I remember Ratan Tata's global ambitions

Ratan Tata, the philanthropist and former chairman of the Tata Group, who has died aged 86, played a crucial role in the globalization and modernization of one of India's oldest business houses.

His ability to take bold and bold business risks shaped a head-turning acquisition strategy that kept the salt-to-steel conglomerate founded by his forefathers 155 years ago even after the liberalization of the Indian economy in the 1990s.

At the turn of the millennium, Tata made the largest cross-border acquisition in Indian corporate history – the purchase of Tetley Tea, the world's second largest tea bag manufacturer. The iconic British brand was three times the size of the small Tata Group company it had bought.

In the years that followed, his ambitions grew as his group absorbed major British industrial giants such as steelmaker Corus and luxury car maker Jaguar Land Rover.

While the acquisitions didn't always pay off – Corus was bought at very high valuations just before the 2007 global financial crisis and weighed on Tata Steel's performance for years – they were still big power moves.

They also had a great symbolic impact, says Mircea Raianu, historian and author of Tata: The Global Corporation That Built Indian Capitalism. He adds that they “represented the empire's strikeback, as a company from a former colony took over the mother country's valuable assets, reversing the derisive attitude with which British industrialists viewed the Tata Group a century earlier.”

According to Andrea Goldstein, an economist who published a study in 2008 on the internationalization of Indian companies with a particular focus on Tata, the Tata Group's orientation was “outward-oriented” from the start.

Tata companies were already working with foreign partners in the 1950s.

But Ratan Tata was interested in internationalizing “in giant steps, not in symbolic, incremental steps,” Ms. Goldstein stressed.

His unconventional training in architecture and broad perspective on his family group's businesses may have played a role in how he thought about expansion, Mr. Raianu says. But it was the “structural transformation of the group” he led that enabled him to realize his vision of a global presence.

Tata had to fight an extraordinary corporate battle at Bombay House, the group's headquarters, when he took over as chairman of Tata Sons in 1991 – an appointment that coincided with India's decision to open its economy.

He began centralizing increasingly decentralized, domestically focused operations by opening the door to a series of “satraps” (a Persian term for an imperial governor) at Tata Steel, Tata Motors and the Taj Group of Hotels, who ran the operations ran the holding company without much corporate oversight.

This allowed him not only to surround himself with people who could help him realize his global vision, but also to prevent the Tata Group – hitherto protected from foreign competition – from falling into insignificance as India opened up sank.

He appointed foreigners, non-resident Indians and executives with contacts and networks around the world to the management team both at Tata Sons, the holding company, and at individual groups within it.

He also founded the Group Corporate Center (GCC) to provide strategic direction to the group companies. It provided “advisory support on M&A (mergers and acquisitions), helped group companies mobilize capital and assessed whether the target company would fit with Tata's values,” researchers at the Indian Institute of Management in Bangalore wrote in an article in 2019 2016.

The GCC also helped Tata Motors raise money for high-profile acquisitions such as Jaguar Land Rover, dramatically changing the global perception of a company that was essentially a tractor maker.

“The JLR takeover was widely seen as 'revenge' on Ford, which had derisively refused to take over Tata Motors in the early 1990s and was then beaten in the deal by Tata Motors. Taken together, these acquisitions suggested that Indian companies had “arrived” on the world stage as growth rates increased and liberalizing reforms bore fruit,” says Mr. Raianu.

Today, the $128 billion group operates in 100 countries, with a significant portion of its total revenue coming from outside India.

While the Tata Group made significant progress abroad in the early 2000s, the company failed at home Tata Nano – introduced and marketed as the cheapest car in the world – was a setback for Tata.

This was his most ambitious project, but this time he had clearly misjudged the Indian consumer market.

Brand experts say that emerging India did not want to be associated with the 'cheap car' tag. And Tata itself eventually admitted that the “poor man’s car” label was a “stigma” that needed to be removed.

He believed there could be a resurrection of his product, but the Tata Nano was eventually discontinued after sales plummeted year on year.

Succession at the Tata Group also became a sensitive issue.

Mr Tata was far too involved in running the group after his retirement in 2012 through the “back door” of the Tata Trust, which owns two-thirds of the shares in holding company Tata Sons, experts say.

“Without blaming Ratan Tata, his involvement in the succession battle with (Cyrus) Mistry has undoubtedly tarnished the group's image,” Mr Rainu said.

Mistry, who died in a car accident in 2022, was ousted as Tata chairman in 2016 after a boardroom coup that triggered a protracted legal battle that the Tatas eventually won.

Despite his many failures, Tata retired in 2012, leaving the vast empire he inherited in a much stronger position both domestically and globally.

In addition to major acquisitions, his drive to modernize the group with a strong focus on IT has served him well over the years.

When many of his big bets failed, one high-performing company, Tata Consultancy Services (TCS), along with JLR, carried the “ballast of other struggling companies,” Mr. Raianu says.

TCS is now India's largest IT services company and the Tata Group's cash cow, contributing to three-quarters of its revenue.

In 2022, Tata Group also took back control of India's flagship airline Air India, some 69 years after the government took control of the airline. For Ratan Tata, a trained pilot himself, this was a dream come true but also a bold bet considering how capital intensive it is to run an airline.

But the Tatas appear to be in a stronger position than ever to make big, bold bets on everything from airlines to semiconductor manufacturing.

India under Prime Minister Narendra Modi appears to have clearly pursued an industrial policy of creating “national champions,” building and nurturing a few large conglomerates to deliver quick economic results across priority sectors.

Along with newer industrial players like Adani, the chances are clear that the Tata Group will benefit.