Last week, the house of Tata’s announced its intention of acquiring Jaguar and Land Rover.The timing was very auspicious because the announcement came with the Indian Independence day around the corner.With this one move Tata Motors could become an extremely prominent player in the world automobile market.
With the acquisition of Corus, the house of Tatas became the largest business group in India.This position was lost by them to the Birlas in the 1970s.For several decades the business house set up by Jamshedji Tata was the number one business house in India.Over the years it lost its prominent position due to various factors including government policy.
New business houses like Reliance overtook them because they were better at managing the environment.When the economy started opening up most analysts wrote off the Tatas.Several factors were against them:
The Tatas were in actual practice not a group but a federation of large companies run by power Satraps.In each of these companies the Tatas held a minority stake.
–Most companies were in traditional businesses and had absolute technologies and operated in a high cost environment.
Ratan Tata who had taken over as Chairman lacked the acceptance and charisma of JRD Tata.The first five years were very painful because Ratan had a very messy succession where all the satraps had to leave.Tata Motors incurred the highest loss in its history and in the History of Indian’s private enterprise.Tata finance underwent a messy financial scandal which bankrupted the company.In all the gloomy scenario Tata and his team of handpicked Managers were crafting a strategy of turnaround.This involved selling of businesses where they felt they could attain leadership.Consolidating businesses where operations were similar.Cutting costs ruthlessly and modernizing.Along with this Tata Sons which was the holding company continued to increase its stake in group firms to ensure consolidation at a group level.The last phase has unfolded now where Tata Companies are aggressively expanding and acquiring companies all over the World thereby becoming truly global in terms of size and scale.
They therefore can count themselves to be a truly global company in Software, Commercial vehicles, Beverages, Chemicals, Communications, Hotels and now steel.The acquisition of Corus steeel was a proud moment for Tata as well as for Indian Industry. With this take over Indians were recognized as business leaders all over the World.This is even more important because the company which is also the largest producer of Steel in the World is also controlled by an Indian namely Mittal Steel.Acceptance of Indian companies by European companies is a landmark because of the sophistication of the European markets.
Interestingly the Board of Corus steel unanimously voted in favour of Tata Steel. Could the same happen for Jaguar and Rover?This is in no small measure an acceptance of their business acumen but also an acceptance of their work culture which is based on ethics and sense of transparent corporate governance.As the month of Independence begins in India, Indians are proud of this achievement of Tatas.Seventy years ago when Jamshedji Tata wanted to set up a Steel Plant in India the then viceroy had remarked that Indians were incapable of such enterprise and if Jamshedji succeeded he would eat the steel. Now it might be the turn of cars.
If the gentleman was alive today he would surely have suffered a severe indigestion. Tata has proved that he is truly a man of India and all Indians would love to join him on his quest for greatness.
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