Financial Daily from THE HINDU group of publications
Tuesday, Apr 27, 2004
Tata: Driving values into business
Shyam G. Menon
A view of Bombay House, headquarters of the Tata Group.
FINANCIAL year 2004 must have brought the smiles back at Bombay House, the headquarters of Tata Group.
Key Tata companies have fared well, quarterly profits have been good and year-end figures are expected to follow the trend.
Restructuring has helped major Tata companies weather downturns. But as it satisfies markets and investors, can the group resist pressures for a character change? Or, should it yield?
Last October when two temporary workers engaged previously in a Tata Power project attempted self-immolation in front of Bombay House, it brought out the darker side of economic growth.
The soot stains on the road where the workers fell, betrayed pain within a booming economy and a plea to those best placed to address it.
Bombay House, after all, is headquarters to the Tata Group. For most, Tata is synonymous with humaneness.
Mr Ratan Tata
Thus, despite bigger companies coming up, Mr Ratan Tata remains one of the most respected industrialists.
He was less than a year into his role as Non-Executive Chairman of the Group when the incident happened. In December 2002, on turning 65 he relinquished executive powers in line with the group's policy.
Deemed a technical change the late J. R. D. Tata was non-executive chairman for many years the slight shift to his designation was nevertheless a time to retrospect for those tracking Mr Ratan Tata's tenure at Bombay House.
Coincidentally, just a few days before the change occurred, Tata Motors unveiled the Indigo sedan, further vindicating its foray into car manufacturing.
In 1988, soon after assuming chairmanship, Mr Tata tackled a labour crisis at the company.
Tata Motors' subsequent journey through a risky car project to its becoming one of the world's top truck makers and among India's top three car manufacturers encapsulates the nature of change Mr Tata wants at the group.
Taking over a conglomerate, in which some companies were ruled by longstanding helmsmen who had fashioned them into personal fiefdoms, Mr Tata's central achievement was putting the glue back into the group.
This seemed to be done in tune with modern reality, reposing reduced emphasis on the promoter's identity, bonding instead through ownership and shared values.
The promoter's stake in key Tata companies was increased and membership to the group rooted in codes of functioning and adherence to brand values. The group made solid progress with its old economy companies Tata Steel has a new cold rolling mill, Tata Motors has entered the cars sector and Tata Tea has acquired Tetley.
There were exits too, as from Tata Oil Mills Company, Lakme, ACC and Tata Infomedia. There were also slip-ups, prominent being the troubles at Tata Finance and Rallis.
But on the upside, the Tatas became a leading player in telecom through VSNL and Tata Teleservices, while IT-major Tata Consultancy Services continues to fare well.
At several AGMs, Mr Tata highlighted the need to make the companies competitive. Luckily for him, in certain cases the revitalising of the company coincided with India's economic growth.
Why, then, the suicide attempts before Bombay House? The answer probably lies in the tradition of charity which the Tatas cannot stop overnight. Homi Modi Street, where the Bombay House stands, should have been the last place for such a protest, yet by the same yardstick it is the most effective to drive home a message. Jamshedpur is the biggest social cause the Tatas have supported.
But even in Mumbai where money was never in short supply, Bombay House was a regular port of call for those with a dream but no resources.
From charity organisations to mountaineering expeditions, from hospitals to cultural programmes and sporting events all list Tata among the resource providers.
These values contributed to the Tata brand image, and in a group where the promoter and brand share the same name it influenced how senior company officials were seen in public.
In fact, it will not be wrong to suggest that even as the group chases profit, the respect attached to the Tata name stems from a perceived reluctance to pursue profit for profit sake.
It is not easy for the group to dilute the image, though today's economic scenario demands nothing but professional focus. Mr Tata has put the structural glue back in the group, given it the ability to reward investors.
But public perception depends on how much the Tata character may change amidst the ascent of the economy.
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