The Life And Times Of Ratan Tata

Good morning. In today’s edition: lessons from Ratan Tata’s vision as an entrepreneur, a record-breaking year for QIPs, and probes into Ola Electric.

THE TAKE

Ratan Tata, An Entrepreneur Who Shaped Companies And A Nation  

In 1999, Tata Motors was on the verge of selling its passenger car division to Ford Motors after the Tata Indica launch faltered a year earlier. The discussions at Ford’s Detroit headquarters in the US didn’t go well. According to one account, Tata Motors officials including Ratan Tata were insulted by disparaging comments about the company and the car project. Ratan Tata returned to India from the meeting more determined to see the project through. Roughly eight years later, Tata Motors bought Jaguar Land Rover from Ford.

Tata Indica’s launch was marred by problems ranging from the engine to high noise and vibration levels in the car. In some cases, customers even turned violent. The sales for the diesel car dropped and in 2000-01 Tata Motors announced a Rs 500 crore loss. The company had already invested Rs 1,700 crore in the project. The blame landed on Ratan Tata for thinking too big.

Ratan Tata called an emergency meeting at the Taj President in Mumbai’s Cuffe Parade to take stock. Team members were encouraged to speak freely and accounts from the meeting suggest there was more self-criticism than blame. This resulted in the launch of a massive retrofit for around 45,000 cars with 45 parts being repaired free of cost. Tata Motors held customer meetings and collected feedback. 

A new car was already being worked on at the time. The Tata Indica V2 was launched with some design changes in 2001 and went on to do what the original car was supposed to. Ratan Tata would return with the famous Rs 1 lakh car, the Nano, in 2009 which again ran into problems — both internal and external. These were serious because the project was eventually wound down.

Many aspects of Ratan Tata’s personality were in the above instances. His goals were audacious,, which stretched way beyond what most entrepreneurs would even dare attempt. Remember, product entrepreneurs are rare in India. It takes gumption and courage to attempt a product that has to prove itself day after day on the kind of roads we have in India.

Second, if something does not work, entrepreneurs must trust the teams that built the product to find the solutions. That takes patience when time is running out in the marketplace. Finally, when Ratan Tata may have got credit for the group’s many successes during his tenure, he never really sought the limelight. His colleagues, whether in automotive, software, hotels or steel, felt a sense of constant ownership. This lasted even after his retirement.

Tata of course set a trailblazing path with the global acquisitions of brands like Jaguar Land Rover, Corus, Daewoo and Tetley. That was another aspect of the vastness of his vision, to grow and succeed. All of this stemmed from his desire to take on bigger challenges.

All Tata employees and acquaintances speak of Ratan Tata’s humility. They say he was always aligned with Tata Group’s principles of serving society along with creating value for shareholders. His tenure ticked all the boxes and created new benchmarks. In today’s time of confusing definitions of entrepreneurship and success, his life and career offer important insights into the true nature and role of entrepreneurship, of the kind that shapes companies and nations.

CO:RELATION

Equity Dilution Hurts Minority Shareholders

Qualified Institutional Placements or QIPs are set to break records this year. It was already close to Rs 60,000 crore in September 2024. In October, companies like Adani Enterprises, Paras Defence, Sundaram Clayton, and Varun Beverages announced their intention. When stock markets peak, Indian companies often find raising money by selling additional equity. The common thought is to augment resources for future growth. 

The rush to dilute equity may help businesses acquire the capital for growth. However, it affects minority shareholder interest. While large institutional investors can protest that move, individuals barely know that there are more shareholders now than before to share the same profit. Shareholder activism is still at a nascent stage in India despite institutional investors' having a significant interest in public companies. Company management must give a strong reason for raising equity at a high cost.

JANUS VIEW

Haryana Results Contra-Indicative Of A BJP Sweep In Upcoming Polls

How are the election results from Haryana and Jammu and Kashmir likely to influence the rest of the polity —  in particular, the forthcoming assembly elections in Jharkhand and Maharashtra? The conventional wisdom is that a third victory for the BJP on the trot in Haryana marks a tremendous vote of confidence in Prime Minister Narendra Modi’s leadership, and that victory for the BJP would be replicated in the forthcoming assembly elections as well. This is overgenerous to both Prime Minister Modi and to the Opposition, the Congress. 

The BJP’s failure to make its mark in Kashmir, even as it had a strong showing in Jammu, indicates that the prime minister’s appeal is neither universal nor all-conquering. Attributing the BJP’s Haryana victory to the party’s star campaigner does an injustice to the meticulous management of the election on the ground. The BJP did everything it could to get votes in the region. What does it indicate for future elections? 

CORE NUMBER

109 million

This is the total number of e-way bills generated in September 2024. This represents an 18% increase year-over-year and a 3% rise from August 2024, according to a Mint report.  E-way bills are electronic permits required for the interstate transportation of goods and are a key indicator of economic activity. This surge, coinciding with India's festive season, signals a positive outlook for consumer spending as shoppers prepare for upcoming celebrations. This data also paints an optimistic picture for Indian retailers as increased consumer spending is likely to boost various sectors and contribute to overall GDP growth.

FROM THE PERIPHERY

—🕊 The passing of former Tata Group chairman Ratan Tata triggered an outpouring of tributes from Indian and international figures alike. Indian entrepreneurs and founders, many personally mentored by him, lauded his visionary leadership, humility, and ethical approach to business. Business leaders like N Chandrasekaran and Anand Mahindra spoke of his transformative impact on Indian industry and his unwavering belief in India's potential. International figures such as Bill Gates and Sundar Pichai acknowledged his contributions to philanthropy and technology. Thousands of Tata employees, clad in blue, lined the streets of Mumbai to pay their respects as Ratan Tata's mortal remains, draped in the national flag, were carried to the Worli crematorium for a state funeral.

—🛵 Ola Electric is facing multiple investigations from prominent government bodies. The latest probe comes from the Ministry of Heavy Industries, which is examining the operational efficiency of the company's service centres. Reuters reported on Thursday that the ministry has tasked the Automotive Research Association of India (ARAI) with determining whether Ola Electric is addressing customer complaints in a timely manner — a mandatory requirement for receiving government subsidies. This investigation is in addition to ongoing probes by the Ministry of Road Transport and Highways and the Central Consumer Protection Authority, which are looking into a surge in consumer complaints alleging service deficiencies and potential unfair trade practices.

—📱 About 21% of global downloads for AI mobile app adoption have come from India, surpassing 2.2 billion by August 2024, reported Sensor Tower which curates insights from digital intelligence and analysis. According to The Business Standard, ChatGPT, Microsoft Copilot, and Google Gemini are popular, though most Indian users prefer free access. Meanwhile, North America and Europe rake in 68% of AI app revenue, already over $2 billion. As AI booms, device manufacturers must innovate, with apps like ChatGPT needing 4-5 GB of storage, pushing hardware limits.

—💻 India’s largest health insurer, Star Health, is probing its chief information security officer, Amarjeet Khanuja, over a data leak after a hacker named ‘xenZen’ claimed the executive sold customer data. Star said no wrongdoing by Khanuja has been found. Star sued Telegram and the hacker, who allegedly leaked medical records using Telegram chatbots and websites. A court in Tamil Nadu issued an injunction against the platforms. Telegram has denied wrongdoing, and the hacker vowed to join the legal hearings online.

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