The heir apparent to the house of Tatas
Business India — December 1981

The Tata companies retain a common flavor and take pride in being known as Tata Concerns despite the fact that, in some cases, the Tata ownership may be barely 3 per cent.

Early in October 1981, in what could only be described as an unexpected move executed in the characteristically quiet and unobtrusive style of the Tatas, J.R.D. Tata stepped down from the Chairmanship of Tata Industries to make way for Ratan Naval Tata to take his place. The question now on many a corporate watcher's mind seems to be - is he the heir apparent to the house of Tatas?

The question appears to be rhetorical though, for judging by all available indications this is a definite signal for succession. Although today Tata Industries, a wholly owned subsidiary of Tata Sons, and the erstwhile managing agency of the Tata Group, holds no executive authority, it is felt that the Chairmanship of Tata Industries, in which most of the chief executives of Tata companies are represented, is a stepping stone to the helm of the Tata group, and that it is only a matter of time before Ratan Tata takes over what is regarded as the group leadership - the Chairmanship of Tata Sons.

For Ratan Tata, the 44-year-old Cornell and Harvard educated son of Naval Tata, who has so far maintained a low profile within the Tata group as director in charge of Nelco and who claims that the appointment came as a pleasant surprise, the move has catapulted him into the limelight as the likely successor to the enviable job of heading India's largest group (in terms of assets) in the private sector.

Breathtaking Magnitude
The move to identify a successor does not, however, come as a total surprise. J.R.D. Tata (78) has for some time been indicating his desire to step down or, as Bombay House, the Tata headquarters, would have it, "step aside" from active responsibility. Succession planning however is not an easy task - and particularly so in the case of the Tatas, where the magnitude of the job involved is so breathtaking. The group's aggregate assets are valued at Rs. 1,539 crore (end 1980) and includes amongst its array of companies the largest and second largest corporations in India's private sector - TELCO and TISCO.

Considering, however, that Ratan Tata is one of the few members of the family actively involved in the companies in fact the only one from the younger generation - the other two, J.R.D. Tata and Naval Tata, both being in their late seventies - the choice might appear inevitable. But it has not really been so.

The Tata companies have been headed by professionals who have established themselves as undisputed leaders in their fields and the possibility of one of them taking over the top position in the group had not been ruled out. In fact, there has been considerable speculation on this issue, with the names of N.A. ("Nani") Palkhivala and Russi Mody, to name a few, being mentioned. Therefore, the final choice would appear to have been the result of considerable deliberation. And Ratan Tata in spite of being Naval Tata's eldest son has probably had to prove himself, so to speak to make the grade. The fact that he has not been projected so far as the likely heir also confirms the view that there was no 'inevitability' about his choice.

A factor complicating the succession issue further is the fact that the task involved - that of holding the group together - is by no means an easy one. It is unlike the situation in other family dominated groups where financial and legal bonds facilitate greater control.

In many ways, the Tata group of companies is unlike any other group in the country. The companies are loosely knit together with such independence and autonomy in operation that sometimes what they have in common appears to be the name alone. While they have been originally promoted as Tata enterprises, most of them have grown to an unrecognisable extent. And yet they retain a common flavour and take pride in being known as Tata concerns despite the fact that, in some cases, the Tata ownership may be barely 3percent. To explain this seemingly paradoxical state of affairs, it is necessary to trace the evolution of the Tata group.

The Growth Option
Shaped partly by force of circumstance and partly by choice, the Tata group of companies founded by Jamsetji Nusserwanji Tata started out on a modest scale in textiles, strictly like any other entrepreneurial venture. However, the desire to enter highly capital intensive areas like steel, which needed more finances than could be raised internally necessitated going public in a big way. The choice had to made between remaining closely held versus sacrificing control to step up growth. The growth option was chosen.

Instances of the other option being exercised are not absent. The Godrej group, for instance, has chosen to remain private even at the cost of forgoing rapid expansion. The Tatas have never let this consideration become a hindrance, and have in fact retained miniscule portions of the shareholding in the large enterprises they have promoted - much less than the holdings of other family groups which have gone public. Even in the holding company, Tata Sons, only 1.53percent of shareholding is held by the Tata family; with a major portion (80.9percent) held by trusts. And the holding company itself holds only a small proportion of shares of individual companies - a mere 3percent each in TELCO and TISCO, for example, 12percent in Indian Hotels and 19percent in Tata Chemicals and Tata Oil Mills.

Another feature that has distinguished the Tatas is that managerial control has also not been held within the family. Partly because there were fewer family members and partly because of a conscious decision to employ professionals, the Tata companies have come to be managed by professional managers who have become legendary figures in the Tata hierarchy. These include Sumant Moolgaokar, who has built up TELCO and Darbari Seth, who has nurtured Tata Chemicals. These people, have come to be considered as part of the Tata family with a strong sense of loyalty and identification with the Tatas.

Therefore, in effect, the Tata family itself maintained neither total financial or managerial control. Yet control was effectively, though subtly, maintained by the holding company, Tata Sons and its subsidiary investment companies through the mechanism of inter-corporate investments and interlocking directorships. The style of operation was that company A would own chunks of company B and these in turn would hold company C. The pattern of floating new companies has also been essentially to incorporate them as subsidiaries of existing companies, to be nurtured and developed by the parent companies. Once they have been ready to stand on their own feet they have been offered to the public. Thus in the early stages, the principal companies were fewer, and this facilitated easier control. Above all, the managing agency system prevailed and Tata Industries, a wholly owned subsidiary of Tata Sons, was the managing agency for all the Tata companies and the whole system was well in place. Within this framework, companies functioned independently but the holding company kept track.

The Holding Company
In 1970, the amendment to the Companies Act, abolishing the managing agency system is one single stroke, made the individual companies autonomous. Tata Sons remained the holding company and although its financial stake in the other Tata companies remained small, it has remained and will continue to be regarded as the controlling entity. And the Chairman of Tata Industries will continue to be regarded as the group Chairman.

The Tata's however claim that they do not qualify to be known as a group since the definition of a group would encompass ownership or managerial control, neither of which according to them lies with a single identifiable entity or group. For MRTP purposes, though, the Tatas have been classified as a group on the basis of the criteria of interconnected enterprises. And yet there are some obviously Tata promoted companies which do not qualify as Tata group companies according to this definition.

Still what has held the group together up to now is a group of people who have been loyal to the Chairman J.R.D. Tata, who is respected and listened to, and the goodwill and reputation for integrity and competence that Tatas have built up over the years. This enables them to exercise in the Tata companies management control far exceeding their ownership stake. Also, the shareholding pattern is such that the government (through the financial institutions) is the majority shareholder in most cases. Their representatives vote with the management except under unusual circumstances. Therefore, the effective equity that determines controlling interest is much less than 50percent in these instances. This holding is also widely dispersed among the public so that the controlling block, or the largest single minority, could be very small - in single digit figures. The reputation that Tatas have for competent management also insulates them against any threat of takeover because even the small shareholders are bound to rally behind the Tatas if such a situation arises. This is why, despite reports that the Birlas own more shares in TISCO than the Tatas themselves, no risk of takeover has been perceived.

There are, of course, two opinions on whether the group of companies is really staying together or gradually breaking up into genuinely autonomous units. On the one had, the Tatas are vulnerable to criticism that they have not maintained tight enough control. It is pointed out that as the companies in the group have grown larger, they have tended to drift apart in their interpretation of ideology and their approach to business opportunities, and have begun to reflect the thinking of their individual chief executives as distinct from that of the group leader(s).

In Their Self-interest
Also, J.R.D. Tata has started the trend of the Tata Sons chairman not necessarily being the chairman of all the group companies, and this, it is felt, has led to greater diffusion of control. However, as Ratan Tata points out, what is more important than the common chairmanship is their ability to work together and maintain informal bonds and this has continued. The dangers of their drifting apart is also vastly reduced because it has been in their self-interest to stay together and be known as Tata enterprises. The financial strength and the goodwill that the group commands will certainly stand them in good stead in good times or bad. Again, control is a somewhat abstract concept, exercisable only when there is an absolute need to do so. The fact remains that today, if JRD Tata were to only give an indication of disapproval on anything, the erring companies would fall in line. In a sense the absence of too many family members has proved to be a blessing in disguise in holding the group together. As Ratan Tata points out, this has precluded the possibility of the division of group into tangible blocks owned by different individuals.

Therefore, what in essence the group chairman has to do is to maintain the informal bonds and possess the ability to inspire respect and credibility in the public and the shareholders and to generate acceptance and loyalty from the chief executives to exert necessary influence (from the point of view of the entire group) if the need arises. This acceptance would, in turn, require that Ratan Tata, as the heir apparent, should be able to inspire confidence, prove his competence and acquire a certain stature to hold the group together. The question therefore seems to be: does he possess the experience and competence to handle this mammoth job?

Considerable Difficulty
Experience and competence are very subjective concepts. So far, his experience has been only in Nelco after brief stints in TELCO and TISCO. The fact that Nelco has been a non-performing company should, however, not be the basis for any snap judgement. For it has to be viewed in the context of the extenuating circumstances.

Nelco was in considerable difficulty even before 1971, when Ratan Tata took over. And he offered a lengthy account about the Nelco experience. "For three years from 1972 to 1975 Nelco made a profit and wiped out some of its past losses," he says. "Then, in 1975, the Emergency came and consumer goods demand just disappeared, not just for Nelco, but for everybody. At that time the company was poised for growth and we were pumping money into non-consumer goods, which were sucking in a lot of money."

"This was followed by an industrial relations problem since 1977. So, while demand improved, there was no production. Finally we confronted the unions and, following a strike, we imposed a lockout for seven months. Now that the lockout has been lifted we hope to improve production by 50percent over the past year and may be by 120percent over the year of the lockout validating the claim that Nelco is basically a sound company."

His claims appear to be valid, for Nelco's prospects have certainly looked up. And, certainly, handling a company that has been in difficulty can provide more worthwhile experience than being in charge of a smoothly running company. To that extent, inexperience cannot be held against him.

Acceptability is another critical factor. The fact that he is a Tata and he is J.R.D.'s chosen successor does lend some credibility and a certain acceptance within the group. He is, after all, no newcomer having spent almost the last 20 years in the Tata companies. J.R.D. Tata himself was a young man when he took over and the situation then was not vastly different from what it is now. If he can demonstrate capacity and commitment, acceptance is bound to come. Also, some of the chief executives of the Tata companies are bound to retire soon. Once a new crop of younger chief executives takes over, they are going to be used to the fact of Ratan Tata leading the organisation and acceptance is likely to be more automatic. As regards stature too it is something that is acquired with time and the job he holds is itself bound to help build up the stature. So far he has been publicity shy and has not had the chance to project a public image. Position and performance will together, it is expected, help build up his stature.

Group Performance
The performance of the Tata group of companies will be another area on which he will be evaluated. By and large the Tata companies have performed well - spectacular in some areas, less so in others.

The Tatas have never shown flashy rates of growth. But the reasons are evident. The mix of industries they have been in has been capital-intensive and to some extent governed by price controls and restrictions placed by the MRTP. While it is felt that to some extent the larger groups have got licenses they wanted, the Tatas seem to be exception. The Dutt committee report on industrial licensing points out that the Tatas obtained a smaller share of licenses than the Birlas during the sixties. In fact, J.R.D. Tata has at times argued that unlike other groups which have used questionable means, the Tatas have sacrificed growth in favourof certain 'values'. This has hurt them to some extent; yet the growth rate of assets has been impressive.

The Tatas have always placed great importance on technological excellence and production. This has been one of their principal strengths. Their preference has been for core sector industries - steel, power, heavy vehicles.... But while in this area performance has been good, the performance in consumer marketing has not been quite so satisfactory. In terms of the trading instinct that has assisted some business houses to rise in prominence, they have been somewhat behind others.
Thus, in textiles or in soaps and oils, they have not done so well. This will be an area which will have to be strengthened, and it is possible that Ratan Tata, who recognises this weakness (see interview), will focus his attention on it.

Comparison With Birlas
Another criticism of the Tatas has been that while they have defined their priority as technological leadership, they have lacked, to a limited extent, as hard a nose for profits as other business groups have. But profitability and growth are objective criteria for assessment and whether they like it or not, any mention of the Tatas inexorably draws comparisons with the Birla group. On a lower turnover and lower asset base, the Birlas have recorded a higher profitability. This is explained partly by the nature of their business lines and partly by the degree of application of price controls. TISCO's improved profitability this year after the price decontrol is a case in point.

However, these seems to be a definite shift in group policy. The Tatas have, over the last year or two, gained a certain momentum for growth, diversification and expansion. TELCO is in the midst of major expansion, TISCO is being modernised, the electric companies in the Tata, fold are in the midst of implementing a 500 MW power project and the group is also entering gas based fertilisers.

The Tatas' attitude on bonus shares and dividends is also changing. The Tata companies, which have traditionally been conservative in this respect, have stepped up dividends, and TELCO, TISCO and TOMCO are making bonus issues. As a consequence, the Tata shares, which have always been sound investments but not the glamorous shares of the stock market are now emerging as the market leaders.

The Tatas would also seem to be taking the lead in financing patterns, with TELCO setting the trend for convertible debentures followed by the equity issue of Tata Electric and now the TISCO convertible debentures. The fact that the Rs. 21 crore issue of TISCO has been oversubscribed on the first day indicates the tremendous goodwill that the Tatas have. While the Tatas disclaim any concerted move or strategy in these developments and put down the timing of it all to plain coincidence, the fact remains that the Tatas are well set to get way ahead in the race for corporate leadership in this country by 1985.

Challenges And Threats
The coming years are, therefore, very critical for the Tatas. While the present projects will put them well ahead, Ratan Tata's task will be to ensure that this momentum is not slackened. The economic environment is also changing, in that a liberalisation in industrial licensing, imports and controls is bound to come about, offering both challenges and threats to the Tatas.

The tasks ahead of Ratan Tata, if and when he takes over the group chairmanship, appear to be fairly clearly laid out (the qualification "if" is made here because there never can be total certainty about anything until it actually takes place - still, that he will probably take over seems a reasonable assumption to make).

His new task is going to be vastly different from that of chief executive of a single company. A difference in perspective is involved, obviously. And there is the fact that he does not have to be preoccupied with the running of individual companies since they have the expertise to carry on their own. The new task will involve providing direction and vision and ensuring that the momentum they have generated up to now does not slow down. New areas of business will have to be identified, and sound judgement and a certain amount of risk taking will be necessary to stay ahead. Areas of weakness such as marketing will also need attention.

Choice of business areas will be very critical in determining the future fortunes of the Tatas. Ratan Tata has expressed a preference for high technology areas, including defence, electronics and communication, if they are "opened up". The Tatas have major strengths in most of these areas, and it only seems natural that they would want to capitalise on them. The Tatas have massive resources - technical and managerial at their command, and would certainly possess the capability to go into capital intensive core sector investments if permitted. Development of more joint ventures abroad could be another move that Ratan Tata might initiate.

Need To Inspire Confidence
From a management point of view, the task of the heir apparent to the group chairmanship would be to ensure that he inspires the confidence of his colleagues. Leadership qualities will have to come to the fore for him to be able to generate greater acceptance from within and outside the organisation.

Another principal task would be to ensure that the next generation of chief executives of the companies in the group is loyalist and will adhere to the values and objectives that Tatas have stood for. The traditions of working together will have to carry into the next generation if the group entity is to continue. Managing a cordial relationship with the government will also be an important task not only considering that the government is the major shareholder in the Tata group, but also because government policies are a major determinant of the economic environment.

Ratan Tata certainly has many advantages - principally that of attitude and approach. His style may not be vastly different from J.R.D. Tata's and the same values and traditions are likely to be continued. "Those values are very important to me," he says, and in that sense he would be able to maintain continuity and ensure a smooth transition. A drastic difference in business philosophy could be traumatic for a company to adapt to. In the present circumstances, it is also unnecessary.

In his approach to business there is definitely no place for complacency or overconfidence. There is a certain readiness to accept weaknesses in the organisation as they exist and work towards overcoming them. More importantly there is a recognition of the need to look out for new business opportunities systematically. His attitude on industrial relations too reflects concern for, despite a bad experience in Nelco, he is willing to say "they (the workers) have some legitimate demands and may be in some ways management, including Nelco's has failed them by not being responsive to their needs - which a company in trouble tends to be." The democratic style and consensus approach that has been a hallmark of J.R.D. Tata's style would seem to be shared by Ratan Tata too.

Age too is a definite factor in his favour. At 44, he has a good many years ahead of him to give direction to the group and ensure that his plans are carried through. His relative freshness is also bound to give him an edge in that he would be more open to new ideas than some others might be.

While the choice of Ratan Tata for the job may have been made regardless of family considerations, the fact that "he is the family" is certainly bound to help. To the outside world, a Tata maintains continuity and inspires confidence. Still the person whose shoes he will be stepping into - J.R.D. Tata - is a person of no mean stature - a figure who commands respect not only in the group but also in the entire business community. J.R.D. Tata has become some kind of a living legend in the Indian business world, and succeeding him could be an awe inspiring prospect.

Time To Settle In
But what is most important is that Ratan Tata has the time to settle in J.R.D. Tata has described this move as part of a plan. This would seem to indicate that Ratan Tata will probably take over the chairmanship of a few companies to begin with before he is ready to take on overall group responsibility. He has aready now been on the top policy making group of the Tatas for some time - having been director of Tata Sons since 1974. He has also been moving into the boards of an increasing number of companies over the last few years and is now a director in almost all the major Tata companies. By taking over in a phased manner, he gets the time and opportunity to adjust and acquire the expertise and perspective. And, with J.R.D. Tata, Naval Tata and other leading Tata luminaries around, he will be able to draw on their experience, guidance and support. With these advantages it seems unlikely that anything could go wrong.

Undoubtedly, the task ahead of Ratan Tata offers him a challenge and an opportunity. What he makes of it will, to a great extent, determine whether the Tata's stay where they are - at the top.
— Chandrika Hariharan

"Industry has lived in a protected environment."
On 10th December, 1981, Business India interviewed Ratan Tata (44), heir apparent to the Tata empire, the largest group of companies in India. Tata, known to be very publicity shy, was extremely reluctant to give us a formal interview. His objection was that there was no need to focus any attention on him as a person. But, obviously, an appointment such as his to the position of chairman of Tata Industries could not possibly be ignored by a business magazine. And it was only with great difficulty - and explaining that Business India had to write about his appointment whether or not we could get an interview with him - that we could persuade him to talk to Chandrika Hariharan for 40 minutes.
We give below excerpts from the interview :

For some time now, as a member of the boards of both Tata Sons and Tata Industries, you have been associated with policy making at the group level. In what way do you see your role changing as chairman of Tata Industries? What would you describe as your principal task?
My role will probably not change significantly except that being the chairman of Tata Industries gives me the opportunity to do some of the things that I think possibly haven't received the attention they need. There is need to look into the future and plan for the future more than we have, in the past, and to look at new business areas in a different kind of way.

Tata Industries, being a collection of chief executives of the Tata companies, offers a chance to be innovative in terms of (determining) where the Tatas ought to be. Hitherto Tata Industries has been a sort of inactive board. I would like to take a try at activating it. There is need for strategic planning, looking at new opportunities. Such opportunities are available to various companies, and there is need to focus them in a central place. I therefore see the role of the office of chairman of Tata Industries as one of providing assistance in coordination between companies when problems arise but at best it is a nonformal kind of role.
There is no legal entity as a (Tata) group today. The assignment in Tata Industries therefore gives one a chance to work with the various companies in a mode of bringing them together, holding them together and looking at the future. It's a mechanism to sit and brainstorm and project where we should be.

But Tata Industries has no executive role. It cannot formulate policy or issue a directive to company A, B or C. It is a collection of key people in the group who can discuss and evolve policies which companies might adopt or consider worthwhile, or throw up ideas which may lead Tatas into new business areas.

Considering that you were the logical heir apparent why is it that you have not been projected so far as a key person within the group and outside?
I don't think there was any logical heir apparency or anything of that sort. I was as pleasantly surprised as anyone else might have been.
In many ways the Tata group of companies, unlike other in the country, is a loosely knit group of seemingly independent companies with very little control exercised by the holding company. What then holds them together?
You might say that the common link so far has been the group of people headed by J.R.D. Tata. It has been the moral bond and to some extent the traditions that they follow. There is no legal or financial or any tangible bond except the bond of people and some standards and traditions they have endeavoured to maintain - and the leadership of Mr. J.R.D. Tata.

One hears of the Tata culture, the Tata ethos. What exactly would you describe as this tradition and how is it translated into the functioning of individual companies ?
I would say that the interpretation of the Tata culture and tradition varies from company to company. To a great extent, perhaps, it's been a little more selfless, has paid more attention to the community and to national issues, and less, you might say, to a provincial or parochial approach.

Other than that I don't really know what one can pick out and define as a culture, except perhaps in the sense that our leaders like J.R.D., Moolgaokar, Naval Tata and others have set certain standards which seem to be projected every time you interact with them and which have filtered down into a style of operation. There is no booklet or orientation or induction programme, and yet if we seem to carry something through, it is what we carry by interaction in terms of what our predecessors and leaders have given to us.

Would you agree that the structure of the Tata group - individual companies operating independently - has evolved because of the dearth of family members to maintain tighter control?
Possibly. But I can't conjecture on it - partly because family members or otherwise, a certain independence and delegation has been there. An independent view has been taken and a fair degree - in fact, total autonomy - has been given to individual companies. Whether that would have changed had there been 40 family members I don't know. I would have thought not. It would not have changed what we have done and the companies would still have been independent.

What might have happend - as has happened in other closely held family concerns - is that the group might have broken up into tangible blocks headed by individual persons connoting possession. We have no role for possession. We have never possessed or owned chunks of our companies.

You are much younger than most of your colleagues on the board. What advantages do you think this gives you, and what disadvantages or problems do you foresee?
As the risk of being facetious - (I have) probably less patience, less wisdom on the one hand; and no tangible advantages in the sense that we have people of considerable standing on the boards. I would say that I am fortunate to be able to spend a greater number of years in their presence - being younger - than if I had come ot the board at a later age.

As a younger person you are likley to be more forward thinking - you talked of looking into the future to a greater extent instead of being bound by some set notions that older people might have. Wouldn't that be an advantage?
Yes. But when they were younger, they looked into the future and we are where we are today because they did what they did. At an advanced age, many of them are probably not looking that much into the future, but I would say here, if I may, with particular reference to Mr. J.R.D. Tata and Mr. Moolgaokar - you find them looking to the future to an extent you can't believe. And I think if I am tending to look ahead, it's to a great extent because of my having rubbed shoulders with them over the years. I see the importance of what they have been saying all along.

There has recently been a marked change in government policies - particularly a more liberal atitude toward big business and greater freeing up of the economy is likely. What would its implications be for the Tata group?
Turning your question round, I would like to comment on what it would do for the country. For I don't think we have something to say for the Tatas because, by and large, we have never tried to buck the system. We have fallen in line with government objectives whatever they may have been.
Obviously, there will be better opportunities for growth, expansion, modernisation; but what I find most hopeful in these changes is that the government seems to have recognised that there is a need to look at industry as industry and not broken up into ideological blocks like the public sector and private sector. These are still there, but it is now believed that they can co-exist in a healthy kind of way.

I also do believe that industry is itself as guilty as the government of allowing the situation to exist, as it is, because we have always lived in a protected environment. We have always tried to fight new entrants into areas where we are entrenched, we have been afraid of competition from abroad. The small sector is afraid of the large sector and the public sector of the private sector and vice versa. The sooner all this disappears, and we look at national objectives and who can best meet them, we will see a mix of both and that is the most hopeful sign I see in the changing government policy.

There may be a time when, if you are small you have a role to play and if you are the organised sector, you have a role to play; it does not matter into which category you fall. Hitherto certain parts were closed to you and if they are opened up it will provide us with a greater challenge.

What specific areas would you like to see the Tatas enter if entry was unrestricted?
Partly because of my own exposure and partly because of my own interest, I feel I would like to see Tatas move into the various high technology areas which one would like to see India develop in - several of these areas are at present reserved for the public sector. They may relate to defence or communications or certain areas of electronics. I think these areas are exciting if they were even opened up and I would like to see the private sector, and Tatas in particular, involved.

Apart from high technology, what other criteria would you set for the choice of new areas to enter into.
There are so many areas to be looked at. Some involve tremendous resources - which we may or may not have. I cannot comment on it meaningfully without being overly general.

What would you describe as the principal objective or the business philosophy of the Tatas at this point in time? What are the priorities?
I don't think there is a single area of priority one can single out. If we were to meet after six months I could give you my views. If today one were to make a statement you would get something trite, like to do the best for the community, nation, shareholders, employees - those would be the kind of criteria I hope to translate this into some kind of business philosophy one can identify. But I would not like to state that at this point in time - not because I am holding anything back but in order not to have a preconception about what it ought to be.

Over the last year or so the Tata companies seem to have adopted an aggressive approach. The timing of expansion and modernisation of Telco, Tisco, the Tata electric companies, the bonus issues and the market leadership of Tata shares seem to indicate a concerted Tata effort to get ahead of the Birlas. Is it a conscious strategy?
No, I don't think there has ever been such a strategy. Companies like Telco have had considerable expertise and have developed themselves into companies that can withstand comparison with any of their kind elsewhere. They are growing and expanding as a result of their own expertise. More than conscious, the timing may be coincidental in that the modernisation of Tisco happens to be taking place around the same time that the first phase of Telco's expansion is over and the electric companies have taken up a 500 MW project. Rather than talk of it as a concerted effort, I'd say it's a coincidence that these expansion and modernisation programmes have been approved at one point in time.

In the sixties and seventies the rate of growth of the Tatas wasn't as phenomenal as that of the Birlas, and profitability also was lower. How would you account for this?
Tatas have not been in the so called highly lucrative areas - areas where there are enormous profits, like fibres or fertilisers. They have been in heavy engineering, basic industries and in these industries they have, to some extent, been denied the opportunity to grow over a long period and prices have also been controlled.

But why didn't the Tatas enter those other, lucrative areas?
I would only be guessing... but I'd say that (Tatas have not entered the more lucrative areas) possibly because there hasn't been a central mechanism to look at new areas. Which is what I was trying to say earlier. All new activities fell into what was aligned with one company or another. One tended, therefore, not to look at certain areas, and this resulted in a greater preference for expansion rather than diversification. Maybe new areas were looked at and maybe those projects came lower down on a set of priorities they had at that time. It is hard to conjecture.

"What might have happened had there been 40 family members in the breaking up of the group into tangible blocks headed by individuals."
Do you feel MRTP has been a damper to growth? There is a feeling that, by and large, big groups in India have got the licences they wanted.
Oh, yes it has been a hindrance. As regards getting what one wants, well, it depends on how much you pursue something and to what extent you are willing to go. Maybe we haven't been as aggressive as we might have been.

Why have the Tatas not gone into many joint ventures.
They have not done enough. They should have done more in that area and I know that this is the view of Mr. J.R.D. Tata also.

While the Tatas have done well in core sector industries, the performance in consumer oriented industries like textiles or soaps or tea hasn't been up to the mark. What are the reasons for this?
I will give you my view point. It may not be correct. I think we have traditionally been strong in establishing a basis for technology or manufacturing facilities, where we have installed or managed projects of a capital intensive nature, and managed them well. Where we have had to be involved in handing commodities, or when we have had to have a trading instinct or sell products on a retail basis, we have not done so well. We have lacked a certain instinct, a certain capacity in that area and all the industries you mention fall into the latter category.

Considering that the Tatas have a good name and reputation for quality, shouldn't consumer marketing have been an area of strength? Would you agree that marketing is a comparatively weak area?
I agree with you. I am not condoning it. Another view which is not very complimentary to the Tatas as a whole is that some of the consumer goods area in which we are, were once seller's markets and they have now become buyer's markets. In these areas we have not quite adapted ourselves enough to the change. But once something is recognised in many ways we have mobilised ourselves and one would see this are strengthened.

In the future as the Tata companies grow further do you see them staying together or drifting apart? How important is it for the chairman of the group to be chairman of the individual companies to hold them together?
I hope they don't drift apart. There is great strength in being associated with one another. Certainly, there is a possibility that they might (drift apart). One would like to see them work as closely as the law would permit. A common chairmanship is not as important as the ability to work together and maintain the informal bonds. A great deal depends on the future leadership of the Tatas in holding them together.

Why do you talk of future leadership in an abstracted fashion?
Because it is abstracted!

Your background is structural engineering and architecture. Are you pursuing anything on those lines?
Unfortunately not... Maybe fortunately, for the community!

Business involves a certain amount of risk taking. Would you classify yourself as a risk taker or a conservative?
There have been certain occasions when I have been a risk taker. Perhaps more so than some, and less so than certain others. It is a question of where you view that from. I have never been speculative. I have never been a real gambler in the sense that some very successful businessmen have been.

How do you see the job of a group chairman being different from that of being chief executive of the company?
I don't think it is very different. Essentially it is a question of perspective. Anyway I am not a group chairman.