The title of this book aptly reflects current reality. Tata Motors is facing a drop in domestic sales. Its much-hyped small car, Nano, has not attracted many buyers. But the company's low domestic sales have been neutralised by strong volume growth for Jaguar Land Rover (JLR), the luxury car business that many had warned Ratan Tata would be a disastrous purchase. Jewels in the Crown, written by Ray Hutton, a veteran journalist and the former editor-in-chief of Autocar magazine, is the story of how the Tatas, who had no previous experience in the business of luxury cars, managed to transform JLR into a profitable venture - something even Ford failed to achieve.
The book is written lucidly, but it leaves many questions unanswered. Nor does it offer new insights into many key events of the transformation. For instance, it doesn't tell you what went on behind the scenes before the Tatas were able to strike a deal. Or why the other competitors - such as Mahindra & Mahindra, One Equity, which was being advised by none other than former Ford CEO Jacques Nasser, and Cerberus - fell by the wayside. It glosses over the critical question of why the Tatas, who are struggling to make a success of the Nano (though a small car is much more within the scope of their expertise), succeeded in running a luxury car company better. The book is also unbalanced in terms of setting the context. It delves into the history of Jaguar and Land Rover, providing unnecessarily detailed accounts of their ups and downs. This covers as many as 19 pages. On the other hand, the author devotes only nine pages to the story of the Tatas and the history of the group that salvaged these two famous brands from oblivion.
Mr Hutton begins the book with the now-famous press conference in the Geneva Motor Show in March 2008, which was the first time Ratan Tata spoke about conducting a due-diligence exercise for Jaguar and Land Rover. This is followed by a long chapter on JLR's history and a short introduction of the Tatas. The next few chapters describe Mr Nasser's ambition and Ford's need to sell the two brands. The rest of the book is about how the Tatas negotiated the transformation plumb in the middle of an economic meltdown. Finally, the author assesses what the Tatas did right.
Despite some inadequacies, the book has many interesting takeaways on the serious challenges the Tatas faced in transforming JLR. It is interesting to know, for instance, that the British government declined to provide funds to tide the two British brands over the global downturn. The government's stance was clear, the author says: why help a rich Indian company with funds when there was no financial crisis in India? Underlying this view, of course, was the suspicion that the Tatas would shift production of JLR to India, leading to more job losses in the UK.
When, however, the UK's Department for Business, Enterprise and Regulatory Reform eventually agreed to underwrite a £340-million loan to JLR given by the European Investment Bank and another £450 million from another group, the Tatas rejected it. That is because the guarantees came with stiff riders that would have made the Tatas virtually lose control. The demands included, among other things, a seat on the JLR board, the right to choose its chairman and vetoes on investment and employment issues. Instead, the Tatas went to Indian banks and elsewhere and secured a £500-million loan from a consortium of banks, which included State Bank of India and Bank of Baroda. The Tatas also learnt a lesson: they decided to retreat from loans given by UK and European government-linked financial institutions.
Also, contrary to the common notion that the Tatas followed a hands-off approach in running JLR, leaving the management to take important decisions, the book brings to light that this policy was limited only to the first two years. After that, the Tatas brought in a new management, many of them from German car maker BMW. Prominent among them were Carl-Peter Forster and Ralf Speth of BMW and others from Porsche and Bentley. It was this team that worked to turn the company around.
Perhaps it is Ravi Kant, the key advisor to Tata for the deal, who aptly sums up the essence of the Tata group's foreign acquisition strategy and why it has been successful. In an interview for the book, Mr Kant says, "in the companies we acquire we keep management independent, but accountable. 'Hands off' is not the same as 'left alone', it does not mean we are not involved…."
JEWELS IN THE CROWN
How Tata of India Transformed Britain's Jaguar and Land Rover
Elliott & Thompson
176 pages; £20