'We must keep questioning the unquestioned'
Business India — July 2, 1995

A year ago, Ratan Tata, as far as the media was concerned, went underground. Though making the occasional public public appearance, such as when the Tata Sumo was launched, he preferred to lie low and say nothing. Business India's dogged pursuit of the Tata chief paid off, when he finally broke his silence and spoke about the concerns and challenges before the group today.

Now that you're in the saddle fully, it's clearly your vision that is driving the group. What have been your concerns since liberalisation?
As we began to move into an era of free markets and competition, it was clear that the Tatas needed to re-focus, where they were going to go. We have approximately 80 companies in so many different businesses. Without protection, not all those companies could survive. Refocusing meant that our companies had to define their core businesses and then we has to determine whether that business belonged to
the group.

Another issue that needed to be addressed was ownership. The protected environment and MRTP had made it a non-issue. In the past it was inconceivable, given the size of some of our businesses, that someone could raid us. Today, the situation is different. While we all proud of the trusteeship management concept that JRD Tata propounded, if we are managing a company, our holding in it should be more than symbolic.

How fast do you think you can achieve the targets you've set for yourself?
My focus has really been Tisco and Telco, because they constitute 50 per cent of our turnover. In many ways, they have been role models for other companies. If these more visible companies can be converted from being production-driven in a seller's market to more responsive companies in a buyer's market, the message will spread faster within the group. These major companies were in the most protected area and they needed to change more. I've had more experience with competition during my years with Nelco more than I could ever have with Telco.

Do you see Tisco and Telco firmly on track now?
They are not running at the speed they should be, but they're both heading in the right direction. Both organisations realise that there's a new game in town. There's a more aggressive role to be played. And there are other parameters to be looked at, like shareholders' value, which were never really too much of a concern.

It's almost five years since liberalisation. Surely the time for Indian industry to get its act together is over?
The time hasn't started and , in fact, I would debate upon the extent of liberalisation. Licensing has been removed so entry and growth are mostly free. Entry of world class players is possible, but it hasn't happened yet. For instance, you can't go down the road and buy a Sony colour TV or a Toyota yet.

But aren't local companies aware that such foreign companies will soon be here?
There are several classes of industrialists. There's one that believes in creating
noise so that certain things don't happen. The other is confident that they can survive despite competition. And there's one that feels that, unless they jump on
to the global bandwagon and get a global partner, they won't survive.
In the automotive sector, we have every intention as well as the capability of surviving on our own. But, in another area, we may be swept away. So we must pick a partner of our choice while we can. Now is the time when we can leverage our position, later we will not be able to.

Is Telco going to be a major player in the passenger car market? The general view is that Indian companies don't have the technological expertise to build their own cars. Do you agree?
In part yes. The view in Telco is that where we need technology we'll buy it. We had no gasoline engine technology so we went to AVL of Austria. Why re-invent the wheel? There will be a shakeout but Telco will be a major player. By the year 2000, I visualise it as a company with sales of about Rs 20,000 crore, of which 20 per cent would be exported.

What percentage of Indian businessmen have this capability of competing on their own?
Very few. We're concerned about our individual sovereignty, whereas we should be looking at alliances and aggregation of companies as it is so often happens abroad.

How do you see your foreign partnerships like that with IBM, for example, working out on a long term basis?
These partnerships are based on human chemistry. If that exists and there is a business case then the two partners really begin to work as one. Take the case of Tata-Honeywell, which decided to automate a blast furnace at Tisco. This was something that Honeywell had never done, and so, they weren't too keen. But Tata-Honeywell implemented that successfully. Consequently, Honeywell has now commissioned us to do a project in China, using Tata-Honeywell manpower and technology. This kind of thing is beginning to happen at IBM too.

Do you see the Tatas forming alliances with other domestic companies?
I think there's an attitudinal problem; everywhere else in the world, such alliances do get formed. I would like to see it happen, though our individualistic nature seems to make it very difficult. Even within our group, when we try to move a certain business, it is extremely difficult.

Did selling Tomco reflect your decision to get out of consumer products altogether?
No, because we are in consumer products with Titan. There hasn't been a clear focus on consumer products. We were in soaps, consumer electronics, non-durables (with Voltas), textiles - but we never tried to put them together and make them into a strong consumer product base. Our whole view has been production-driven rather than market-driven. Even the grouping of our companies historically has been on the basis of production or technology.

Is that changing now?
This is what one is trying to change. One has also been trying to create a culture that's more market-oriented and customer-friendly. We enjoy a tremendous reputation of being fair and having good quality products. But we're not necessarily been concerned about total customer satisfaction.

How far have you achieved the changes that you mention?
We must keep questioning the unquestioned. In our group, there are postures and turfs and this is not necessarily felt universally; so one has to play the role of catalyst.

How do you view the infrastructure sector as it gets privatised?
The infrastructure area is one of tremendous opportunity but I fear that it is not always going to be awarded on merit. There is a tendency amongst some bidders to take things on ridiculous terms and then try to negotiate after the contract has been awarded. We don't do that and, therefore, lose out on that score.

The Tatas have not leveraged their financial muscle within the market context. For example, you have chosen not to revalue your assets whose earning power has grown several times…

In fact, there's been a somewhat justified criticism that Tata companies are much more leveraged than they should be. That they have not internally generated as much as they should. Revaluing assets is merely a cosmetic exercise. We have been conservative and should change but without turning into gamblers. There's a concern that we're going into very large projects that were previously the domain of just one or two of our companies. I'm not tremendously nervous about that, because we have the ability to raise money. We've never had to back-pedal on a project for lack of resources.

What's the philosophy that's driving the group into new areas like insurance and mutual funds?
Our name carries a certain level of trust and, in these areas, we can leverage this image. These businesses also fit into a larger gameplan in terms of resource raising and supporting some of the other businesses.

What about airlines? How does that business fit in?
Apart from the sentimental reason, we are associated with the transport industry in many ways. We are in the hospitality business, we have a technical and a knowledge base. So we thought, why not get back into the industry?

Why do you need Singapore Airlines for this venture? Hasn't your proposal run into problems, because you chose a foreign partner?
When Jeh started Tata Airlines, the airline industry was in its infancy. His airline was based on quality and service and it became a key player in the global market. Since then, the airline business has been keenly competitive. Systems, processes and procedures have become much more sophisticated. We don't need Singapore Airlines to help us run an airline. But if we decide that we want to run a world-class airline, then we need them.

Singapore Airlines is one of the world's most admired international airlines; are we serving the country badly by creating an Indian airline that embodies all the expertise that they have to offer? It has run into problems, because certain vested interests feel threatened by the fact that someone is doing it in a big way. If it had been a proposal just by the Tatas, it would have made no difference.

One of the concerns is that the Tatas no longer attract quality
managers as they used to. For one, you haven't been market-sensitive
in terms of remuneration. How are you dealing with the whole human resource problem?
It's an area of concern, because again it has not been an area of focus. If you wake up every morning for 40 years and go to work where everything you make is sold, then you develop a certain culture. In that context, we needed people who had experience; we didn't feel the need to inject new blood. It's not that we're devoid of talent; it's just that we're not doing enough to identify them, train them, move them in a particular direction. We've created some suction by putting an age limit on senior executives and we're developing a fast track for our younger managers. We've tried to bridge the remuneration gap, but the gap is growing faster than we're able to bridge it in some areas. But it is also a fact that a GM or a Ford does not pay as much as smaller, high-flying companies do.

Do you have a core group of people assisting you in this task?
There is a group of like-minded people but we don't have a dedicated team
to re-engineer Tatas. There is no task force and, structured as we are, that
couldn't exist.

Are you satisfied with what you've achieved thus far?
I have found it very challenging. There has been more than a fair share of frustrations along the way, and a lot of resistance. Now that things have started to happen, one is encouraged. I would feel satisfied if the perception about the Tatas changes. We should be seen as a group that has shed its past traditions, that is living in today's world and is in the forefront of whatever it does.