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The Rediff Business Interview/Ratan Tata

'I would like to be remembered for re-positioning the group as a world-class organisation'

Ratan Tata is in the news again. This time, with a snazzy new passenger car, an utility vehicle to rival the Pajero, and a spanking new imagery for the Tata Group. Designed by an international consultant. All part of the new mantra at Bombay House. Globalisation. In a rare, full-length interview with Pritish Nandy, the chairman of the India's largest and most respected corporate house puts forward his arguments for meeting the world head on. As equals. In a free economy buttressed by political stability.

How do you see the global economy evolving in the new millennium?

The trend is towards closer integration of economies and reduction in the level of disparity between the industrialised and developing countries. Concentration of global economic activity in this century in Europe, North America and Japan is likely to change in the next century, with Asia emerging as the most significant centre of economic growth and development.

There is, however, the possibility of trade being divided along the various trading blocs, unless managed otherwise. Much will therefore depend on how successfully an institution like the WTO is able to manage differences between different countries and economic groupings, and establish regimes that encourage co-operative behaviour to the common benefit of all countries.

What do you see as India's role in this? What will be our strengths, our weaknesses, the challenges before us?

We can be a major player in the global economy. Being part of the region that is likely to be the nucleus of world economic growth in the next century. India, along with China, will be one of the key players.

India's main strengths are its democratic set-up, its natural resource endowments, its human capital, the size of its market. Our major challenge lies in creating an economic environment within the country in which Indian enterprise can thrive, uninfluenced by subjective and discretionary application of the regulatory framework.

Indians have done tremendously well overseas and given the right climate, there should be no reason why Indian industry should not see the same kind of gains here.

Do you envisage a quickening of the pace of liberalisation, structural reforms?

Yes, provided there is stability in our political system.

What are the opportunities you feel we, as a nation, have missed?

Most importantly, in my view, we failed to address the issue of population control before it became a major problem. On the economic side, we failed to realise the role that private enterprise could play along with the public sector in bringing economic prosperity to the nation. It took a near crisis in 1991 for the country to embark on a path which should have been chosen at least two decades ago.

How should we focus on the future if we are to become key players?

We first need to collectively recognise that we have the capability to become significant global players. Then we need to work together towards achieving a well-planned vision for the future. Our emphasis needs to be on creating the right environment in which the talents of our people can be freely expressed. The role of the government in all this must be to facilitate the creation and maintenance of such an environment, through efforts such as the liberalisation of the economy, development of the infrastructure needed for rapid economic growth, and appropriate investments in education and public health.

How are the Tatas going to focus on the future?

We aim to reorganise the group along clearer, focused businesses each of which should achieve the potential to acquire a leadership position. We will continue to benchmark our performance with global majors and endeavour to provide the Indian customer the same experience through our products and services as he would experience in dealing with world-class industry players.

What are the changes you anticipate in the business environment? How will you cope with them?

I believe the most important change will be that the domestic business environment will increasingly witness the forces of global competition in operation. We will endeavour to maintain our leadership position through being more aggressive in the market, increasing shareholder value in our businesses, and by building on the power of our brand.

What do you see as your long-term strengths? What are your frailties?

The Tata group is known for its professional management and has an established brand equity. Its major operations are of sufficient scale, and it has financial resources to implement its plans for expansion of existing businesses or entry into new businesses.

The group's main shortcomings are that it has a presence in too many non-synergistic business areas, which prove to be a drain on our managerial and financial resources.

Do you have a crack team ready to translate your vision into reality?

I do not think one is looking at the creation of a separate crack team as such. The group has a wealth of managerial talent and leadership. The changed agenda has to be managed primarily with the existing team and the challenge lies in developing a shared vision which can be implemented by people who believe in it strongly. Ordinary people have the potential to reach extraordinary heights given the right inspiration and the environment, and my effort will be directed towards this very achievement.

Where do you see technology gaps? How do you plan to plug them?

By international standards, there are significant technology gaps in several of our operations, which is primarily a consequence of the protected environment in which we operated in the past. We are endeavoring to address these gaps by, as appropriate, buying technology, or developing it alone or with partners. A good example is Telco's new small car, which has been developed by us indigenously, with some inputs from overseas, and some foreign assistance taken to validate our own technological efforts.

Will you move out of important but sunset businesses like steel and cement?

These businesses may be viewed as sunset industries in the developed world but in a country like India, they are still -- and will continue to be -- on a growth curve. To answer your question, we still view steel and cement as businesses with a large potential in India.

How do you see the Tatas standing apart from the rest of Indian industry?

The Tatas have set an example of professionalism and value-based management which I am personally very proud of.

What will be the group's key image attributes, as you see them?

While preserving our traditional image of credibility, trustworthiness, and commitment to India's economic and social advancement, I see the group's image being additionally enhanced by attributes of modernity, and a presence that is internationally respected.

What will be the corporate structure of the group? How will it evolve?

There is a process underway to evolve a new corporate structure for the group. While I would not like to say more on this subject at this point in time, I would just like to mention that it will be a structure which will play a challenging and yet enabling role for our businesses to achieve their full potential.

Where are the exciting new challenges before your group?

Being market driven, enhancing shareholder value, maintaining above industry average growth would be amongst the most challenging tasks that we have.

Where lie the threats, the concerns, the uncertainties, the fears?

Our size, as much as it is an asset, could be our biggest weakness if it were to breed complacency and make us slower in responding to market needs.

What do you see as your enduring contribution towards the future of the group?

I would like to be remembered for re-positioning the group as a world-class organisation, while upholding our value system.

Can the Tatas emerge as dominant global players? In what kind of businesses?

Yes; I would hope many of the businesses continue to operate.

In what kind of businesses will Indian enterprise excel in the future?

Those which are knowledge based like software rather than those which are asset based. The opening up of the agro-sector to industrialisation also holds tremendous potential.

What are our strengths as a nation?

The fact that we have stayed together as a nation despite attempts by divisive forces. The perseverance power of our people is admirable in the way that the country has overcome several reversals, every time with a stronger sense of nationalism.

Interviews