Ratan Tata, the charismatic chairman emeritus of Tata Sons and Chairman of Tata Trusts, who practiced the philosophy of “Sarve sama hitam” (beneficial to everyone) passed away at the age of 86 on October 9, 2024.

It was in 1991 that Ratan Naval Tata (RNT)—reticent and humble but always immaculately dressed in his trademark Brooks Brothers shirts—succeeded the legendary JRD Tata, who had headed the group for half a century, as the Chairman of Tata Sons, the holding company of the Tata conglomerate.

His ascent to the group’s chairmanship was however not preordained. He had a difficult childhood owing to his parents’—Naval Tata and Sooni Tata—divorce. It was under the loving care of his paternal grandmother that he grew up. After schooling in Bombay, he went to Cornell University in the United States.

Tryst with Tatas begin

At his grandmother’s call, he returned from the US in 1962 and worked at a succession of Tata entities: He began his apprenticeship on the shop floor of Telco, and then moved to Tisco, perhaps shoveling coal into furnaces, like any other ordinary apprentice.

In 1971, for the first time, he got his independent assignment—he was appointed as the Director of the sick National Radio & Electronics (Nelco) which was already in dire straits. It hardly had a 2% share of the consumer electronics market, while accumulated losses stood at 40%. He could, however, turn it around by increasing its market share from 2% to 25% and indeed became profitable. Still, the weak economy witnessed following the declaration of emergency and labor problems dragged Nelco down to near collapse again.

Later, he was asked to turn around the sick Empress Mills. He did succeed in reviving it, but the group’s refusal to inject fresh capital of 50 lakh to make it competitive came as a major shocker, leading to its ultimate closure.

These two failures haunted him for almost two decades. Indeed, it became more intense after JRD Tata, impressed by RNT’s growing reputation for strategic vision and scientific temper, appointed him as the Chairman of Tata Industries Ltd. in 1981.

Foreseeing the growth in the capital market and the ease of accessing capital for new projects, RNT drafted a strategic plan for the Tata Group in 1983 that emphasized group’s foray into high-tech businesses; focused attention to select markets and products; judicious mergers and acquisitions, leveraging group’s synergies, etc. It, of course, earned him the reputation of an ideation leader. Still, he could not push it forward to its logical conclusion except to promote a few high-tech businesses in the 80s such as Tata Telecom, Tata Honeywell, Tata Elexi, Plantek, etc., as the Chairman of Tata Industries. In the rest of the group, his strategy document gathered cobwebs.

A stormy welcome awaits at the Bombay House

It is against this backdrop that in 1991 he walked into the corner room of the Bombay House, of course, with no knowledge of the impending storm waiting to greet him. The old satraps—Russi Mody of Tata Steel, Darbari Seth of Tata Chemicals, and Ajit Kerkar of Indian Hotels—were reluctant to accept his leadership. This trio was loud and unrestrained in their disapproval of RNT as the group head. He was ridiculed by saying that he became Chairman of Tata Sons by virtue of his surname; some even likened him to the clown in a circus. The loud and acrimonious battles, particularly of Russi Mody with RNT were all carried out in public view.

Despite all this ruckus, RNT, the shy leader of impeccable manners, without getting distracted from his chosen path silently went ahead with his mission of reinventing the Group of Companies that were hitherto working in silos. But to get the satraps, who have been all along ruling the companies as their fiefdoms, to toe a group line and work in tandem with other companies became next to impossible. Indeed, RNT’s “first three to four years were engaged in struggles with satraps”, said RM Lala, the author of JRD’s biography.

Sensing that the Tata Group was on its way to disintegration, RNT, finally enforced the long-dormant retirement age rule for all business heads and directors to replace the satraps with fresh talent as heads of the important group companies and thus ensured greater integration of Tata Group companies, all within about five years from his becoming the chairman.

Realizing the pathetically low equity holding of Tata Sons in the major group companies such as Tisco, Telco, etc., RNT, capitalizing on the cash flows of the then unlisted cash cow, TCS, that flew into Tata Sons as a dividend, increased the shareholding of Tata Sons in every important company of the group. Thus, he could ring-fence the Group companies from outside interference. It was only after ensuring that the shareholding of Tata Sons in group companies had reached a level of comfort that he gave the green signal for the public listing of TCS in August 2004.

Simultaneously, he worked towards creating a single brand image for the group. He created a single group logo under the ownership of Tata Sons, the holding company. The group companies were made to pay brand equity and sign business promotion agreements with Tata Sons as a condition precedent for using the brand name. Thus, he brought all group companies under one common logo in 1999.

As India embraced liberalization, to stay relevant to the changing times, particularly to face the onslaught of foreign competition, RNT introduced the ‘Tata Business Excellence Model’ which became Tata Group’s largest change initiative. This framework was implemented through Tata Quality Management Services, mandating it to “help Tata companies achieve their business objectives through specific processes”. Once the company signed up, it was evaluated annually on seven parameters: leadership, strategic planning, customer and market focus, information and analysis, process management, human resource focus, and business results. Using this framework, Tata transformed the group companies into much leaner and nimbler companies to improve their productive functioning.

Paying attention to the unstructured growth with overlapping business across multiple companies, a remnant of the control-Raj period, RNT disposed of businesses that he considered no longer fit into the group’s strategy. First, he sold Tata Oil Mills Company to Hindustan Unilever in 1993. Later, swiftly exited from pharmaceuticals and textiles followed by cement business. Similarly, Lakme was sold to Hindustan Lever.

Taking Tatas global

When it comes to businesses, as John Kotter (1988) said, business leadership is essentially centered on “change” and “action”; a leader should have the courage to orchestrate a new vision and strategy as that which empowers others to work on it and exhibit their requisite strength of character to set right examples in terms of sacrifices to be made under the proposed changes. This articulation of Kotter is well reflected in what RNT did in his 21 long years of leading the Tata conglomerate.

The first of such changes that he introduced was perhaps, launching the Tanishq jewellery brand, which over time transformed the very nature of the country’s unorganized jewellery industry by affording embedded trust in the jewellery. The second and the most notable is the launching of the Indica car—a car made in India by India with “the Zen’s size, the Ambassador’s internal dimensions and the price of a Maruti 800” in 1998. It was a major transformation for Tata Motors, a company that had been hitherto known as a manufacturer of trucks.

Of all RNT’s decisions till then, the Indica project was, perhaps, one of his greatest gambles. When he started the project, many critics opined that RNT was all set to destroy a good truck business “for the sake of an ill-conceived vanity project.” The criticism seemed justified as project costs escalated to 1,700 cr and eventually Tata Motors booked a loss of 500 cr—the biggest ever booked by any Indian company till then. It is of course a different matter that Indica later proved RNT was right by its great success but what this whole episode importantly reveals is his leadership: He never distanced himself from its initial failure. He said later in an interview: “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”.

This project appears to be the one that made RNT acquire global businesses, more as a strategy for risk mitigation. His vision for stability coupled with the growth of the group can be well gauzed from what he once said, “Perhaps, the most graphic moment came in 1997-98 or 2000 when we had that economic downturn and when Tata Motors at that time produced that 500-crore loss. That told me that we had to do something where we would not in the future be dependent on one economic cycle, but we had to have more irons in the fire in different economies and if one economic cycle was down, the chances are that the other might be up. That accelerated the move to go and search, not for acquisitions, but for markets in a serious way.” And that is what he precisely did subsequently: led his team standing upfront in acquiring Tetley, a UK Tea brand, for $450 mn in 2000; Corus, an Anglo-Dutch steel manufacturer, for £6.2 bn beating CSN of Brazil in 2007; and Jaguar Land Rover for $2.3 bn from Ford Motor Company and so on.

Indeed, RNT’s bid to acquire Corus—a company that is almost three times bigger than Tata Steel that made Tata Steel the world’s 5th-largest steel maker—was seen by many as “risky”. Some analysts felt that the price that Tata Steel eventually agreed to pay was above the ‘comfort zone’—a payment of £6.2 bn sounds expensive at nine times EBDITA, which in rupee terms equals a whopping 54,000 cr, almost equal to the annual budget of a medium-sized state in India—and that RNT in the process had put the company in jeopardy. “Ratan was the chief architect of the Corus deal,” said B Muthuraman, Chairman of Tata Steel. He also said, “I was worried about the magnitude and the amount of money. But he instilled confidence.” No wonder this daredevil act of RNT made the industry pundits drop their jaws: “Ye Gods, it doth amaze … / A man of such a feeble temper should / So get the start of the majestic world, / And bear the palm alone.”

However, from RNT’s perspective—“Be bold in setting your goals and do not be afraid of taking risks”, an idea that he picked up from a study his Group carried out to understand the difference between China and India’s growth rates—the limit set on the deal was never reached. For him, the acquisition was a good business decision. It is not only that RNT was courageous but also instilled courage in the very culture of the organization as is revealed by what he once said: “When I took over as Chairman, I set some targets for various group companies; for example, doubling revenues in three years, doubling profits in four years and so on. The initial reaction was: ‘We can’t do that.’ And I said, ‘why are you looking at only organic growth as an option? No one is stopping you from acquisitions’.” And that is what he precisely did: Led his team standing upfront in acquiring Natsteel, Millennium Steel, Corus and later the marques Jaguar Land Rover.

Market pandits had, of course, talked about these big and bold moves as his ‘follies’ and some even dubbed him as a risk-taker. But RNT had dismissed them saying: “There have been certain occasions when I have been a risk taker. Perhaps more so than some and less so than certain others. It is a question of where you view that from. I have never been speculative. I have never been a real gambler in the sense that some very successful businessmen have been”. This argument compels one to infer that RNT’s ‘follies’ were decisions arrived at by prescience and not by mere gut feeling.

Notable among his path-breaking concepts that emanated from his out-of-box thinking is the Nano, the “car heard round the world” at the 9th Auto Expo, held in Delhi on January 10, 2008. It was indeed a dream project of RNT to offer a vehicle for the masses of India that could make the travel of India’s middle class less dangerous. However, the plant that was coming up at Nandigram for the production of Nano car had faced tremendous opposition from the local farmers. Tata then did not hesitate to shift it lock, stock, and barrel from West Bengal to Gujarat, though it involved huge capital outlay—both already sunk and fresh investment. Defying all the odds, RNT finally rolled out Nano thundering, “A promise is a promise” at its launch in 2008.

Despite the initial excitement, the Tata Nano faced several challenges, notable among them was the perception of being “cheap” rather than affordable, and hence was forced to shelve it in 2018. Nevertheless, Nano stands as a symbol of RNT’s vision to innovate for the masses and improve their lives through accessible, affordable technology. It remains a significant part of his legacy, a legacy that Hemant Kothari, the investment banker who worked on many of the Tata Group acquisitions and watched RNT’s functioning from close quarters, revealed thus: “He is a very discerning person when it comes to decision-making. And once he had made up his mind, he is prepared to go all out to achieve his objectives, be it Corus or Nano”.

He also spearheaded the Group’s entry into aerospace and defense sectors. In 2007, he incorporated Tata Advanced Systems Ltd. and entered into collaboration with Sikorsky Aircraft to manufacture helicopter cabins. Later, similar collaborations were entered with Lockheed Martin, Airbus and Boeing to manufacture aircraft components.

RNT, having thus steered the behemoth of more than 140-year-old Tata group for 21 years and having transformed it into a global conglomerate, besides raising the revenues from 10,000 cr in 1991 to 475,271 cr ($100.09 bn) in 2011-12, retired on his 75th birthday, with a confident assertion, “I feel satisfied that I have done my best to do what I considered to be the right thing and that has been there throughout”, which is a no mean achievement for any corporate leader.

Thomas Mathew, author of RNT’s biography said that “the top line of the Tata companies had grown in dollar terms by nearly 1,742% during his tenure as chairman of Tata Sons that exceeded the record of Jack Welch of GE—a growth of 1,360% during his tenure—who was dubbed as the ‘manager of the century’ by a US business journal”. In conclusion, one must say that RNT outperformed the legendary JRD in exhibiting judicious courage in fostering path-breaking innovations such as Indica and Nano besides making Tata a multinational corporation.

Financial results aside, what speaks about the core of his leadership is: his style of identifying fresh talent, recruiting ‘non-lifers’ at a late stage of their career and taking the risk of entrusting them with board-level responsibilities, leading the talent within the group to achieve sustainable solutions to the societal expectations, of course with a firm ‘value-centric’ focus. He injected a new spirit of competitiveness into the 140-year-old Group by exhorting it to “question the unquestioned”. He had an ear for what his colleagues had to say and a mind with a quiet determination to discern how it mattered for the business.

He even lent his ear to those who criticized his business aspirations: When the environmentalist, Sunita Narian raised her campaign against the health hazards posed by diesel cars such as Tata’s Indica, though initially a messy battle crept in, once realized that it was all based on the emerging science of PM 2.5, RNT said to have accepted the contrary views of the environmentalists more in a “democratic tradition”. As a strategist, he brought cohesiveness among the group companies. He created Tata Sons as the ‘Group Center’ enriching it with fresh talent of high competency and nudged the conglomerate to work under it as a group rather than each working on its own. This gave a boost to the Group’s capabilities to wither out global competition. In short, RNT provided the new-age leadership that the group needed in the wake of economic liberalization.

He Too Had His Failures

That said, one must also admit that as is inevitable for any leader, he too had his failures and shortfalls from his known standards. His efforts to build a mobile telecom business not only failed inflicting huge losses but also landed him in controversies, particularly Radia’s tapes episode questioning his judgement about people. His biggest acquisition, Corus, became a winner’s curse for the Group. Though it never faced an existential threat, the Global Financial Crisis of 2008 did cause more financial stress leading to the selling of select acquired steel assets in Europe.

The most challenging task for any long-serving and highly successful CEO is finding a successor and passing on the baton, for it may turn great or the transition may wind up in disaster. Secondly, however sure a CEO is of his/her departure date, the closer one gets to the date, “the more tempting it will be to postpone it”, said Nitin Nohria, former Dean of Harvard Business School. But RNT appointed a selection committee to search for an ideal successor for him much ahead of his announced retirement date such that there is enough handover time. Perhaps to make the selection more scientific, RNT stayed out of the selection panel to afford more comfort and confidence to the aspirants from within the group that the selection is based on the recommendation of the panel and “not on account of the Chairman’s preference”. On turning 75 in 2012, RNT made way for the selected candidate, Cyrus Mistry as Chairman of Tata Sons.

However, in a couple of years, the relations turned sore and Mistry was ousted with a terse statement: “In its collective wisdom and on the recommendation of the principal shareholders and in the long-term interest of the Tata group and Tata Sons the Board has resolved to replace Cyrus Mistry as Chairman” and RNT returned to lead the group for a brief period. This certainly dented RNT’s legacy gravely. The real reason for the fallout between Mistry and RNT will never be known but it did not fit the persona of RNT. However, he soon corrected the vacuum by appointing a professional and an insider, Chandrasekharan, as Chairman of Tata Sons.

An Icon Forever

Nevertheless, RNT’s accomplishments and contributions to industry and the Indian economy are so huge that they made these blemishes insignificant. Indeed, the nation viewed RNT as a principled, ethical, and gentlemanly business leader. People loved his persona of grace, humility, thoughtfulness, and his value-driven decisions which became visible at once in his handling of the Tata Finance Company’s episode. When Tata Finance faced a financial crisis in 2001 owing to management’s bad acts, he announced that Tata Group would ensure that every depositor, big or small gets his/her savings back from the company. Following this announcement, he injected needed capital into Tata Finance. He also ensured that the lapses were addressed squarely and appropriately, telling the Group companies that “there is to be no cover up, and the guilty must be punished”.

As a business leader, he often exhibited a certain boldness while making decisions far beyond financial metrics. The public offering of TCS was a nice corporate story that reveals this softer side of RNT’s boldness. As the merchant bankers were grappling to get the highest price for the IPO, RNT had this to say to them: “Are we leaving something on the table for retail investors who bought into the IPO partly due to trust in the Tata name? Will we price such that the post-IPO price moves up and creates confidence in the investor?” This episode well reveals his concern for the welfare of prospective retail investors.

Staying back, as Chairman of Tata Trusts and Chairman Emeritus of Tata Sons, RNT made India’s entry into semiconductor manufacturing happen in a big way. Towards the end, he also fulfilled his last obsession: acquired Air India, but one has to wait and see whether Tata Sons can turn it around vindicating what RNT once said: “Turning around a loss-making company is socially more honorable than selling it”. That aside, this man of unconventional bets left behind the Tata group with $165 bn in sales, a million employees in a hundred countries, and a market cap of $365 bn as of FY 24 through 26 public listed companies.

His pursuit of philanthropy, as Deepak Parekh observed, “is legendary both in India and around the world. It is perhaps, in the pursuit of the “perpetual value” of Tata Trusts, that even after the Nano project was pulled out of West Bengal, he stood by his promise and invested close to $75 mn in creating a new state-of-the-art cancer care center in Kolkata. Indeed, his tenacity and resolve to contribute to the cause of the common man were such that Tata Trusts under his chairmanship created several cancer care centers and hospitals across the country.

In 1991, at the request of RNT, Rediffusion created a campaign called “The Company of Man” which depicts how the Tata Group, carrying forward the original vision of Jamshedji Tata— ‘the purpose of an enterprise was to serve the community’—helps people. One day, RNT came to the agency’s office and watched the beautifully written and art-directed campaign. As the work was read aloud to him, he had tears in his eyes. He stood up and said, “This is a great piece of work. But I will never release it.” When asked why, his reply was: “Because if you are a true healer, you do not go around telling people that you are a healer. You just heal”. Narrating the incident, V Shantakumar of Doing Think said that as a creative director, he felt “hugely disappointed, but as a human being he felt proud that he had met such a man”. That was RNT’s spirit of philanthropy.

To conclude, here is an incredible leader—who, driven by a profound love for the country, practiced ‘wise capitalism’ with a deep concern for corporate longevity which enshrines ‘perpetual value’, “Sarve sama hitam” (beneficial for all), that ultimately benefits society at large, whose philosophy merits adaption by India Inc.