Politics is not for me
Darpan (Alliance Air magazine) — October 15, 2004 

Ratan Tata personifies everything the Tata brand stands for. Dependability, meticulousness and vision — both for the Group and the country. Under his tutelage, the Tatas have forayed into new areas, particularly passenger cars and software with amazing success, making their old ad catchline, "We also make steel" become a reality. In a freewheeling conversation with Darpan editor-in-chief Chandan Mitra at his Bombay House headquarters, the Tata supremo reveals many lesser-known facets of his towering persona.

If I could start by asking you about your early days, when you first came to Jamshedpur after your stay in the US. What kind of job was assigned to you, and what was life like in Jamshedpur?
First of all, I wasn't assigned a job. That was my main grouse, because I had come from a job but was instead sent on a prolonged assignment as a trainee. I would have loved to have a job, however small or insignificant it might have been. Life in Jamshedpur was a mixed bag because it is a very small town, very inbred and yet very comfortable to live in. So it was a nice place to come home to, and I ended up staying there six-and-a-half years. Had I not been transferred to Mumbai, probably I may have been there today!

As a company that has so much interest in the country, doesn't one thing bother you: I am referring to the development gap, the way eastern India seems to be dropping out of India's development map?
I'll go along with that. In fact I have a fair amount of commitment in my heart — that part of the country needs to be developed. I feel that no development is taking place in that area and we are part of that phenomenon.

Is it largely because of lack of infrastructure?
No, I don't think so. I think it is the perception and bad deals of the past. I think in many ways things have changed but in many other ways they remain unchanged…..the reception you get at the customs and immigration section at Kolkata airport, for example. Should it be a surprise that people don't find this region an attractive investment proposition? Yet, you have a chief minister who is very forward looking, you have all these shinning stars, but somewhere down the line, there is certain babuism that hasn't changed, and that slows Kolkata.

It is my privilege that I am meeting you today a day after you announced the grand success of the TCS IPO. But I got some feedback that you delayed this TCS public issue for quite some time, whereas you should have hit the market much earlier. Is that so?
No. As a matter of fact, I am very pleased we did not go in at the height of the dotcom boom. First of all, we probably would have destroyed the valuation to the shareholders had we gone for an IPO then and the valuations at that time were very high too. So we thought a bust might happen and indeed there came a downturn. Also, when we look back, at that time the turnover of TCS was much lower that what it is today. So what we got today was with a much lower multitude and we got much more cash than we would have at that time. Today, I think the valuations are much more realistically priced and so the investors are unlikely to have an erosion of the value it holds.

I read somewhere you want to make TCS the finest IT company in the country. Whom do you see as your contenders? How will you benchmark the 'finest'?
There are many ways to benchmark an intangible and when you talk of the finest, there are many forms of benchmarking. Apart from the highest growth rate, the highest turnover, the highest profit, a couple of other indicators would be the kind of quality certification that TCS has been awarded, which has not been equalled by any software company in the world. Therefore, the quality of the software and the quality of service offered, I hope, would be the finest. TCS has got away from being a material and client-based IT driven company to a solutions driven company. So, one element of being the finest is to be able to produce solutions for a customer.

There is a momentum gathering against outsourcing in the West. Is it in any way going to affect you?
Well, there are two views on that. One is that it is only an election issue in the US and so it will diminish after November. Forgetting the political ramification, if you look at the outcry on outsourcing, it is really the loss of jobs in the IT space that is bothering people. But if offshoring rather than outsourcing is in fact curbed, we come back tot he same situation. American companies have to remain competitive and if they can remain competitive with IT services in America, then the problem goes away. When they cannot, they have no option but to go offshore.

All I am trying to say is that the movement of manufacturing will happen to wherever it makes the most sense, irrespective of what label you put on them. This is the first time white-collared labour has found something nibbling at their jobs. But I think it will move back to an issue of what it takes to keep the main company remain competitive. In other words, if General Motors takes $8 million to design a car in the US while it takes half that amount to have it designed, even by them, in India, would it stop General Motors from setting up their own facility in India?

So it will still go offshore, American jobs will still be lost, Indians will do the job, but they will do it for General Motors, instead of TCS or Infosys or whatever. So, you know, there is going to be movement of skilled labour to whatever it's available and at the most competitive price.

The Tata Group has made a transition from being a manufacturer of commercial to passenger vehicles. What made you focus on it? Why did you perceive it to be so important and where do you see it going eventually?
Being in the commercial vehicle business involves a lot of factors. In that segment you are totally dependent on the economic health of the country. Buying a truck is a business decision. If there is an economic downturn, goods don't move, your business goes down. If the economy booms, your business does. Also, there is a danger of the markets getting saturated. Telco is already the sixth largest truck manufacturing company in the world — a fact that is not widely known.

You may still ask why passenger cars as against something else? That decision was taken at a time when we were a country of 700-800 million people, (and now we are a billion plus) and we realised that the incidence of ownership of the passenger car is too small. If you believed in India's prosperity, you would feel that there had to be a growth potential in personal transport, a belief that now stands fully justified. When we thought about going into the passenger car market, the situation was that in the first 40 years after Independence, we produced just about 50,000 cars annually — Ambassadors and Fiats. You had to wait several years to get you car; you registered when your child was born and hoped to get delivery when he or she was an adult. You also paid whatever price was demanded when delivery happened; often you paid a premium. Today, the country is consuming about a million cars, which was the figure for last year, of course including exports. Meanwhile, India is also consuming five million scooters and motorbikes annually.

So all I am saying is that there is a huge potential for passenger cars, not so much at the high end as at the lower end of the market. Everybody said that we could not get into this business without collaboration. I thought 'No', with our ability, given the right tool and the right facility, we could in fact develop a car, and that we could do it and compete with Maruti. So that was the leap of faith in the young people to develop a car although they had not done it before. We designed that in 34 months, which was a benchmark that many companies have not reached and we did it for just $400 million. Usually it would cost a car company $2 billion to produce a car. And that made us feel, and quite rightly, we could be a player in this segment of the market.

I have always been curious to know how the name Indica was chosen, the talk that was doing the rounds those days was you were tossing between Mint and Indica….
Mint was just a code name; it was never the car's intended name. In fact, if you must know, Mint really stood for Mini Tata. So it's just a code name that was developed.

There were some initial reports that customers were not happy with Indica. What were the problems and how did you get over them?
You know in a car, about 60%of the parts come from vendors. More and more components are brought in and assembled. Most of the foreign cars have Indian ancillary manufacturers. In our case, we designed those parts and supplied them to various part manufacturers in India. A lot of their know-how was very limited. So, the vendor would sometimes then, and even now, not quite understand how to design reliable parts. I would say about 80% of the earlier Indica's problem came from just one pulley that mustn't have cost more than Rs 10. What that pulley did, it wore out the belt. The belt broke, the crankshaft timing changed. When the belt broke, the valves would go through the engine, the engine would cease. When you opened it, you had a ceased engine with a broken belt, you thought that the car had got over-heated and therefore the belt broke.

And for six months, we never looked at the pulley, till we found out that the design of the pulley, which was ridiculously a small thing, was ruining the whole thing. But we never knew until there was a problem. We learned that way. So those kinds of issues were there. There were rubber parts that posed another kind of problems. But we solved them too. So that's what our engineering strength is about; you are able to address those problems and solve them.

Are these the kind of problems routinely faced in the history of car manufacturing?
All car companies have had problems with their first vehicle and some have problems even in their current vehicles. They have even recalled them in US and in Europe. This has been an issue which has to be taken in stride; unfortunately the media makes a big issue of these things. For instance, it so happens that I just bought a new Mercedes and it had faulty brakes. It was recalled, the brakes modified and given back to me. Not a big issue. They decided that something has a problem so you fix it.

We find so many cars, lovely cars most of them, but the state of the roads remains pathetic. What can the industry do, how can it build some more pressure on this issue?
I really believe that roads are very much a purview of the government. Roads, ports, airports, you can give contracts to private parties, but setting them up is the responsibility of the government. Now the government is actually privatising, but roads can't be privatised because there really isn't a return from them. Bridges and tunnels can, if you are willing to have them tolled, but not roads. And the kind of leakage that takes place in a project, till that gets rectified, this will remain one of the problems we face in the country.

Moving into another area, will it be a kind of abiding regret that you didn't get into aviation?
Aviation is an area I love. And to be back in the airline business would be a great thing. At this time I don't know, with whatever other headaches we have, whether we would like to be in the airline business. But no regrets, there have been times of disappointment. But no regrets.

I was just going through your piece in India Today in which you mentioned JRD was hurt when Air India was taken away…
When Air India was taken away, I wasn't with him. But when he was taken away from Air India, I was with him. He was only hurt in the way it was done; that he had to read about it in the newspapers. If he were to be removed, I think what he would have liked was for Moraji Desai to tell him and he would have resigned.

How would you see the aviation scene evolving? Don't you think the skies are getting overcrowded?
Whenever a space gets overcrowded, some falling out, some consolidation and some refocusing happens. And I am sure that will happen in the airline business too. It happened in the United States. Some went, some merged and finally it came down to five or six.

In today's market, you wouldn't think of entering in it, would you?
I haven't thought about it very much. But I think probably we wouldn't in today's market because as a group we have our hands full with various things. So, probably we wouldn't think of entering the airline business unless there is a very good proposal.

What would you say are the one or two main things you think you achieved as chairman of Tata Sons?
One certainly is that the loose bunch of the companies have become, I think, a more cohesive group of companies. They are interacting with a common brand. We don't create businesses that compete against one another. Second thing I think I have achieved is to create a demand for performance. We set targets, tasks, identify strategies and we have given our companies a customer orientation rather than manufacturing or commodity orientation.

Doesn't the Tata name cut two ways? I mean while it evokes awe and reverence, it also intimidates at times, doesn't it?
In what sense?

An ordinary customer might feel that if he has a problem, a giant group like Tata may not take him seriously. He may prefer to deal with a smaller company…
Each customer deals with not the whole of Tatas, but just one part of the group. Somebody who buys an air conditioner from Voltas is not overawed by the size of Tata Steel. He probably doesn't even think he is dealing with the Tata group. In buying an air conditioner from a retail outlet, he has made up his mind after looking at three or four products. There is no great overhang from the Tata group per se. He is buying an air conditioner on the basis of price, appearance and other things.

Mr Tata, what are some of your favourite leisure activities? I know you are very fond of dogs, for instance. Would you tell us about them, how many dogs you have had?
I have had dogs all my life. I am really fond of them. My present dog and the immediate past one are both Alsatians. The other ones I had before them were small dogs. We are terrific friends; they are terrific companions. I always say this that unlike human beings they give so much of themselves; they never seek anything back other than your affection.

Since you travel so much, how do you manage to regularly interact with them?
That's true…my last dog, I used to miss very much when I used to travel. This one is very close to my cook and I am very pleased about that because they are very attached to each other. I feel very happy whenever I am here or not. He really is my cook's dog, not mine.

Do you still go for walks whenever you are here?
No, I have stopped doing that. People come up to me complaining about some minor malfunction in their Indica, some noise in the engine! Somebody else comes and says: "my daughter is brilliant with computers, so can you give her a job in TCS!" It just got too much.

But tell me what else do you do when you have a bit of time to yourself?
I love to play golf…but I haven't played in many years. Earlier I would play on weekends. Then travel took its toll. So I decided to take one afternoon out every week, which became increasingly difficult. So, finally I've landed up with nothing. I love to fly. So every chance I get, whenever, wherever I can, I usually fly. I used to fly on work also.

Whenever you go out of town on work, you fly yourself.
Yes, mostly. Now I also fly helicopters.

I read somewhere that you find them more challenging…
Yes, they are. With modern, sophisticated planes you need a systems manager more than a pilot. But with helicopters, the operation is still largely physical.

Did you learn how to fly helicopters recently? I am told the skills required are very different compared to planes. Is that so?
Yes, I learnt to fly choppers about five or six years back. Flying them is much more demanding. That's why it's a strange breed of flyers that know how to fly both.

Did you learn how to fly here or in the US?
I initially learnt flying in India but followed it up during my stay in the US. Then I came back to Jamshedpur and did a lot of flying with one captain Bose, the then chief of our airline. I owe him a lot…he taught me a great deal. I have been flying since the age of 17. I soloed first in the US and now have about 3,000 flying hours to my record.

Do you ever take a vacation?
Not really, but I would love to take one. No I haven't taken one as far as I can remember. What I often do is, is I am in an interesting place, I take my business meetings for the first couple of days there and add a day or so there to relax.

You must have also been to your hotel, the Taj Exotica, in Maldives?
Yes, a couple of times. We have in fact opened a new hotel in Mauritius, and I have visited that too. I must add I love South Africa but I have never been able to spend time there. I had to come right back as soon as my work was over. I have visited the game parks. What I did was to schedule my business meetings in them. But I haven't seen much of South Africa, the cities for example.

Do you look forward to complete retirement from work?
Yes, I am really looking forward to it. There are so many things that I'd like to do…first is to take a break and do all the things that I feel I haven't done — like play golf, read, have the space and time of my own, not have to get up and be somewhere else. I think six months of that will be a great tonic. After that I will get bored. Then I will decide what I want to commit myself to for the rest of my life.

Will you stay on in the boards of some companies?
Well, I think, some of the foreign boards that I am on, so long as they want me, I will continue to have that connection because it would give me an opportunity to interact with interesting people. I have always been interested in design and I may do something in designing — by that I mean product design. Then there are causes that I feel I would want to take up. I can't define because they come up from time to time. I will probably end up a cantankerous old man fighting for those causes. I look forward to retirement in an active kind of way.

What's the timeframe for that?
The timeframe is 2007, simple.

Will you walk away completely, or take a six-month break and get back with some degree of involvement in the work?
I think when one makes that move he should make that move completely.

You wouldn't consider politics? After all, Naval Tata had contested elections.
No, I won't consider politics at all. Yes, my father wanted to be in politics. I think he really wanted to be in the Rajya Sabha. But I don't want to. I don't know why my father wanted to be in politics, but he really did. And I was with him when he campaigned. Each day that I was with him, I kept asking him why would anybody want to do this? I think that had a lot to do with me deciding never to be involved.

But don't you think that you can contribute a lot, if you really want to?
In what way? To defy a system that is so deep rooted; I don't think I can make a contribution.

Finally, where do you see India being after 2050?
I think I can't express a view for that because most of us in this room right now won't be around!

Ok, lets broadly look at the next ten years then.
I have two views on this. First I am nationalistic and am very proud of India. I have felt for a long time that India will be a country that will stand up and be counted by other countries. We also have many challenges, demands, many things to be done; they are not done because of problems. You talk of 2050: What scares me is that we are adding about 18 million people each year. Although our population growth is slowing but it is at a very slow pace. But the scary part is that about 40% of our population today is under the age of 16, and that young population would want to get more and more opportunities but more importantly, they will need jobs. And that means a segment, assuming that women are also looking at livelihood by that time, you re looking at 40-50 million people.

If you look at it today, we are employing about 350 million out of a billion. I don't think new industries will dole out more than 7-8 million new jobs each year. So the point is that we have to create jobs in the agro industry — basically in the rural areas. We have something to do to slow down our population growth. We have to create more jobs, we have to create levels of education, provide basic necessities, drinking water etc. These are the tasks ahead of us. I think that there should be a commitment that this needs to be done, not just statements, but we need to be on the ground and make this happen. Otherwise, we are a tremendous country, with great talent, great raw materials and natural resources; we can be a very successful country.