How Ratan Tata turned a family business into a global behemoth

Ratan Tata, one of India’s most powerful and admired magnates, who transformed his family’s business conglomerate, the Tata Group, into a multinational corporation with globally recognisable brands, died on October 9 in Mumbai. He was 86.The Tata Group announced his death in a statement, which did not specify a cause. He had been treated in a critical care unit of a hospital, Reuters reported.During his 21 years as chair and chief executive, from 1991 to 2012, the Tata Group’s profits multiplied 50 times, with most revenues coming from sales abroad of such recognisable Tata products as Jaguar and Land Rover vehicles and Tetley teas.Despite the conglomerate’s international outreach, its impact at home remained greater than ever under Tata’s leadership. For middle-class Indians, it was almost impossible to get through the day without buying Tata goods and services. They awoke to Tata tea, surfed the internet with Tata Photon, watched Tata Sky programmes on television, rode in Tata taxis or drove their own Tata cars, and used uncounted products made with Tata steel.Beginning in the 2010s, other family-led business groups rivalled or overtook the Tata Group in revenues and valuation. But none of the new magnates enjoyed the public esteem of Ratan Tata, who was renowned for disbursing a majority of his wealth to philanthropy and for his investments in startup businesses by young, underfinanced entrepreneurs.The unusual ownership structure of the Tata Group added to Ratan Tata’s allure. The parent company, Tata Sons, held the majority shares and was itself two-thirds-owned by philanthropic trusts endowed by Tata family members.Tata preferred to stay out of the limelight and projected a public image of a shy loner, a man who never married or had children. But he became ensnared in a major controversy late in his career when he persuaded Tata’s board to oust his hand-picked successor. The ensuing legal controversy took years to resolve and was a subject of constant media attention. medium nocaptionhttp://youtu.be/ht6ISXdExPA?si=KqXW64_T8FRuyqQ-Ratan Naval Tata was born on December 28, 1937, in Bombay during the British Raj. His family belonged to the Parsis, a small ethnic community whose Zoroastrian ancestors fled persecution in Persia centuries ago and found refuge in India. Tata became a leader of that community.The Tatas made their fortune in the 19th-century opium trade with China and in textile mills. By the time, Ratan’s father, Naval Tata, rose to become deputy chair of the family business, the Tata Group was entrenched in scores of manufacturing and commercial enterprises.Naval Tata married a cousin, Sooni Tata, but they separated when Ratan and his younger brother, Jimmy, were still children. Both boys were raised and adopted by their wealthy paternal grandmother.“I had a happy childhood, but as my brother and I got older, we faced a fair bit of ragging and personal discomfort because of our parents’ divorce, which in those days wasn’t as common as it is today,” Tata recalled in a three-part Facebook interview posted in 2020.He grew up in a white Baroque revival-style building in Mumbai known as Tata Palace, with a staff of 50 servants, and was driven to school in a Rolls-Royce. He was sent to the US for high school at the Riverdale Country School in New York City. He graduated from Cornell University with an architecture degree and later took management courses at Harvard University Business School.Tata maintained a subdued social life. He devoted much of his leisure time to driving sports cars, piloting planes and racing his speedboat out of the harbour near an apartment he kept in Mumbai.His survivors include his stepmother, Simone; his younger brother, Jimmy; a half brother, Noel; and two half sisters, Shireen and Deanna Jejeebhoy. medium114107966Tata joined the family business in 1962, initially working on the shop floor of Tata Steel. He then rose steadily through management positions. His single setback was at the conglomerate’s troubled electronics subsidiary, which he initially succeeded in turning around only to have it collapse during an economic slowdown. Years later, the subsidiary, Nelco, again became profitable, especially in satellite communication.In 1991, JRD Tata stepped down after a half-century as chair of Tata Sons and the Tata Group, and turned over leadership of the conglomerate to Ratan Tata, who belonged to a different branch of the Tata family.The succession was bitterly opposed by other Tata family members and business managers. “JRD got clubbed with nepotism and I was branded as the wrong choice,” Tata said in his Facebook interview.Tata quelled resistance and consolidated his leadership by forcibly retiring older Tata executives (softening the blow with generous pensions), making subsidiaries report to the group office, and embarking on a globalisation of the family businesses.He tapped into a nationalistic groundswell by pursuing a so-called “reverse colonialism” — the acquisition of British-based brand-name companies like Jaguar, Tetley and Corus Steel.“Britain has become an ‘insourcing’ hub for Ratan Tata: a base for foreign operations of an Indian multinational,” The Guardian wrote in a 2008 article.In another popular move, Tata spearheaded the production in 2008 of the Tata Nano, the world’s cheapest car, with a ₹1 lakh price within reach of the average middle-class Indian consumer.On turning 75 in 2012, Tata surrendered his executive functions in the Tata Group. In what was supposed to be a smooth transition, he appointed as his successor Cyrus Mistry, 44, whose family was the largest individual shareholder in the conglomerate.Instead, the succession turned into the most high-profile corporate controversy in India’s recent history. As they had two decades before when Ratan Tata was named the group’s successor, other Tata family and board members opposed the choice of Mistry. But with Ratan Tata’s support, Mistry won out. medium nocaptionhttp://youtu.be/_BM2HnwqxHY?si=kKJrkzlp9xcKar53Over the next few years, however, tensions mounted between Mistry and Tata, who still exercised strong influence as chair of the Tata Trusts, which controlled most of the conglomerate’s shares. Mistry divested several businesses that Tata had supported, and Tata disapproved of Mistry’s handling of the group’s international steel business and telecommunications ventures.In October 2016, less than four years after being appointed to head the Tata conglomerate, Mistry was ousted by Tata’s board with the full backing of Ratan Tata. Tata retook his position as chair of the conglomerate until a successor was named by the board in February 2017.But Mistry did not go quietly. He sued the Tata Group on the grounds that his removal was illegal. His allegations that the board fostered nepotism, ignored minority shareholders and tolerated misdeeds were given often sensational media coverage over the next five years.Initially, the courts ruled in Mistry’s favour. But in 2021, the Supreme Court finally affirmed the legality of Mistry’s dismissal, ending the saga.The controversy detracted attention from Tata’s far-reaching philanthropies. In India, he disbursed much of his personal fortune on education, health and agricultural projects for poorer Indians. In the US, he and Tata Trusts contributed millions of dollars to several universities — including his alma maters Cornell and the Harvard Business School — for research facilities and scholarship programmes that carry the Tata name.Enterprise and philanthropy had been at the heart of the Tata empire since its inception in 1868 by its founder, Jamsetji Tata. Jamsetji’s factories were among the first in the world to invest substantially in employee welfare, and he and his two sons left most of their estate and shares in the company to charitable trusts.Tata backed more than 50 startup companies in India, including e-commerce and digital payments platforms and an online lingerie retailer. But his favourite was a startup called Goodfellows, which encouraged friendships between older and younger Indians in business and other professions.At the launch of Goodfellows in Mumbai in 2022, he told an intergenerational audience, “You don’t mind getting old until you get old, and you find it’s a difficult world.”