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The architect who changed the landscape

Updated on: Dec 27, 2012

BL28_02_TATA

Much of an architect’s life is about coming up with new designs — ones that will change the landscape forever. Negative reaction to new ideas, sometimes downright disgust, makes the art difficult and controversial.

The Chairman of Tata Sons, Ratan Tata, has gone through it all, despite not pursuing architecture actively as he was meant to.

Steady evolution

Before taking the helm of Tata Sons in 1991, Ratan Tata studied architecture at Cornell University and was planning to stay on in the US permanently.

Fate and an ailing grandmother ordained it otherwise, bringing him back to the country in December 1962 to establish and build a new design aesthetic at Tata Sons, the promoter holding company of the Tata Group.

From a patriarchal concern to an institutional enterprise, the evolution has been steady. Ratan Tata has spent more than $21 billion on foreign acquisitions and has a spate of takeovers to his credit. Between 1995 and 2003, there was almost one purchase a year.

In 2004, there were six acquisitions, while in 2005-06, the figure jumped to more than 20. Corus was in 2007, along with seven other buys, and 2008 had nine purchases including Jaguar Land Rover. In the next three years till 2011, there were more than nine acquisitions.

It was no smooth sailing. Mergers and acquisitions and massive turnarounds were replete with many controversies. Each attempt seemed like a risky bet, but Ratan Tata was willing to explore uncharted territories.

“That is how he operates, regularly taking risks and sacrificing short-term profit. It is not uncommon to see a compression in margins and returns in any phase of growth. Tata owes much of his success to his ability to look beyond the short-term,” says a Tata insider on condition of anonymity.

EARLY DAYS

The challenges during Ratan Tata’s early tenure were fairly daunting, says the old-timer. “Soon after he took over, he donned the cap of a crusader for rationalisation of the many businesses the group was in.” Ratan Tata’s managerial start with Nelco and Empress Mills floundered and were termed low points. The trial by fire only got worse with the sale of Tata Oil Mills Company to Hindustan Lever in 1984.

“The whole world descended on Ratan Tata. He was labelled an upstart, ungrateful, responsible for changing employees for life. It was the beginning of the end for him,” said the official.

The result was that for many years, Ratan Tata put aside his plans for rationalisation and decided to grow what the group had.

GROWTH CONCERNS

Despite the restraints imposed by a controlled economy, the Tata group decided to venture into new areas to build on the foundation.

As another insider said, “One of the driving forces of acquisitions overseas was the fact that in some of the businesses we had massive market share, almost 60-65 per cent. How much more could we grow in those areas?”

Ratan Tata looked to growth outside India, at companies that could provide a good fit, either in terms of a gap in the product range or an unknown technology.

The economic conditions of western Europe came to his aid, with several companies scouting around for acquirers.

In each case, the official said, “it was a leap of faith, because the acquisitions were bigger than the parent.”

BIG BETS

Tata Steel acquired Corus, which was four times larger and the largest steel producer in the UK. The $12-billion acquisition in April 2007 created the world’s fifth largest steel maker.

“Jaguar and Land Rover were also larger than our passenger car activity in India. It was then a question of being either bold or stupid. We decided it would be both,” said the official.

Ratan Tata’s quest to enter and redefine the Indian passenger car market drove the same audacious path.

In 1998, he undertook a huge gamble with India’s first indigenously manufactured people’s car, Indica, short for India’s car, which was engineered from the ground up. By 2008, with profits topping $400 million, the car was being exported to other developing markets, including Europe.

As Hormazd Sorabjee, editor at an automobile publication, said, “The Indica was his biggest achievement. It transformed the company from a truck-maker to a car-maker. It is his most crucial and significant achievement.”

With innovation around cost a recurrent theme at the company, the announcement in 2002 to design, build and market the Nano at Rs 1 lakh met with much derision and disbelief. Today, the company is looking to launch a Nano-style vehicle in western Europe and the US.

Stating that Ratan Tata’s intuitive sense is staggering, Sorabjee added, “It is his ability to see into the future, whether it is the Indica or JLR or with the Nano. What Tata saw was a certain need in the market. The cars were not designed for India. They were adapted from the Western market and put here.”

As for the Nano, Sorabjee said the problems are beyond the product, “It is image issues, marketing issues. Nano is still unfinished business for Tata. One cannot write it off.”

Role model for Leadership

Business historian Morgan Witzel insists that Tata sees things through the end.

Witzel, author of Tata: The Evolution of a Corporate Brand , noted, “The thing that struck me most was his quiet determination. He gets on with things. He is an excellent case study of someone leading by example. If young Indians are looking for a role model for leadership, I recommend they look no further.”

Leadership in sustainable design is especially challenging. Added the Tata insider, “When you step into a leadership position, you become the target of criticism. Tata’s international acquisitions have transformed the company, deeply grounded in India, into one of the world’s most visible conglomerates.”

For Ratan Tata, it was education at Cornell that showed the way.

At the University’s 2012 Entrepreneurship Summit in New York City recently, he said it equipped him for what he ended up doing, “because you’re dealing with people in solving problems. It involved budgets. It involved finding solutions where people were involved, how they circulated, how they use space, and visualise a project as it was meant to be.”.

Ratan Tata’s tenure may have sparked controversy, as much as passion and conviction, but has undeniably spawned many establishments, ranging from energy to communication, that are now considered iconic.

As he steps down as Chairman on December 28, marking the end of an era, for the devotee of architecture and design, it may be time to get back to the drawing board.

>amritanair.ghaswalla@thehindu.co.in

Published on December 27, 2012
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