Business | Economy

Ratan Tata hands over reins of empire

Handing over the reins of his sprawling business empire after decades at the top of the country’s turbulent corporate world

  • AFP
  • Published: 15:05 December 26, 2012
  • Gulf News

Cyrus Mistry
  • Image Credit: AP
  • Cyrus Mistry, newly appointed deputy chairman of Tata Sons, arrives at Bombay House, the company’s headquarters, on Thursday. Board member Mistry will take over from Ratan Tata when he retires as chairman of Tata Sons next year.
Image 1 of 2
12

Mumbai: Indian industrialist Ratan Tata retires on his 75th birthday this week, handing over the reins of his sprawling business empire after decades at the top of the country’s turbulent corporate world.

Ratan Tata has been credited with transforming the Tata group into a streamlined conglomerate of more than 100 companies and earning a global reputation for eye-catching purchases of Western firms.

With a portfolio ranging from salt and software to tea and telecoms, Tata is India’s largest group, and new boss Cyrus Mistry faces a challenge as the first chief appointed from outside the immediate Tata family in its 144-year history.

“I have devoted my life, as best I could, to the welfare of the group,” Tata said ahead of his retirement on Friday.

The highly-respected, media-shy mogul, who spent 50 years with the company, is likely to mark his last day at the helm in the unassuming manner in which he took over from his uncle J.R.D. Tata in 1991.

The same year saw India unleash radical free-market reforms that transformed the country’s economy, and Tata took full advantage.

“Ratan Tata came with zilch expectations and in an environment where the group was headed by people who thought they could perhaps ‘manage’ him,” said financial consultant R. Balakrishnan.

“The transition today is amazing,” Balakrishnan told AFP.

Tata companies include India’s largest IT firm, the biggest vehicle maker and a ritzy hotel chain.

In one of the group’s most successful moves, Tata Motors turned around fortunes of loss-making British luxury brands Jaguar and Land Rover just a year after buying them out from Ford Motors for $2.3 billion in 2008.

Jaguar Land Rover now contributes nearly 80 percent of Tata Motors’ earnings and the deal has vaulted the Tata firm from a commercial vehicle and small-car maker into a global player.

Tata Consultancy Services (TCS), went public in 1994 under Ratan Tata’s leadership, when investors were unsure about the future of technology stocks. It is currently growing faster than rivals Infosys and Wipro.

Tata is exiting with the group’s total combined sales at $100 billion in 2011-12, nearly 60 percent of which come from business outside India, mainly the United States and Britain.

“His reign has been outstanding,” said fellow industrialist Rahul Bajaj.

But Tata could not escape some controversy: he was one of the business leaders questioned in 2011 by a parliamentary watchdog probing a multi-billion-dollar telecom licensing scam that rocked the government.

India’s federal police agency later cleared the Tata group of any wrongdoing.

Mistry, the current vice-chairman, was announced as heir more than a year ago, and Tata has said the group will be “in the hands of somebody who understands the business environment better” than he did.

The pair, both from India’s tight-knit Zoroastrian community of Parsis, do have a family connection: Mistry’s sister is married to Tata’s younger half-brother Noel, who was initially tipped to be the group successor.

Mistry, who has not spoken to the media since being appointed, is the son of Pallonji Mistry, whose construction firm Shapoorji Pallonji is the biggest shareholder of Tata Sons.

Educated at London’s Imperial College and the London Business School, the new chief takes charge when some of Tata’s senior management are also heading into retirement.

“The challenge for Mistry will be to find the next growth sector for the group,” said Sonam Udasi, head of research with IDBI Capital. “How long can it ride on the success of Tata Motors and TCS?”

Tata has tried hard to expand the global footprint of the group’s Indian Hotels, which runs the landmark Taj Hotels Resorts and Palaces and has posted losses in the past four quarters.

Tata Steel’s daring $13.7 billion purchase of Anglo-Dutch firm Corus in 2007 - then India’s largest overseas acquisition - now appears ill-timed, as business conditions continue to look downbeat in Europe.

But Mistry has time - and Ratan Tata - on his side.

After retirement, Tata plans to remain head of the charitable trusts that own two-thirds of main holding company Tata Sons and distribute millions.

He also wants to work towards “relaunching” the Nano, his pet project billed the world’s cheapest car, which has been struggling in a competitive market.

A bachelor, Tata is set to continue to pursue his passions for fast cars, flying, books and his dogs.

“I will not disappear. You will continue to see my face whether you like it or not,” Tata told emotional shareholders earlier this year. AFP

Comments (3)

  1. Added 12:56 December 27, 2012

    Remarkable man with great vision and love for the people.

    Subra, Abu Dhabi, United Arab Emirates

  2. Added 11:12 December 27, 2012

    A legendary figure whose legacy will be heard for years and years!

    Hussain, Dubai, United Arab Emirates

  3. Added 09:14 December 27, 2012

    Indeed a remarkable achievement! The name has always been there, but to have the courage and skills to expand and extend to a Global Market is the main feather on this gentleman's hat. Hats off to you!

    Siraj Nettikkadan, Dubai, United Arab Emirates

Gulf News
Retail Gold Rate
Business Editor's choice
Quick Access

  1. Markets

  2. Economy

  3. Property

  4. Aviation

Business Top Stories

  1. Dubai to tap into Africa growth

  2. Emirates to change chief of Angolan carrier

  3. 4K TVs have become affordable now, retailers say

  4. National Bank of Fujairah launches NBF Islamic

  5. Watchdog launches probe into Tesco profit error