RATAN TATA

How successful is Ratan Tata

Nandini Lakshman & Gouri Shukla | July 26, 2005

It was a ritual at Mumbai's Taj Mahal Hotel. Two months ago, Ratan Naval Tata, 67, non-executive chairman of the Rs 79,000 crore (Rs 790 billion) Tata group was presiding over the annual group management meeting for 200 of his senior managers, including Tata Sons' directors.
For the past six years, this has been Tata's way of reaching out to his people, telling them where the group is headed, what needs to be done and how they can do it. This year's theme was the global story. And the punch line? Be bold; think big; lead, never follow Such exhortations are heard more often these days at Bombay House, the Tata group headquarters. Tata's game plan, according to his managers, was simple -- rationalise the group's business portfolio; deliver a return on investment that exceeded the cost of capital; have a symbolically and emotionally unified brand; and grab new opportunities.
Today, Tata's empire is still unwieldy. With seven business sectors and an official list of 91 operating companies (a group insider put the total at 300), Tata still employs around 220,000 people. "We have too many companies and focus is necessary," says a senior Tata manager.
But what Tata has already done is hauled his heavy engineering-to-services conglomerate into newer businesses (telecom, passenger cars, retail, biotech); turned around and restructured flagships (Tata Steel, Tata Motors) that once operated in protected regimes; and shed some businesses that no longer fit into the corporate vision or failed to yield requisite results (Merind, Goodlass Nerolac, ACC, Lakmé, Tomco).
"The group is more aggressive today than it was a decade ago," says a merchant banker "there is a certain electricity in the group."
To hedge the cyclical nature of some of his flagships, most of the Tata companies are going global and acquiring businesses as if there's no tomorrow -- half its 14 acquisitions were in the past year. Apart from bagging orders from overseas, they are acquiring foreign companies. "Globalisation is the way to go for us," Tata said recently. "A global footprint is very important for the group to remain competitive,"