Ratan N Tata – Man of the Year 2008
The launch of the revolutionary Tata Nano and the acquisition of Jaguar Land Rover wins the visionary Ratan N Tata our award,
We are well aware that this year has witnessed the Singur imbroglio which left the Nano homeless, the chronic global recession which threatens to make Jaguar Land Rover a white elephant, and the collapse of the Indian auto market which has been disastrous for Tata Motors.
Ratan Tata’s catastrophic year reached an all-time low with the Mumbai terror attacks of 26/11 that struck straight at his heart. The heinous assault on the Tata Group’s Taj Mahal Hotel is something that will always haunt him.
But all these distressing events cannot undo what Ratan Tata has accomplished in 2008.
The launch of the Nano and the buyout of Jaguar Land Rover not only put Tata Motors on the world map but also gave India a new-found respect and proved that our nation’s automotive industry is a force to reckon with.
It was just under a year ago that the Nano rocked the world after it was unveiled at the Auto Expo in January 2008. It was the manifestation of Ratan Tata’s dream to offer a true ‘People’s Car’ without any serious compromises. “The original plan was to make the car to quadricycle standards and initially we were looking at a car with no doors and just a bar for safety. We then decided that the car shouldn’t be a compromise or an excuse for a car. It should be a proper four-door car that will comply with the same safety and emission standards that apply to other cars,” said Tata.
Making a proper car as opposed to what was originally conceived to be an auto rickshaw with a fourth wheel was a completely different ball game. It was a completely different price game too.
The cost of meeting even the base safety standards and Bharat Stage III emission norms was sure to send costs spiraling upwards, but Tata was adamant not to shift the price point. Skeptics said it was impossible to produce a full-fledged car for Rs 1 lakh but Tata proved the naysayers wrong and stuck to this magical price which sent shockwaves from Delhi to Detroit.
‘How could Tata make a car so cheap?’, asked a stunned automotive industry. It was the challenge of the century. “I pushed our engineering team to come up with innovative solutions to meet this price target and I am proud of what they have achieved,” said Tata. In fact, the Nano is a showcase of India’s expertise in frugal engineering, a term made fashionable by Carlos Ghosn.
However, it is the Nano which has completely shifted the goalposts as far as costs go and no other company has dared to announce a true Nano rival.
However, Tata’s blueprint of a ‘People’s Car’ has inspired global companies to offer their take on the same concept and this is truly remarkable. Volkswagen, Hyundai, GM, Fiat and Renault-Nissan have all joined the race to make a car that is smaller and cheaper than anything that exists in their present model range.
Ratan Tata has shown the world that small is big and this wasn’t more evident than at the last Geneva Motor Show in March where the Nano made its international debut. The Tata stall was mobbed and Ratan Tata was the man of the moment with CEOs of global car companies queuing up to meet him.
In contrast the Chinese stalls went largely unnoticed. Not many paid attention to cars that were essentially blatant copies of defunct Japanese models. Thanks to Tata, the might of China’s auto industry seemed squarely beaten by Indian ingenuity. The Nano also emphasised India’s prowess with budget cars and its prominence as a small car manufacturing hub was further underscored.
The Nano has also spawned (the Singur hiccups notwithstanding) a thriving low-cost vendor base that global manufacturers are sure to feed upon. Hyundai, Fiat, GM and Bajaj-Renault-Nissan are sure to source parts for their range of ultra-low cost cars from the Nano’s suppliers.
The most amazing thing is the impact the Nano made even before it was launched. The fact that it was Ratan Tata’s baby is one reason, but it’s the fact that a car could be made at an impossible price that truly caught global attention.
In 2008 Ratan Tata also did what would have seemed impossible a few years ago; he bought Jaguar and Land Rover. For an Indian company to buy a global giant was unheard of but then it’s a trend Tata started in 2000 when his Tata Group bought out tea giant, Tetley.
Since then, the Tata Group has been in an acquisitive mode and the Corus buyout by Tata Steel for US$ 11.3 billion was the biggest in corporate India.
Buying Jaguar Land Rover for US$ 2.3 billion seemed puny in comparison, but it’s the biggest deal in the Indian automotive industry.
The long-drawn-out transaction was eventually wrapped up in June 2008 and at the handing over ceremony of the two brands at Gaydon in the United Kingdom, which is Jaguar-Land Rover headquarters, Tata said: “This is a momentous time for all of us at Tata Motors. Jaguar and Land Rover are two iconic British brands with worldwide growth prospects. We are looking forward to extending our full support to the Jaguar and Land Rover teams to realise their competitive potential.” Tata’s main task was to assure the JLR work force that it was in safe hands.
Along with Tata Motors’ managing director, Ravi Kant, Tata toured three manufacturing plants of Jaguar and Land Rover and with his characteristically honest and humble approach he disarmed and won over the workforce. “In total we must have met over 2,000 people. We were very open with them and we didn’t feel any resentment at all. We met the unions as well and came away with a feeling of great warmth,” said Tata.
According to company insiders, the top management of previous owner Ford had never bothered to engage with the workforce while Tata’s visit came within weeks of buying the company!
Tata was keen to establish a positive feeling about the takeover within the company and lay any apprehensions to rest.
Despite a severe lower back injury which had earlier forced Tata to take complete rest for a few weeks, he flew to the US jetting from New York to Miami, San Francisco and Los Angeles to meet dealers who represented around 50 percent of sales in the crucial US market.
Some dealers had reservations about Jaguar Land Rover being Indian-owned, which Tata quickly laid to rest. “We met some of the dealers who were apprehensive about us, but now they are our staunchest supporters,” said Tata.
He added, “Meeting the dealers was the most exhilarating part for me, because the dealers felt for the first time that somebody from the management was listening to them. They are now engaged and they are looking at some of our products and have given their inputs on what the products should be. We may not be able to satisfy them completely, but at least somebody is listening to them.”
The good guy
It’s this compassion and empathy that truly sets Ratan Tata apart from most other industrialists. The sheer benevolence with which he conducts business is an intrinsic part of the 140-year-old Tata Group which is ringed by charitable trusts and has a strong commitment to nation-building.
Ratan embodies his Group’s ethos and has served as an inspiration for thousands of employees. Tata says: “There has to be a belief that what you are doing is not just for the money or grandiose reasons. Business should not be done for ego but because you think that you are doing something that is genuinely worthwhile. Then even if you fail, you know what you did was for the right reasons and that is motivation enough to somehow make it work.”
The Nano is a shining example of Tata’s desire to do things for the greater good. Distressed by the sight of families with small children on motorcycles and scooters, Tata saw a desperate need to provide millions of Indians with a significantly safer mode of transportation. Rising material costs and a change in plan from quadricycle to contemporary car, made it seem impossible to meet the target price of Rs 1 lakh. Tata didn’t budge.
The base Nano was launched at an ex-dealer price of exactly Rs 1 lakh because as Tata said in his historic announcement, “A promise is a promise.” This announcement gave the bean counters in Tata Motors nightmares but the phenomenal PR and goodwill Tata’s commitment to the Rs 1-lakh price generated has been invaluable.
Tata was the toast of global industry. Tata’s alliance with Italian carmaker Fiat is yet another example of his desire to help rather than looking at it as a pure business deal. In fact, when Tata decided to tie up with Fiat, it was at a time when the Italian carmaker was on the brink of collapse. “Fiat had gone down because of some horrible products, but later I could see they had some terrific products coming out which eventually turned them around,” said Tata.
However, he is quick to add that his alliance with them was not dependent on the company’s health. “We have a great deal of empathy for the Agnelli family, Luca (di Montezemolo) and Sergio (Marchionne) and even if they weren’t successful, I would have gone with them.”
A little known fact is that Fiat, on the verge of collapse in India, approached Tata to salvage the situation. “Luca asked us for help but I told him that he would have to listen to us and understand what they had done wrong in India. Luca was willing to understand and agreed to do things differently with us and said let’s do it together to which I said, of course, let's do so.” This was the start of a relationship that has only become stronger. Ratan Tata is now on the Fiat board and is constantly exploring ways to maximise the synergies with Tata Motors.
In fact, after Tata took over Jaguar Land Rover, there has been talk of looking at a wide range of cooperation between the British brands and the Fiat Group.
In a much smaller way, Tata’s largesse and eagerness to help resulted in India producing its first Formula 1 driver. Not many know that it was Ratan Tata’s desire to see an Indian on the F1 grid that gave Narain Karthikeyan the break to create history.
Tata’s sponsorship of Narain made good business sense too. The Tata brand piggy-backed on this high-profile sport and fitted in well with the Group’s global aspirations. Again, Tata did not do this for any personal gratification. Unlike Vijay Mallya, who has used Force India to feed his larger-than-life image, Ratan Tata, out of courtesy, went to just one grand prix and stayed in the background throughout Narain’s one and only F1 season in 2005.
In fact, it is this humble and down-to-earth character of Ratan Tata that has endeared him to many. Compared to other industry barons, his lifestyle is exceedingly modest and he lives alone as a bachelor in a regular flat in south Mumbai. Yes, he does have his interests like his cars and flying, but he is finding it increasingly difficult to find spare time for himself. And that spare time will only get less.
2009 promises to be the most challenging year for Ratan Tata as he will have to battle a recession, the likes of which we have not seen in generations. What he has achieved in 2008 is already being put to the test, but under that shy and introverted exterior is a steely resolve to succeed, especially if it’s something he believes in.
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