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BW Businessworld

Passing Of The Baton

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Ratan Naval Tata took over as chairman of the Tata group from his uncle JRD Tata in 1991. The prevailing opinion in business circles then was that he was not a good choice. He had been anointed successor to JRD before he was formally named as group chairman by the Tata Sons board. Most people pointed out that Ratan Tata’s track record had been less than spectacular till then. He had handled Nelco and Empress Mills independently, and neither was considered a jewel in the Tata crown. He had turned around Nelco, but it slid back into trouble shortly after he left. In Empress Mills, his plea for additional resources and funding had been rejected, and he couldn’t do much.
The biggest problem for Ratan Tata was the inevitable comparison with his predecessor. JRD was a legend. He was a great people manager. Exceptional managers such as Russi Mody, Ajit Kerkar, Darbari Seth and Sumant Mulgaonkar had flourished under him. All these men had proven skills as managers and builders of companies. At least on paper, their track record was superior to anything that Ratan Tata had achieved till then. And most of them made no bones about the fact that they did not like taking orders from him. Much of the early years of the new chairman’s tenure was spent trying to assert his authority and consolidating his hold on the group.
A group presentation shows that the first decade and a half of Ratan Tata’s tenure as chairman saw the group revenues growing only moderately. It was only after 2006 — when the group’s biggest international acquisitions took place — that the Tata group showed spectacular growth. Between 2006 and 2008, the Tata group’s revenues more than doubled.
Ratan Tata proved all his detractors wrong. But he is leaving his chosen successor Cyrus Mistry with many of the same issues he himself faced. Every decision Mistry takes will be constantly scrutinised and compared with what Tata would have taken under similar circumstances. Similarly, the way the Tata group grows in the initial years of Mistry’s stewardship will be compared with the growth achieved in the past half a dozen years.
Senior editor Nevin John examines what Mistry is inheriting and the immediate issues he will be expected to solve.

(This story was published in Businessworld Issue Dated 31-12-2012)