Ratan Naval Tata Part-2

Early Life !!!

Naval Tata, Ratan Tata and Noel Tata (in the centre).

A Shaky Start

Left to himself, Ratan Tata would probably have stayed on in the United States after training as an architect at Cornell University. But the son of deputy group chairman Naval Tata and the nephew of JRD Tata couldn't be allowed to work outside the group (he had an offer from IBM).

In 1962, Ratan joined the family business, working on the Tata Steel shopfloor at Jamshedpur, just one of several thousand employees.

He got his first independent assignment less than a decade later -- as director of National Radio and Electronics (Nelco), in 1971 -- but it was a mixed blessing. Nelco was in dire straits when Ratan came on board -- losses of 40% and barely 2% share of the consumer electronics market.

Just when he turned it around, the Emergency was declared. A weak economy and labour issues compounded the problem and Nelco was quickly near collapse again.

Ratan's next assignment was just as trouble-stricken. He was asked to turn around the sick Empress Mills. He did, but was refused the Rs 50 lakh (Rs 5 million) investment required to make the textile unit competitive. Empress Mills floundered and was finally closed in 1986 (by which time the infamous Mumbai textile workers' strike had also taken its toll).

The two 'failures' haunted Ratan for decades. His track record was suspect, he was jinxed, said his baiters. "My first directorship was that of Nelco and the status of that company has forever been held against me. No one wanted to see that Nelco did become profitable, that it went from a 2% market share to a 25% market share," Tata said several years later.

The attacks became more vicious after 1981, when JRD stepped down as Tata Industries chairman, naming Ratan his successor -- in one leap, Ratan had moved to the head of the queue for eventual leadership of the entire Tata Group, and that was completely unacceptable to many.

So much so, that at one Tata Sons meeting, when Nelco's losses were being blamed on Ratan (although he came to the company much later), JRD had to step in and deflect the criticism.

Later, recalling the incident, Ratan was to remark, "Jeh came to my rescue and slowly turned around the whole conversation."

But even JRD's backing wasn't enough to help Ratan achieve many of his ambitions for the group. Foreseeing expansion of capital markets, which meant easier access to money for new projects, Ratan helped draw up a group strategic plan in 1983.

Among other things, it emphasised venturing into hi-tech businesses; focussing on select markets and products; judicious mergers and acquisitions; and leveraging group synergies.

Accordingly, Ratan promoted seven hi-tech businesses under Tata Industries in the eighties: Tata Telecom, Tata Finance, Tata Keltron, Hitech Drilling Services, Tata Honeywell, Tata Elxsi and Plantek.

But elsewhere in the group, his blueprint gathered cobwebs as companies -- many of which were run by their CEOs as independent fiefdoms under JRD's benevolent leadership -- blatantly ignored it or at best, paid lip service to the 1983 plan.

New businesses and M&As in these companies, if they happened, occurred independent of Ratan, not because of him.

Ratan's spell of bad luck continued -- even as his successes grew. He was steadily finding a place on the board of many group companies, having become a director at Tata Sons back in 1974.

In 1988, he took over from Sumant Moolgaokar as Telco chairman -- and promptly found himself at the centre of a prolonged labour dispute, perhaps the worst industrial relations slide in Tata history.

Ratan stood firm and eventually the matter was resolved in the company's favour. In an interview some years ago, Ratan recalled that Telco was "the first company in which I could actually do something. In other companies, I was always put in a fire-fighting situation."

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