Tata tells group cos to reinvent themselves

Even as his successor, Cyrus Pallonji Mistry, had a tough time entering Bombay House where scores of journalists were waiting for a photo opportunity, Ratan Tata spent his last day as Tata Group chairman in the shop floor of the Tata Motors plant in Pune, where over 25,000 workers gave him a fond farewell.

Tata, who moved around the sprawling premises and had lunch with workers in the canteen, was in a nostalgic mood and recollected his days at the plant, which gave him some of the most memorable moments of his life. Tata had become chairman of Tata Motors in 1988, three years before he became group chairman.

As Tata was away, there was no event at Bombay House to mark the occasion. There is nothing planned for tomorrow, either, when Mistry will take over the reins as the sixth chairman of Tata Group.

Tata, however, didn’t forget to send a communication to all the 456,000 employees of the group. In an emailed statement, he said all group companies would have to reinvent themselves, reduce costs dramatically and be aggressive in the market place.

“We will also need to contain our borrowings and work hard to retain our margins,” Tata said.

He warned the group, like the rest of the world, should be ready to face the difficult economic environment, which is most likely to continue through most of next year. “We will probably see continued constraints in consumer demand, over-capacity and increased competition from imports,” the letter said.

Tata, however, struck a note of optimism by saying this “seemingly gloomy picture” would be a passing phase.

“I feel confident that the robust growth that India has shown over the past several years will be re-established and the strong fundamentals in the country will result in India once again taking its place as one of the economic success stories of the region,” he said, adding that the Tata group would play an important role in the development of the country.

On his successor, Tata said the growth of the group depended on Mistry and he was sure that the new chairman would receive from employees the same support, the same commitment and the same understanding that he had enjoyed over the years.

The doyen of Indian business gave full credit to his employees for the $100-billion group revenues, which rose 20 times in the last 20 years. “Our brand has emerged as the 45th global and the number one Indian brand and I feel immensely proud about it,” the two-page communication said.

Tata watchers said Mistry had it in him to fill the space left vacant by Tata. “Cyrus will certainly be able to steer the group well,” said Zia Mody of AZB Partners, who worked very closely with Tata on his global acquisition drive. “Let’s not forget that he has been in business for a long time, there is a familiarity with the Tata companies with which Cyrus has been director. Besides, he has been working closely with Mr Tata for close to a year now.”

Many in India Inc said Tata showed it was possible to do business in an ethical way. Adi Godrej, CII President and chairman of Godrej Group, said Tata led the group brilliantly and successfully in expanding and globalising it.