate managerial ability and he must have the vision to run the Tata group.’
But there are other less obvious qualities. Ratan believes that he hasn’t been able to complete the task of restructuring the group. He thinks more needs to be done to motivate Tata employees. Any new chairman of Tata Sons will have to be a man with the ability to finish the job.
He’s looking, he says, for a younger person. Ideally, he would want a man in his 40s. If no such candidate appears then he would be okay with somebody in his early 50s. But he wants a boss who can stay at the helm long enough to remould and restructure the group.
Does that mean that the next chairman will not be in his late 50s or early 60s as many of the existing candidates are? Ratan is clear. A transitional chairman is an option. But he’d much prefer a young person who could lead the group for a long time. That probably means that all the speculation in the business press about likely successors will now have to go out of the window as the search narrows in on a new generation.
I never thought I’d succeed JRD
Any questions about the Tata succession must inevitably take us back to that day in 1981 when J.R.D. Tata announced that Ratan Tata would be the new chairman of Tata Industries. Was he surprised by the decision? Well, perhaps he was, he says, but he never for a moment thought that chairing Tata Industries meant that he would succeed J.R.D. Tata as the big boss.
Come on, I say, everybody treated the Tata Industries announcement as proof that the succession was a done deal. ‘ The media certainly treated it that way,’ he says, ‘ but within Tatas, nobody was sure that I would be the successor. And while JRD would say things like “one day you will have to look after the group”, he never actually made a firm commitment to me.’
Does that mean that for the full decade that he chaired Tata Industries but not Tata Sons, he lived with the knowledge that he might end up working for somebody else? Yes, that apparently, is exactly how he felt.Who, I ask, could have succeeded JRD?
‘Nani Palkhivala,’ he says, ‘Nani was a very strong contender. It was only because he became such a vocal critic of the government that JRD thought his political views might have become a liability to the Tatas.’
‘ Rusi Mody,’ he replies. ‘ In fact, for most of the 1980s, I personally thought that Rusi was certain to be the next head of Tatas. He ran Tata Steel very successfully, had a larger-than-life personality and Jeh (JRD) was very fond of him. I think Jeh liked him because he had many of the qualities that Jeh would have liked to have had himself. Rusi was gregarious. He was outgoing. He could go into a crowd of workers and charm them.’
He offers as an example of J.R.D. Tata’s faith in Rusi Mody. The proposal – in the late 1980s – for Rusi to take over Telco as well as Tisco. ‘ But then of course, Rusi put his foot in his mouth.’
I tell him I have heard the story – from Rusi himself. Apparently, just as they were preparing to announce that Rusi would take over Telco, irresponsible journalists quoted Rusi as saying that Sumant Moolgavkar had run Telco very badly. Moolgavkar lost his temper and refused to let Rusi succeed him even though Rusi explained that the quotes had been fabricated. ‘ Yes,’ says Ratan tactfully, ‘ Rusi did claim later that he had been misquoted.’
The turnaround story
Any discussion about Rusi Mody leads us to the two charges most frequently levelled against Ratan Tata in the 1990s. One: that he was a hopeless businessman who had got the job only because of his surname.
And two: that he was so insecure about his own limited abilities that he quickly got rid of the satraps on whom JRD had depended. ‘Well, let me say first of all that I was never insecure about anybody else or their position in the group,’ he says coolly. ‘ But I am a sensitive person and when people like Rusi Mody started saying these hurtful things about me, I took it very badly. I had always looked up to Rusi, especially when I was in Jamshedpur, and I felt very hurt that he should direct so much of his anger my way. It was emotionally very wrenching.’
Let’s do this step by step, I suggest.Was he really the business dum-dum that his critics would claim? Was it true that he ran Nelco to the ground? That he forced the Tata textile business into liquidation?
It is not the sort of question people usually ask Ratan Tata to his face but he is remarkably unperturbed. In fact, he seems eager to set the record straight.
He starts with Nelco, long regarded as an albatross around his neck.
‘When I took charge of the company, we had 2 per cent market share of the consumer electronics market. Our losses were 40 per cent of turnover. I was able to turn that around so that we had 20 per cent market share of consumer electronics and had diversified into new areas including professional electronics, inverters, computers etc. And by the end, we actually made a profit and declared a dividend.’
It is not his claim, he says, that Nelco was ever a huge success but surely he can take some credit for turning it around? And, he adds, if the Tatas had been willing to invest in the company, things could have been much better.
As for the textile experience, he was given Empress Mill when it was a sick unit. He made it profitable and declared a dividend. Then, J.R.D. Tata asked him to look after the Central India Mill. ‘ At around this time, the whole Indian textile industry went through a bad patch. So, some Tata directors, chiefly Nani Palkhivala, took the line that we should liquidate the mill. I argued with them.We needed just Rs 50 lakhs to turn it around. But Nani opposed giving us the money and we closed the mill down.’
Then, Ratan Tata shows a little emotion. ‘I was so disgusted by that decision that when I got my annual bonus from the Tatas, I gave it to the officers of the company. These were perfectly blameless people who now had lost their jobs through no fault of theirs because of a bad corporate decision. They had homes to run and children to educate.’
It is not a side of Ratan Tata that he allows us to see very often.
The biggest regret in my life
What about the satraps, I ask. Inevitably, the conversation turns to Rusi Mody again. It is hard to escape the feeling that of all the relationships that have gone wrong in Ratan Tata’s professional life, it is the break with Mody that has wounded him the most.
‘I still don’t understand why Rusi behaved the way he did. He was my friend. He was Jeh’s favourite. But he just became totally unreasonable. I remember one board meeting where we asked him why he kept giving interviews running down Tata Steel, of which he was the chairman. (By then, J.J. Irani was MD.) He just got up and said, “I will leave the room because this subject has been raised.” And then, to our astonishment, the chairman of Tata Steel got up and walked out of his own board meeting. After that he didn’t turn up for board meetings and kept bad-mouthing the company. Finally, the board had to remove him.’
He seems genuinely bemused. ‘I think he did himself a disservice. And I think his behaviour harmed Aditya Kashyap, who was a very intelligent and capable executive but who felt he had to support Rusi.’
Does he regret some of the bitterness that permeated the Tata group during that era? Yes, he says, he clearly does.
But his biggest regret has nothing to do with the satraps. It has to do with J.R.D. Tata himself. ‘ For the last six years or so of his life, we were very close,’ he recalls, ‘ but I really regret that we did not become closer earlier. That is probably the biggest regret of my life.’
And the loneliest moments
Since he seems in such a candid mood, I ask about his own success and failures. Given that for the first five or six years of his time as head of Tatas, so many people wrote him off, were there lonely moments?
‘Oh, yes,’ he says, ‘there were many lonely moments. There were many moments when I felt alone, frustrated and despondent.’ He talks about the phase when Telco lost Rs 600 crore and the critics decided that Ratan was simply not up to the job: ‘I tried to explain to people that our market share was still the same. It was the industry that was going through a bad phase. But nobody would believe me. Then, when the market revived, Telco began making profits again. Once again, I tried to explain that it wasn’t that we’d turned the company around.We still had the same market share as always. But market trends had changed. Even then,’ he laughs, ‘ people wouldn’t believe me.’
Then, there was the terrible and bloody labour dispute involving Rajan Nair weeks after Ratan had taken over Telco. ‘ It was a terrible time,’ he recalls. ‘ There was violence. There were stabbings. The police appeared to be on Rajan Nair’s side. And there was absolutely nobody in Poona (Pune now) who was willing to come out openly in favour of us except for old Dr Kalyani (father of Baba Kalyani), whose support I will never ever forget,’ he remembers. ‘ But if Telco hadn’t fought that battle and if we hadn’t won, Rajan Nair would have ruled Pune.’
So, that was a lonely time? ‘Oh yes, it was a terrible time.’ And of course, there’s the story of the Indica, the car that everybody regarded as Ratan’s folly but which became the great success of Tata Motors. ‘I always thought we should build a small car,’ he says. ‘ But all small or medium-sized foreign cars are meant to be self-driven which means that nobody pays any attention to the back seat which sort of sinks down when you sit in it. I wanted a car that could be chauffer-driven, where the back wasn’t too low – really. I wanted to build a modern version of the Ambassador at a competitive price.’
As the process of making the car got underway, many of Ratan’s critics thought it would be his undoing. ‘ Even within Tatas, people kept asking me to distance myself from the project so that when it failed I wouldn’t be stuck with the blame. And when I refused to do that, they distanced themselves from me.’ He smiles. ‘ But it was a good thing in retrospect, because I got very involved with the team and we worked very closely together and were much more motivated as a result.’
It was destiny, not the surname
I ask him about the manner in which he is perceived by his colleagues, and by the public at large. Because the bulk of Tata Sons is now owned by various charities, the Tatas themselves are not multi-billionaires. But it does not follow that they are not rich either. As Ratan concedes, ‘I do have capital of my own.’
In the old days, when his beloved grandmother was alive, the Tatas were among the richest people in Bombay (Mumbai now). Ratan himself grew up in astonishing luxury at a huge villa in the centre of Bombay (bits of which later became Sterling Cinema and Deutsche Bank).
And yet, if you look at his lifestyle now, he lives like any professional manager – actually, all the top corporate honchos I know, have lifestyles vastly in excess of Ratan’s. He’s lived for years in the same flat (from before he became chairman of Tatas) in Bakhtawar in Colaba and the few people who’ve been to his house say that it is the home of a bachelor who loves reading and dogs; certainly not the home of the head of India’s largest conglomerate. Even J.R.D. Tata, who was not exactly ostentatious, lived in far greater luxury – in a very nice Cumbala Hill bungalow – far better than Ratan does now.
Could it be, I ask, that personal wealth doesn’t matter so much to him? And isn’t that odd for somebody who was brought up as a rich boy? ‘Yes, I did grow up amidst a lot of wealth,’ he concedes. ‘ But don’t forget that I spent ten years in America trying to live on the Reserve Bank’s allowances (the Tatas would, of course, never buy dollars on the black market) and the money was never enough. So I had to take all kinds of jobs, including washing dishes, to make ends meet. That sort of thing helps you forget that your family is rich quite quickly.’
And now? He’s added hundreds of millions of dollars in value to the Tata empire. Does he mind that virtually none of it has come to him? ‘Oh, no. It is not something I even think about.’ The other popular view of Ratan is that he’s painfully shy, almost a recluse. ‘ That’s true,’ he says.
But, I persist, I think it goes deeper than that. I think he’s also, at core, a very lonely man.
He pauses. ‘ That’s fair,’ he says finally. ‘ Yes, I think I am lonely. And what’s worse, I’m too diffident to do anything about it.’
He went away to America to study architecture when he was young. And yet, here he is, running a huge business. Is this something he would have liked to do? Or is he just a prisoner to his surname? ‘I think I would have remained an architect, regardless of my surname,’ he responds. ‘I was called Tata when I decided not to go into business and become an architect. But then, my grandmother, to whom I was very attached, fell very ill and I had to keep coming back to India to see her. And after a while, after I had been here so many times, one thing led to another and I just never went back.’
So, in the end, it wasn’t the surname that trapped him. It was his destiny that finally caught up with him?
Ratan Tata pauses a while and then, he smiles. ‘ Yes, I think you can say that.’
(Picture courtesy Hindustan Times)