Ratan Tata, the chairman emeritus of Tata Sons, the principal investment holding company and promoter of Tata Companies, has passed away in Mumbai India. Tata, who was 86, has left behind a lasting legacy and helped the group become a global behemoth. Here’s how he contributed to the conglomerate’s success and why he is regarded as the most respected businessman in India.
To begin with, let’s look at the history of Tata Group and how Ratan Tata helped it grow into one of the largest companies in the world.
One of the stalwarts and icons of modern India, Ratan Tata, who was the former chairman of TATA group, breathed his last at the age of 86 in Mumbai's Breach Candy Hospital. He was one the leading industrialists in Indian history, and had earned respect from people of all walks of… pic.twitter.com/yP0l7p9J75
— Mirror Now (@MirrorNow) October 10, 2024
History of Tata Group
Tata Group was founded in 1868 as a trading company by Jamsetji Nusserwanji Tata. The group soon ventured into textile manufacturing and opened the iconic Taj Mahal Hotel in Mumbai (then Bombay) in 1903. When he passed away the next year, his son, Sir Dorabji Tata, took over the baton as the chairman of the group.
In 1907, the group established Tata Iron and Steel Company which went on to set up India’s first steel plant. The same year it opened an office in London, taking the group global. In 1917, the group got into the consumer products business. In 1932, the group founded Tata Airlines, India’s first commercial airline. While the airline was later taken over by the Indian government and nationalized as Air India, Tata acquired the debt-laden company in January 2022.
Meanwhile, the group continued to venture into new industries, incorporating Tata Chemicals in 1939. Six years later, it incorporated Tata Engineering and Locomotive Company. This company went on to become Tata Motors and, eventually released the first truly Indian passenger car named Indica. In 1962, the group founded a beverage company Tata Finlay which later became Tata Tea and subsequently Tata Global Beverages.
In 1968, it formed a software services company named Tata Consultancy Services (TCS) which has since grown into the biggest company in the group and accounts for the bulk of its profits. TCS continues to remain the bedrock of the group and is the second-largest listed company in India.
Between 1968 and 1991 when Ratan Tata became the company’s chairman, the group diversified into other industries like salt, and watches.
Ratan Tata Became the Chairman in 1991
Ratan Tata, who was born to Soonoo Tata and Naval Tata in 1937, joined the Tata Group in 1962 after completing his graduation from Cornell University in the US. He served in various positions at Tata Group companies and in 1983 drafted the group’s Strategic plan. In March 1991, he succeeded JRD Tata to become the group chairman.
Those were interesting times for India and the country was beginning the path of economic liberalization, leading it to become the world’s fifth largest economy. Ratan Tata remained the group chairman until 2012 in those 21 years the group’s profits soared 51x while the market cap jumped 33x.
Ever since he took over as the group chairman, Ratan Tata began restructuring the conglomerate which had nearly 100 companies. In their paper, for the prestigious Indian Institute of Management Bangalore, K.S. Manikandan, K. Rajyalakshmi, and J. Ramachandran said that Tata group was a “slow, bureaucratic, domestic market focused, loosely connected agglomerate of businesses,” before Ratan Tata took over, who transformed it into a “ambitious, integrated business house.”
Ratan Tata expanded Tata’s business into new segments and countries while at the same time consolidating the business which had become too complex and fragmented. Under his leadership, Tata launched the Tanishq jewelry brand which has since grown into the biggest jewelry chain in India.
Ratan Tata Took the Group Global
While the group had a global footprint even before he took over, Ratan Tata made the company a truly global enterprise, and now the bulk of its revenues come from global markets, with TCS serving countless clients across the world.
Under Ratan Tata’s watch, the group became ambitious and made several key acquisitions. These include.
- Tetley in 2000 which helped the company become a global player in the tea market
- Jaguar and Land Rover in 2008 which helped establish the group in the league of global luxury automakers.
- Corus Steel which made Tata Steel among the top steelmakers in the world.
Ratan Tata conceptualized a small car named Nano. Priced at a mere $2,500, the “People’s Car” was unveiled in 2008 and was touted as the cheapest car in the world. However, the project was among the rare failures in his otherwise brilliant stint as the chairman of Tata Group.
As of March 31, 2024, the group had 26 publicly listed companies with a combined market capitalization of more than $365 billion. There are many unlisted companies in the group as well, especially in the fast-growing ecommerce sector. Ratan Tata also invested in several startups personally.
I am unable to accept the absence of Ratan Tata.
India’s economy stands on the cusp of a historic leap forward.
And Ratan’s life and work have had much to do with our being in this position.Hence, his mentorship and guidance at this point in time would have been invaluable.… pic.twitter.com/ujJC2ehTTs
— anand mahindra (@anandmahindra) October 9, 2024
What Does Ratan Tata’s Death Means for Tata Group?
Ratan Tata briefly returned as the interim chairman of Tata Group in October 2016, in early 2017 he relinquished the post with Natarajan Chandrasekaran stepping into his shoes. Ratan Tata has been holding the position of chairman emeritus.
Notably, Tata Group shares spiked today as Indian investors piled into the shares as a mark of tribute to the visionary leader who is widely respected and has mostly stayed away from politics and controversies.
While Ratan Tata aggressively expanded the Tata empire globally, he did so without compromising on the group values and the conglomerate is the most respected big business group in India known for its commitment to all stakeholders – including employees, shareholders, suppliers, and customers.
Meanwhile, since Ratan Tata had relinquished the leadership role and the group companies are professionally run, his demise should not have much impact on Tata Group shares. That said, since he did not have a successor, markets are now debating who would succeed him. His half-brother Noel Tata and his children Leah, Maya, and Neville are being touted as potential successors.
All said, with Ratan Tata’s demise, India has lost a great visionary and philanthropist and it would be difficult for any other business leader to earn the same respect as he did for years.