Ratan Tata, 74, ambles off into the
twilight this winter, retiring as chairman of the
Tata Group and leaving a considerably
contradictory legacy. He steered his company to
becoming India's largest privately owned
industrial group, but battered in the bargain
traditional values of a business house respected
for 150 years.
In multiple ways, Ratan
Tata's two-decade reign reflects India's entire
economic story of the past 20 years: more growth than
glory, of quantity rather
than quality.
India crossed the
trillion-US-dollar-economy frontier without a
single globally recognized "made in India" product
with the quality status of a Mercedes-Benz or a
Nokia. Tata had the chance, but failed to break
free from manufacturing mediocrity.
India
has rapidly changed since 1991, the year Ratan
Naval Tata took over as chairman at Bombay House,
the Tata Group's 88-year-old headquarters in
Mumbai. Since then, India has accelerated to
become the world's second-fastest-growing economy
after China in just 20 years. The Tata Group also
mushroomed, from posting revenue of US$2 billion
in 1991 to $83.3 billion in 2010-11.
But
despite explosive growth numbers, neither India
nor Tata yet has what Western or other Asian
economic giants like Japan, South Korea and China
own: at least one product, one brand, with a
worldwide testimony to quality of domestic
industry - rather than being one of the world's
leading providers of cheap labor and outsourced
services.
Tata Motors, the apple of Ratan
Tata's eye, was a reasonable candidate to deliver
India's overdue equivalent of a Japanese Toyota,
US Ford, British Rolls-Royce, German BMW or even a
South Korean Hyundai. Or even any thingamajig of
everyday use, like a chilled can of American Pepsi
or a Chinese Lenovo laptop.
Instead, the
Indica, the first fully indigenous series of cars
that India, Ratan Tata and Tata Motors produced,
failed to huff, puff and rattle its way to reach
status even as a domestic success, let alone hog
export glory.
And the Nano, the world's
cheapest car and meant to be Ratan Tata's great
personal legacy, has become a spectacular dud, the
butt of ridicule and a historic bungle.
Tata Motors epitomized the Ratan Tata
legacy - and India's quality-starved manufacturing
history. He had the choice to focus on Tata's core
strengths and boost standards - for instance, to
ensure that iconic Tata Steel made a global
imprint with its exports, not with mergers and
acquisitions. Instead, he chose to rush around the
world buying trophy brands like Corus Steel and
the British Jaguar, and invest in poor strategic
projects like the Nano.
In the process, he
pushed to the back seat the word "trust" that used
to have instant name association with "Tata".
Unwieldy Tata Group growth into more than 70
companies, and entering intensive consumer-service
areas like telecommunications and home satellite
TV, came without supporting customer-service
infrastructure. The Tata brand name took an
unprecedented beating.
This overzealous
expansion without solid consolidation produced
angry consumers sounding betrayed - as a Google
search exhibits online - by a Tata Indica or a
Tata Sky satellite TV subscription. I remember
once asking a doddering Tata Indicom
customer-service worker in wonder: "Are you really
an employee of the Tatas?"
Under Ratan
Tata, the Tata Group may have maintained its rare
corporate integrity of refusing to give or take
bribes, but may also have slipped in the integrity
standard of giving a customer his money's worth.
Ratan Tata expanded the Tata empire across
80 countries, mostly through frenzied buying of
local companies since 2000. Yet building India's
infrastructure and community service had been the
fundamental Tata credo since the 1850s, not global
big-brand buying and borrowed bragging rights.
More than 150 years ago, Tata Group
founder Jamsetji Nusserwanji laid the
philanthropic foundation of the Tatas, such as his
JN Tata Endowment to fund scholarships for Indian
students. Since then, dozens of charitable trusts
own 65.8% of Tata Sons, the group's holding
company. Nowhere else in the world does Mr
Philanthropy own a major corporate group to the
unique extent as with the Tatas.
Jamsetji
Nusserwanji's successor Dorab Tata (1904-1932)
established the Tata Iron and Steel Co, now Tata
Steel and one of India's leading infrastructure
companies. But during the Ratan Tata reign, India
has become more an exporter of iron ore and
importer of steel from China.
Dorab's
successor Jehangir Ratanji Dadabhoy "JRD" Tata
continued the pioneering and nation-building
tradition of the Tatas. He founded Air India,
which during his ownership became one of the
world's best airlines. JRD became the father of
civil aviation in the subcontinent.
JRD
set up other major group companies such as Tata
Consultancy Service and Tata Motors, the world's
fourth-largest truck and bus manufacturer. But as
a visionary industrialist, JRD was unlikely to
have seen much scope or use for India in making
the world's cheapest car, as his successor Ratan
did with his Nano.
The Nano became one
instance of poor decision-making that dragged the
Tata Group into unsavory controversies. The Tatas
were linked with the telecom-licensing scam that
earned telecom minister A Raja a residency in New
Delhi's Tihar Jail. And even though officially
certified innocent, the Tata name featured in
related murky episodes like the Radia tapes leak
that revealed a brazen corporate-media-politician
nexus.
Ratan Tata found himself defending
allegations in sordid territory unfamiliar to any
of his predecessors. But in sticky situations
largely born out of unwise choices, Tata made
matters worse by failing to exhibit statesman-like
diplomacy - or at least appreciate the dictum
"speech is silvery, but silence is golden". Tata
very nearly turned him into India's Donald Trump.
Ratan Tata showed more naivety in his
much-troubled search for a factory for his Nano.
In perhaps his most infamous decision as leader of
India's most respected industrial group, Tata took
his car project to Gujarat, the state with
Narendra Modi as its dictatorial chief minister.
Modi is the prime accused in the horrendous
Gujarat communal riots of a decade ago, in which
crazed mobs killed thousands of people after Modi
ordered the state police to let the rioting go on.
Tata's credibility not only took a
nationwide dip, but nemesis was soon served to the
Nano. Within three years of its launch in 2009,
the Nano joined the "dream car" flop list
alongside the likes of the DeLorean.
The
tiny Nano, the "world's cheapest car", highlighted
the mashed, mixed legacy of Ratan Tata. He wanted
to give India's millions of lower-middle-class
families a cheap car, in a country with the
world's highest gasoline and diesel prices and
some of the most traffic-jammed urban roads.
The idea was born out of false compassion
and supposedly after he saw a family riding a
scooter getting drenched in the monsoon rain. He
could have given them a lift in his Mercedes, or
gifted that family a second car.
Instead,
he launched the hare-brained project of the
1-lakh-rupee Nano (100,000 rupees, then about
$2,000), an endeavor destined to failure given
costs of production, the difficulty of
mass-marketing a car with the "cheapest in the
world" tag, and suspect safety compromises that
turned worse with a few Nanos bursting into
flames.
Cyrus Mistry, Tata's anointed
successor after a prolonged search, seems more
likely to return the Tatas to their core values
and the solidity of infrastructure-related
business that India needs - instead of Nano-like
flights of fancy.
Mistry, 44, keeps a low
profile, and comes from the well-known family of
builders Shapoorji Pallonji. From his few media
interactions, Mistry sounds less inclined to
flashy decision-making, or the reflected glory of
hunting corporate trophies like a Jaguar or a
Tetley. If Mistry learns from Ratan Tata's
strategic misadventures, he stands a better chance
of ending India's strangely long wait for a
globally recognized brand, even if it be soap or
shampoo.
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