Chennai is familiar with low-key corporates. In fact it often falls into no-key. With the dominance of the engineering industry, with limited channels for marketing and confined to a handful of original equipment manufacturers, there is indeed not much of an attempt to look for sustained media relations. 

The Tata group also fitted well into this mould. Until the advent of IT and expansion of interest into tea, the operations of the Tatas were largely confined to the west, north and east of India. Very rarely one came across a senior Tata director interacting with the media in the south. There were the rare instances of the doyen, JRD Tata, delivering the first Anantharamakrishnan Memorial Lecture or his first and perhaps only interaction with the media, on a subject he loved most, family planning, under the aegis of the Family Planning Association of India. Perhaps after bachelors APJ Abdul Kalam and AB Vajpayee, he was the most suited to preach the small family norm (he had no children). The other senior member of the Bombay House, Naval Tata, was more gregarious. His active involvement with the Employers' Federation of India brought him to Chennai more often. He was also passionate about issues concerning employers. Ratan Tata, by nature, even more shy than his predecessors, is a rare visitor to Chennai. 

I was, therefore, pleasantly surprised when Tatas' corporate public relations called to invite for an interaction with the media by Executive Director R Gopalakrishnan (RG) of Tata Sons.

Articulate, media-savvy
RG has been known for his articulation and media savvy nature. Ratan Tata brought him from Hindustan Lever where RG rose to the position of vice chairman and had built a formidable reputation for his marketing and brand building capabilities. RG has also been a great attraction at several management seminars organised by the MMA, CII… 

There was, therefore, a lot of expectation on the momentous event and RG didn't disappoint. He provided four major reasons for this revolutionary event from a group that had believed in evolution:

• 2004 marked the death centenary of founder Jamsetji Tata. 

• 2004 also marked the birth centenary of the best known face of Indian business for several decades – JRD Tata. 

• This year also marked the birth centenary of another familiar face at Bombay House – Naval Tata. 

RG also had one more important reason: that the current year marked the completion of ten years of Ratan Tata at the helm at the Bombay House. These years have seen the Tatas charting new paths in several directions. These included:

Vacating several areas of business with which the group has been engaged for decades helping in a clearer focus on areas of growth; the group taking aggressively to new businesses that involved competing with international giants. There was a much sharper focus on human resources, both at the top and down the line. For the first time in the history of the group, a clear retirement plan for people at the top was enunciated and enforced – with a limit of 65 years for the post of managing director and 75 years for the director. Down the line, there was massive rationalisation of the work-force, shedding close to a hundred thousand workers, making the whole operation lean and mean. Most importantly, there was also a tremendous focus on building a new brand image for the Tatas with an easily identifiable Tata logo that was common for all the group companies, products and services. This period also witnessed the Tatas consolidating their ownership through the several Tata trusts. RG thus advanced a combination of reasons for choosing the time to interact with the media.

I expressed my concern that, like the planets of the universe coming in a row only once in a few centuries, the Tatas had waited for a hundred years to go for such a great year of three centenaries: they shouldn't wait for another 100 years before the next such meet with the media. RG seemed to agree. 

RG said in the history of the Tatas spanning over 126 years, there had been just five chairmen – each has had an average span of around 25 years!

The vision of Jamsetji Tata
Founder Jamsetji Tata was obviously the most towering personality for the sheer brilliance of his concepts. Just look at the foresight of someone conceiving, in the closing years of the 1890s, three great enterprises vital for a modern industrial society:

• Setting up of a modern, state-of-the-art steel mill. The selection of the site in Bihar, which later became Jamshedpur, was the result of a lot of scientific studies. The location in the thick of forests had close proximity to the major raw material sources – iron ore and coking coal. JN Tata collected experts from the global steel industry and went about the task of setting up the first modern steel mill in the country in the early years of the 20th century. 

•  JN Tatas' textile mills and other industrial units at Bombay needed uninterrupted supply of cheap power. Bombay had copious rains for just around a hundred days a year – from June to September. Tata conceived massive hydroelectric power generation, storing the rain water during the monsoon in the valleys north of Bombay. Tata Electric Companies have served the power needs of Bombay metro for so many decades so successfully and so profitably! 

•  It was not all related to business and money. JN Tata conceived the setting up of the most prestigious and well-equipped institute for science. His effort was not just confined to Bombay. He undertook a tour of the country and selected Bangalore, thanks to a progressive princely administration then headed by Dewan Sheshadri Iyer. The Tata Institute of Science (now the Indian Institute of Science) collected some of the best academics and academic planners from Europe and elsewhere and set about the task of offering high quality science education.

• RG pointed to the average life span of a Fortune 500 corporate of 40 years. Look at the foresight of JN Tata, then conceiving of enterprises in three entirely different areas! And look at their evolution through these 100 years emerging quite strong and raring to grow stronger!

Bewildering range of activities...
JRD Tata, himself a pilot, had great fascination for civil aviation. He piloted the first civil aviation flight from Bombay to Karachi seven decades ago. In the early years after independence, Tatas' activities covered a bewildering variety of services and products. These included textiles, hospitality, steel, power, cement, soaps and toiletries, aviation, chemicals, transportation equipment including commercial vehicles and locomotives, cosmetics, air-conditioning, tea and coffee, IT, pharmaceuticals, financial services, watches, auto components, telecom services, passenger cars, retail business and insurance. In its long history, several of the activities were lost through nationalisation (eg.: insurance, civil aviation, banking). 

The growth of the Tata empire in the liberalised era marks the coming of age of Indian corporate management. This period also coincided with the change of leadership at the Bombay House with Ratan Tata assuming charge ten years ago. Tatas' approach to restructuring the business and taking to expansion was triggered by the transition from a controlled, planned, state-driven regime to the other extreme of near laissez faire. 

India was just preparing itself to enter the knowledge era. The Tatas had tremendous advantage in this, with the headstart the group had in the field of information technology as early as in the 1970s. But in other conventional businesses, including steel and engineering, there had not been much of the thrust towards global levels of quality. In line with other industrial units, the Tatas were also content to produce products 'appropriate' to the Indian market. Very few products of India at that time met with global standards of quality or sophistication. 

This was exemplified by the commercial vehicle industry. Despite its start in the 1950s and set up in collaboration with the world renowned Daimler-Benz, for four decades TELCO (now Tata Motors) was content to produce average quality vehicles that could be sold in the protected Indian market and in a few developing countries in Asia and Africa.

The transformation agenda...
RG pointed to the transformation agenda set in the 1990s with the principal objectives of increased ownership by the promoters, promoting the brand, restructuring the portfolio and improving shareholder return. 

The main priority of the Tatas at that point of time was to prevent hostile takeovers. With the low share of the Tatas in most of the unit companies, there was a real threat of hostile takeovers. There was the example of Swaraj Paul attempting to take over Escorts and the DCM. 

Ratan Tata had clear areas of focus. The objectives for restructuring were defined clearly. These included: 

• Returns must be greater than cost of capital. 

• Economies of scale should be derived. 

• Each company must be the industry leader occupying one of the top three positions. 

• The business identified must have potential for high growth and should be globally competitive. 

Having decided on these objectives, there were clear strategies for exits and entries. There was a break from the earlier sentimental approach to businesses that have been built over decades. Ratan Tata decided to exit the businesses of soaps and toiletries, cosmetics, consumer electronics, pharmaceuticals, computer and telecom hardware, branded white goods, paints, oil exploration services, cement, textiles... 

Equally fervent was his expansion / entry into businesses identified as having high growth potential. These included passenger cars, auto components, retailing, telecom, power and insurance. 

With such clear focus, Tata Sons achieved the major objective of increasing the stake of the owners. RG pointed to the increase in group shareholding through the last 13 years through an investment of Rs.2700 crore. Promoter shareholding in the unit companies today is in excess of 26 per cent.

Remember this shareholding was in single digits in even major unit companies like Tata Power and Tata Steel! The group today is well-focused in the few specific areas of engineering, IT, communications, consumer products, services, materials, energy and chemicals. Total revenue of the group in 2002-03 was in the region of $11.2 billion (Rs.54,227 crore).

Stronger group identity
RG described results of the transformation as a stronger group identity, greater interaction among companies, common defined standards and increased focus on business strategies. 

From this expert on marketing and branding who had made such rich contributions to HLL earlier, RG's role in translating Ratan Tata's revised focus should be significant. Today, right from the new Tata logo, the Tata group's identity appears more focused. Hardly a decade ago, even the logos of the Tatas differed from company to company. Today they are the same for all. 

The Tatas had leaders with different styles like a Russi Mody, S Moolgaonkar or Darbari Seth. Understandably, there were vast differences in approach to the development of human resources, diversification or growth. Today there is a lot of synergy in these areas. Significantly, there has also been a paradigm shift in the business focus: a decade ago, 54 per cent of the businesses were in traditional areas like steel, chemicals and commercial vehicles and only 4 per cent in new technology areas. Today traditional businesses account for 35 per cent, but new tech areas account for 23 per cent. Likewise there is a change in the employee profile: in 1992-93, 90 per cent of the workers were bargainable workers and only 10 per cent knowledge workers. Today their shares have changed to 67 per cent and 33 per cent respectively. The share of branded products had increased in the period from 19 per cent to 41 per cent of sales.

Five-fold increase in income per employee! 
The emphasis on productivity has also resulted in the number of employees dropping from 310,000 to 220,000 during this period. But sales have more than trebled from Rs.15,086 crore to Rs.52,134 crore. This essentially means a near five-fold increase in the income from employee! This period has also seen a more than five-fold increase in profit after tax – from Rs.724 crore in 1992-93 to Rs.3893 crore in 2002-03. RG hinted at profits for the year just ended as having crossed a billion dollars. 

The Ratan Tata period is thus full of excitement though it had some very anxious years. There were a few who questioned the wisdom of the Tatas diversifying into the production of passenger cars at a time when auto majors from the US, Europe, Japan and Korea entered India with their contemporary products and huge resources. 

Governments at the Centre and the States also offered handsome concessions. There was also the neglect of R&D by most engineering companies including the Tatas. Tata Motors (formerly Telco) had two great advantages: initial collaboration with Daimler Benz and the continued focus on engineering and development. Ratan Tata also opted for an intelligent combination of sourcing state-of-the-art designs from Europe and committing a much higher R&D spend than earlier. Leveraging the existing infrastructure in terms of men and materials, the Tatas could launch mass production of passenger cars at much lower costs – estimated around Rs.1600 crore against the over Rs.2500 crore for the Ford Motor Company and the Koreans for comparable volumes. 

The Tatas identified the competitive advantage of India in terms of much lower development and engineering costs and, most importantly, lower employee costs than in Europe or Japan. Unfazed by the initial setbacks, Tata Motors succeeded in establishing the Tata Indica and expanded the range. That erased earlier memories of the also-ran type of vehicles that came from the commercial vehicle stable earlier. The best testimony comes from the company winning an export order for 100,000 cars from the UK. 

The consolidation in several other areas like power has been equally spectacular. Just imagine the stakeholding of Tata Power increasing from 1.7 per cent in 1991 to 32.5 per cent in 2003! With the company foraying into distribution in other major cities like Delhi!

Need for a greater thrust on global business
Buoyed by the success of Tata Consultancy Services (TCS) in establishing its prowess in the IT area in several developed countries, most notably the USA, there is the confidence and the interest to broaden the horizon beyond India. TCS has won a lot of esteem for the Indian knowledge workers in several developed countries and has proved a role model for several other IT companies. In recent months, there is interest to expand the activities of TCS into consultancy. I was happy to notice the participation of TCS at the INTERPHEX 2004 pharma exhibition recently held in New York: in the pharma exhibition, companies like TCS tried to bid for pharma consultancy jobs; and this was in contrast to the almost total absence of participation by Indian pharma companies! 

The acquisition of the British Tetley Tea has helped the Tatas acquire well-known brands and expand activities in this traditional business. 

The more recent acquisition of Daewoo Commercial Vehicle Company of South Korea is bound to help Tatas take its vehicles to a number of Asian markets. 

For far too long the group had been content to focus on the domestic market. And there is the example of the success of the Birlas' expanding massively into south east Asia, and the Mittals and Swaraj Pauls shining in steel. A century of experience in steel-making and its emergence as a low cost producer of steel should come in handy for expanding the Tata Steel empire globally. The knowledge of the global market has been a great advantage for multinationals like Ford; even Reliance has gained massively by acquiring knowledge on global financial and commodity markets. The Tatas have been missing out a lot of opportunities in these vital areas. But the efforts spent by Ratan Tata and his team in consolidating the operations, bringing along a lot of synergies and focus on core areas of competence, should have prepared the group to look for global opportunities. The success of value creating acquisitions like Daewoo would spur the group to more action in this area. 

RG referred to a special feature of the profits earned by the group serving a larger social purpose. Last year the Tata group earned a billion dollar in profits. 25-30 per cent of these moved back to the 13-14 trusts, which own shares in the Tata companies. Thus the profits are not measured by wealth accretion to an individual; through the trusts these go to society at large, said RG.

Step up allocations to R&D
Even while Ratan Tata and his team are busy broadening their horizons beyond India, I would suggest their providing the lead in specific areas: 

• The first, naturally, is to step up allocations to R&D. German, Japanese and Korean companies spend upto 10 per cent of sales on R&D. Indian companies have been spending less than a per cent and have mostly been content to achieving marginal improvements in processes. With the high quality, cheap manpower in India, the Tatas could provide the lead for nurturing interest in R&D. The success of Indica should convince them of a quick pay-back. 

• Hitherto the prowess of TCS in the knowledge sector has mostly gone for the benefit of developed countries led by the US. More than 90 per cent of the revenues of TCS (as also other IT leaders like Infosys) flow from abroad. A focused attempt to get the benefits of IT through simple applications for a variety of small and medium businesses can bring about massive improvements in efficiencies. FC Kohli of TCS has been referring to the need for this for quite some time. Ratan Tata and his team can build this as part of their objectives. 

I am sure RG and his colleagues would not wait for another 100 years to stimulate interest in the Tata Group. There have been momentous changes that RG described as evolutionary. But I think one need not link this usage to the gradualness associated with evolution. The Ratan Tata years in the long history of the Tatas indeed strike one as revolutionary.