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Ratan Tata became the Tata Group’s chairman in 1991. In his 21-year tenure, the Tata Group saw profits multiply fifty-fold. He transformed the company from a mostly domestic Indian producer to a global industrial powerhouse.

Tata passed away on Wednesday night, 9 October 2024. His legacy is one of global ambition, spinning a vital trade and investment web between India and the rest of the world.

Forging a global India

Jamshedji Tata founded the Tata Group in 1868; his great-grandson, Ratan Tata, was born during the British Raj in 1937. After his early studies in Mumbai, he completed his bachelor’s degree at Cornell University. His time in the US added to Tata’s macroeconomic vantage point a perspective of India from the eyes of the West.

When he went to study abroad, he was offered a job at IBM—which he refused in favour of a hands-on internship on the shop floor of Tata Steel, returning to India. In his biography, he recognised that there was neither supply nor demand for high-level industrial businessmen in India. Tata created both.

By 1990, former Indian prime minister Rajiv Gandhi had instigated a liberalisation program to open India to the world. Finance Minister (and later Prime Minister) Manmohan Singh, in eliminating the ‘License Raj’ pejorative, changed India’s economy from state-controlled and socialist-leaning, to a more capitalist one in which foreign direct investment was easier.

Where Gandhi and his government were modernising India politically, Tata sought to transform the corporate world.

Strategic divestment, acquisition spree

Tata championed India’s global role in trade and supply chains, using Tata Group’s acquisitions and reach to connect Indian industry to international markets. Over his tenure, India’s stake in key global commodities grew increasingly embedded.

In the late 1990s and early 2000s, Tata divested from several consumer-focused businesses within India. This consolidation was partly necessitated by a sharp economic slowdown in India. Between 1997 and 2001, group revenues shrunk by 5%, while net profits plummeted by 85%. 

With a leaner portfolio, Tata set his sights on global expansion. The turning point came in 2000 when Tata Tea acquired the British tea manufacturer Tetley for $432 million, making it the world’s second-largest branded tea company. This acquisition set the stage for a series of bold moves in the international arena: after Tetley, the company bought around 30 companies. 

In 2004, Tata Motors acquired the South Korean Daewoo Motors’ heavy vehicles unit, followed by a stake in Spanish luxury bus maker Hispano Carrocera S.A. The pinnacle of Tata’s automotive ambitions was realised in 2008 with the $2.3 billion acquisition of Jaguar Land Rover, catapulting Tata Motors into the ranks of the world’s top automakers.

Perhaps the most audacious move came in 2007 when Tata Steel acquired the Anglo-Dutch steel manufacturers, the Corus Group, for $12.2 billion during the steel boom. In the longer term, the Corus Group acquisition was a lesser success, mired by financial challenges and controversies which resulted in job cuts and asset sales.

Overall, acquisitions were costly. The group’s balance sheet leverage ratio peaked at debt equal to 1.84 times its equity in 2009, up from 0.52 times in 2005. The 2008 financial crisis exacerbated this financial strain, with the group’s combined net profits falling by 54% in 2009 and a further 7.4% the following year.

By late 2014, Tata Group was £13 billion in debt. The Tata Group’s core companies have since rebounded, largely due to Tata Sons’ financial resources and growing dividend income from Tata Consultancy Services.

Yet, what Ratan Tata accomplished in the ideological domain is unquantifiable. The name of ‘Tata Group’ had irreversibly penetrated household vocabulary across industries, continents, and social strata. Whether or not they paid off in the shorter term, India’s central position in global supply chains today comes as a direct consequence of these gambles.

“Urging compassion”

Ratan Tata was a frequent advocate for stray dogs, allowing them to lounge in the Tata Group headquarters in Mumbai. Evidently, his personal commitment to environmental, social, and governance (ESG) causes has shaped the group’s strategy today.

Under his leadership, the Tata Group committed to becoming carbon neutral, with many of its companies setting targets for reducing their carbon footprints. Tata Trusts, the group’s philanthropic arm, has invested heavily in water conservation measures, afforestation programmes, and initiatives to promote sustainable farming techniques in rural areas. 

The Tata Group’s environmental initiatives gained momentum during Ratan Tata’s tenure. Tata Motors ventured into electric vehicles (EVs), launching the Tigor EV and Nexon EV. The intention was to create a generation of millions of middle-class Indians, for whom sustainability was in the popular lexicon. While the Nexon, advertised as the world’s cheapest car in 2009 (for ₹100,000, or $1,350), proved an expensive failure, the project was socially forward-looking.In the realm of social responsibility, the ‘S’ of ESG, Tata Trusts has provided scholarships and supported sustainable living programs towards rural development across India. During the COVID-19 pandemic, Tata personally contributed ₹500 crore (approximately $68 million at the time) to relief efforts.

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Highly unconventionally for a business tycoon, Ratan Tata has been described as introverted, humble, compassionate, and even adorable. but regarding his approach to placing India on the map of global investment and trade, Tata’s salutary long-termist attitude shows how, above all, he was patient.