Ratan Tata's many achievements

Published on Thu, Jan 05, 2006 at 10:39 | Updated at Wed, Jun 28, 2006 at 14:43 |
Source : Moneycontrol.co

"If you move up the corporate ladder you expect people, particularly those near the top, to
have thought through situations in terms of all implications."

"The greater integration of the group has added an enormous strength to what we've done
because we really were a disparate group of companies."

"You're the dog when you're doing badly. If Tata Motors is in a loss, we say, look the market
shrunk but our market share didn't shrink. But nobody listens to you."

"When McKinsey was involved, it was very negative on steel. I've always held a view that steel
provided a return that was beyond the cost of money."

"We're going to go after growth not just by expanding our existing products but by creating
products that will reach out to the lower end of the pyramid."

"We are planning to grow our companies across the globe and will be looking for both organic
and inorganic growth," says Tata.

"A company does not become global by simply participating in a certain number of geographic
markets - in that sense, it is not a sum of parts. It is its ability to become globally competitive,
leverage global opportunities and have the required global capabilities that makes it global. We
are in the process of acquiring such a competitive position and global coordination capabilities,
both at the individual company level, as well as at the group level," says Tata

Vital Statistics

Name Ratan N Tata

Age in 2005 68 years
Education Bachelor's degree in architecture from USA's Cornell University
Mission/Vision "To improve the quality of life of the communities we serve"
Company Tata Motors Limited, Tata Group
Designation Chairman
Tenure in current position 1 January 1991 to today
Tenure in company 43 years: since 1962
Experience Joined the Tata Group in 1962 on returning from the USA. Initial
assignment was at Tata Steel in Jamshedpur where he spent six
years on the shop floor, first in the engineering division and
finally in the projects division as technical assistant to the
Director-in-Charge. Moving on to the group's textiles industries,
he turned around Central India Textiles, and more importantly
Nelco. He was appointed Chairman of Tata Industries in 1981,
 Deputy Chairman of Tata Motors in July 1988, and assumed
JRD's position as Group Chairman in 1991
World class competency Building world class companies and leaders, developing India's
first car
Awards Ernst & Young Entrepreneur of the Year,
2003
Salary Rs430,000
Google hits 14,000
Number of employees NA

Company Performance FY02 - FY04

Revenues Rs132.23bn RONW 24.19%
Net profit Rs8103.4mn Growth rate 21% CAGR
Net profit margin 3.253% ROCE 26.21%

Smart Achievements

•Globalization: made three international acquisitions, sourced new markets across three
continents, developed products for international markets, put together a high speed data
network linking three continents
• Tata Motors bought South Korean truckmaker, Daewoo Commercial Vehicles for
Rs4.65bn to establish a hold in East Asia, entered new markets in China, South Africa,
Korea, Thailand and Britian, achieved 44% increase in net sales
• Established presence on NYSE: Tata Motors listed its American Depositary Receipts
on the New York Stock Exchange
• Tata Steel bought Singapore's NatSteel for Rs13bn
• VSNL acquired Dishnet for Rs2.7bn, and acquired TGN for $130mn including Tyco's
extensive submarine cable network
• Launched a highly successful IPO with TCS: the offer of 55.4bn shares was subscribed
7.7 times
• Corporate restructuring: merged non-banking finance companies with Tata Motors to
form a consolidated entity
Summary

On a balmy day in South Korea on 30 March 2004, in a quiet ceremony at the Daewoo
Commercial Vehicle facility in Gunsan, Kwang-Ok Chae, President & Receiver of Daewoo CV,
the second largest commercial vehicle maker in South Korea, handed over the newly allotted
shares of his company to Ratan Tata. Not only was it Ratan Tata's first visit to Daewoo facilities
but it was also Tata Motors' first overseas acquisition.

• For Tata the Daewoo CV takeover was huge step forward in his eventual vision to firmly
establish the Tata Group as a transnational. He plans to see that it is well on its way
before he retires in three years. But Tata is clear about the challenges he faces. Tata
Motors is one of the group companies that has already developed these capabilities. The
strategy in this case has been through acquisition.
• Tata Motors is only one example. This sea change is happening across the group. For
Tata, the dream of developing into a global giant had been brewing for many years, but it
is only recently that the process really gained momentum. In the last few years, behind
the stately facade of Bombay House, Tata has been busy pushing all group companies
 towards international growth. His strategy is simple; a mix of organic growth and
takeovers.
• In 2004 in addition to Daewoo, Tata has made four bold steps. Tata Motors listed its
American Depositary Receipts on the New York Stock Exchange; Tata Steel bought
Singapore's NatSteel to target markets in China, Australia and Southeast Asia; VSNL put
together a high speed data network linking three continents by agreeing to buy Tyco's
extensive submarine cable network and by adding a link between Singapore and
Chennai. And Tata Consultancy Services (TCS) went public with fanfare, cashing in on
the global outsourcing boom.
• Tata took over VSNL in 2002 with the express idea of leveraging its capacities and
increasing the scale of the company. In the last three years, VSNL has grown by leaps
and bounds by acquiring companies, starting new projects and creating synergies with
other Tata companies. By 2003 work on a 3,175km undersea cable laying project (called
Tata Indicom India Singapore System) between Chennai and Singapore, costing $100mn
had commenced.
The TCS IPO was another feather in Tata's cap. TCS is one of India's truly global companies with
800 foreign employees and a development center in every part of the world. TCS is one of India's
largest software solution providers making over 90% of its revenues (Rs59.39bn in FY04) from its
international clients. In 2003 it become the first Indian IT services organization to generate $1bn
in a

Powered by The Smart Manager

Ratan Tata on Nano and future challenges

July 09, 2008

The year ahead will be a tough one, but the high sales volume of Nano will dramatically
change the company's market position.

The Indian economy continued to register impressive GDP growth, although the rate of
growth declined marginally over the previous year, reflecting inflationary trends driven
by the increase in the cost of energy and raw materials.

The level of industrial activity has also begun to decline as a result of fiscal constraints
imposed on money supply and the raising of interest rates.

Investment flows into India increased by 20 per cent to a record level of about Rs
1,20,000 crore (Rs 1,200 billion). Investment and consequent growth could have been
even greater but for the roadblocks to major investments arising from ideological
differences, state-Centre conflicts and vested interests.

Some of these self-serving obstacles delayed major projects, depriving the country the
opportunity to bridge the gap in infrastructure, energy, power generation, utilisation of
the country�s vast natural resources and, finally, to improve the quality of life of its
people.

Image: Tata Group chief Ratan Tata poses with Tata Nano | Photograph:
Raveendran/AFP/Getty Images

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TATA-CORUS
Ratan Tata and Corus chief executive Philippe Varin speak their minds on the path ahead
A week after sealing the $12.1-billion Corus deal, Ratan Tata tells why he was willing to
pay more for the acquisition. In an e-mail interview with BW’s Piya Singh, he discusses
Tata Steel’s strategy to leverage the strengths of the combined entity and other
integration challenges.

The Street perception is that the Tatas have paid too much. Analysts are concerned
about the industry’s cyclical nature and its impact on future earnings. How would
you view the deal price in case of an adverse turn in the business cycle?

Globally, the steel industry is witnessing consolidation and changes in the traditional
business model. Instead of moving large quantities of iron ore, companies are now
moving efficient material which is steel based (de-integrated production). We took into
account possible steel price change, and geographical and product mix possibilities while
bidding. We are optimistic that we can extract benefits from the acquisition in different
scenarios.

How far were you prepared to go considering the strategic advantages that Corus
offers?

I think at this point of time, in the steel industry, the business cycle has been better. We
had taken a view that we would not go beyond a point of prudence and we did not reach
that limit. The price has been higher than what it was when we started, owing to
circumstances that existed. We believe that the price today will, looking back in time,
prove to be one that was worthwhile because the price of steel companies in the coming
year will likely be even higher.

What are your plans on supply of raw materials to Corus?

We plan to improve Corus’s profitability and operational efficiencies; adopt a philosophy

of de-integrated production. We expect significant synergies.

Are you interested in acquiring iron ore assets overseas?

We will look at all possible opportunities in line with the company’s strategic direction.

Directionally, do you see any changes for Tata Steel from being a low cost steel
maker?

The combined entity will emerge as the second-most geographically diversified steel
company. It will have access to high value-added product mix and strong market
positions in automotive, construction and packaging. The combine will be the second
largest tin-plate maker in the world. Of course, there is a great amount of cultural fit
between the two companies, which is, perhaps, the most important thing in any post-
acquisition integration process between two large companies.
Could you shed light on the potential financing options for the $8 billion debt to be
garnered from banks aside from the Tatas’ commitment of $4.1 billion to the SPV?

Tata Steel is working on the funding structure and financing options; the same will be
announced at an appropriate time.

Does the plan include fund-raising through ADRs from group companies?

It is too premature to comment on the same.

Would the new business model of the two companies necessitate a rationalisation of the
workforce?

Any new change involves a certain amount of apprehension. This acquisition is about
making an entity more competitive so that jobs can also be secured better. We are not a
company that looks at jobs first. We would first try and improve the productivity and
output with the same number of people. It is important for us to get the respect of people,
raise their motivation and strengthen the partnership.

Philippe Varin, chief executive of Corus, is one name Indians will get increasingly
familiar with. The 53-year-old Varin, who had the tough task of turning Corus around,
now has a key role in forging the merged entity’s future. He tells BW’s Pallavi Roy what
lies ahead for Tata Steel and Corus.

Why do you think Tata Steel found more value in Corus than CSN? What are your
gains in being part of this acquisition?
We are at the beginning of the journey. It is clear to me that the enlarged company will be
No. 5 and the second-biggest global player. The value creation for the new company has
to come from three areas. One is what we call synergies.

It is about sharing of manufacturing practices, shared services and purchasing — these

are the traditional type of synergies in any merger. The second area is about sharing our
complementary strengths. For example, Corus has strong R&D and product development
capabilities for value-added products in the auto, construction and packaging markets,
which will complement what Tata Steel is doing in the fast-growing Asian markets. The
third is linked to the option for the future to bring low-cost slabs once Tata Steel has
completed its greenfield projects.

In addition, there will be other ways to create value, linked to the projects of Tata Steel in
India today. We will have a good platform from which we can participate in the
consolidation of the industry that is going to continue. So, it is about profitability, growth.
I also think that because of the management chemistry at all levels, we will have a very
strong performance.

Tata Steel’s new vision is to create capacity of 100 million tonnes (mt) over the next
few years...

I share the vision that growth will be a key component of our strategy. To compete in the
first league globally, we have to run on two legs. The first is profitability. If you take the
EBITDA/sales of the combined entity, it is slightly below 15 per cent, which we will look
to improve. The second leg is about growth. We will start below 25 mt, but not stay there.
But I am not sure there is a magic figure. We won’t grow for the sake of size, but grow in
a profitable manner.

As CEO of Corus in the past three years, what were the challenges you faced? And
to what would you attribute the company’s reasonable turnaround?

There have indeed been challenges. The first one in 2003 was to restore competitiveness
of the company. Then we set up the turnaround programme called ‘Restoring Success’,
which was about investing in the UK and restructuring to focus our main steel-making
businesses in the UK on three sites instead of five (see ‘This Is Corus’ on page 38).
Beyond restructuring in the UK, we have increased our focus on safety and customer
service. Here, there is a lot of similarity between what we are doing and what Tata Steel
has been doing over the past few years.

The second challenge was financing. The company had huge debts and we went into a
rights issue in 2003. Then, we sold our downstream aluminium business in 2006. Now,
we are a fully refinanced company and we have increased our profitability. Our gearing
ratio was also very low — at the end of the third quarter, it was 13 per cent.

The third challenge was making a lot of changes in the management, and the board, in
particular, has become more international.
The next step for us was to find a partner with whom we could play the global game and I
am very pleased that we found it in Tata Steel. Also, we have been lucky because the
steel industry has been in good shape.

Ratan Tata
Ratan Tata (born December 28, 1937, in Mumbai, India) was brought
up by Lady Navajbai after his parents separated. He is the Chairman of the Tata Group, a
respected and most well-known industrial group. He never married.

Education & Career of Ratan Tata

Ratan Tata had his schooling in Mumbai. He graduated with Bachelor of Science degree
in Architecture and Structural Engineering from Cornell University in 1962. He was with
Jones and Emmons in Los Angeles, California. He returned to India in late 1962 and
joined the Tata Group at Tata Steel in Jamshedpur. He worked with a number of
companies before becoming the director-in-charge of The National Radio & Electronics
Company (NELCO) in 1971. He became the Chairman of Tata Industries in 1981 and
launched major reforms. He took over the Tata group when J R D stepped aside in 1991.

Important Works by Ratan Tata

Tata Consultancy Services went public. Tata Motors got listed in the New York Stock
Exchange. In 2007, Tata’s acquired Corus, an Anglo-Dutch steel and aluminum producer
for about £6.7 billion. He announced his intention to manufacture Nano costing Rs
100,000 (US$2,528) in three models at the New Delhi Auto Expo on January 10, 2008.
Tata Motors acquired Jaguar & Land Rover from Ford Motor Company for £1.15 billion
($2.3 billion).

Awards/Achievements for Ratan Tata

Ratan Tata received a number of awards such as Padma Vibhushan (2008); NASSCOM
Global Leadership Award (2008); the Carnegie Medal of Philanthropy on behalf of the
Tata family (2007); 26th Robert S. Hatfield Fellow in Economic Education by Cornell
University (2006); and Padma Bhushan (2000).
Ratan Tata serves in a number of positions including Member, the Prime Minister's
Council on Trade and Industry.

Ratan Tata's foreign affiliations include Member of the international advisory board, the
Mitsubishi Corporation, JP Morgan Chase, the American International Group and Booz
Allen Hamilton; Member of the board of trustees of the RAND Corporation, Cornell
University, and University of Southern California; board member, the International
Investment Council of South Africa; member, Asia-Pacific advisory committee, the New
York Stock Exchange; member, board of governors, the East-West Center; member, the
advisory board of RAND's Center for Asia Pacific Policy; Member, programme board of
the Bill & Melinda Gates Foundation's India AIDS initiative; honorary economic advisor
to Hang Zhou city in the Zhejiang province of China (2004); and the Honorary
citizenship, Government of Singapore (29th August 2008) the first Indian to receive this
honor.

He received an honorary doctorate from the London School of Economics and is among
the 25 most powerful people in business named by Fortune magazine (November 2007).
He was listed as one amongst the World's 100 most influential people Time magazine
2008).