Starbucks, Tetley, Jaguar Land Rover: Remembering Ratan Tata’s global ambitions

Ratan Tata, the philanthropist and former chairman of Tata Group who has died aged 86, played an instrumental role in globalising and modernising one of India’s oldest business houses.

His ability to take bold, audacious business risks informed a high-profile acquisition strategy that kept the salt-to-steel conglomerate founded 155 years ago by his forefathers relevant after India liberalised its economy in the 1990s.

At the turn of the millennium, Tata executed the biggest cross-border acquisition in Indian corporate history – buying Tetley Tea, the world’s second largest producer of teabags. The iconic British brand was three times the size of the small Tata group company that had bought it.

In subsequent years, his ambitions grew only bigger, as his group swallowed up major British industrial giants like the steelmaker Corus and the luxury car manufacturer Jaguar Land Rover.

While the acquisitions didn’t always pay off – Corus was bought at very expensive valuations just before the global financial crisis of 2007, and remained a drag on Tata Steel’s performance for years – they were big power moves.

They also had a great symbolic effect, says Mircea Raianu, historian and author of Tata: The Global Corporation That Built Indian Capitalism. He adds that they “represented ‘the empire striking back’ as a business from a former colony took over the motherland’s prize assets, reversing the sneering attitude with which British industrialists looked upon the Tata Group a century earlier”.

Global ambitions

The Tata Group’s outlook had been “outward-oriented” from the very beginning, according to Andrea Goldstein, an economist who published a study in 2008 on the internationalisation of Indian companies, with a particular focus on Tata. As early as in the 1950s, Tata companies operated with foreign partners.

But Ratan Tata was keen to “internationalise in giant strides, not in token, incremental steps”, Ms Goldstein pointed out……….

The misses

While the Tata Group made significant strides overseas in the early 2000s, domestically the failure of the Tata Nano – launched and marketed as the world’s cheapest car – was a setback for Tata. This was his most ambitious project, but he had clearly misread India’s consumer market this time.

Brand experts say an aspirational India didn’t want to associate with the cheap car tag. And Tata himself eventually admitted that the “poor man’s car” tag was a “stigma” that needed to be undone………..

A lasting legacy

In spite of the many wrong turns, Tata retired in 2012, leaving the vast empire he inherited in a much stronger position both domestically and globally.

Along with big-ticket acquisitions, his bid to modernise the group with a sharp focus on IT has served the group well over the years.

When many of his big bets went sour, one high-performing firm, Tata Consultancy Services (TCS), along with JLR carried the “dead weight of other ailing companies”, Mr Raianu says.

TCS is today India’s largest IT services company and the cash cow of the Tata Group, contributing to three-quarters of its profits.

In 2022, the Tata Group also brought back India’s flagship carrier Air India into its fold approximately 69 years after the government took control of the airline. This was a dream come true for Ratan Tata, a trained pilot himself, but also a bold bet given how capital intensive it is to run an airline……….

Source BBC BUSINESS NEWS