'Ethical standards and value systems' of Tata group must stay intact: Ratan Tata

In an exclusive interview with CNBC-TV18, the former head of the Tata group reflects on the people, the moments and the beliefs that have shaped him, and what could be in store for the iconic conglomerate

Published: Sep 20, 2017

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Image by: Mexy Xavier

In an exclusive interview on CNBC-TV18, the chairman emeritus and former chairman of Tata Sons speaks to Suhel Seth about the importance of legacy and values of the Tata group, the people who have had a profound impact on the 79-year-old business legend, what he looks at while investing in startups, why PM Modi could be good for India, and the future of the conglomerate under the leadership of N Chandrasekaran. Edited excerpts:

Q: Ratan Tata Trust will be completing 125 years of its existence, the first of the trusts. When you look back at the work that the Tata trusts have done what are you feeling?  What ignites this feeling of compassion and giving back?
 I have a great sense of pride that over 125 years, Sir Ratanji Tata left his legacy to philanthropic causes, followed by his brother Sir Dorab Tata when he passed away -- he did exactly the same. Over the years, the Tatas have been structured by the holding company or the proprietors’ ownership being held by two charitable trusts. Over the years there was an increase in the number of charity trusts that were created to work on the disparities that one found in the country, that time a colonial country, and to work for the common good of the common man.
 
This was a different thing, it set up cancer hospitals, schools, institutions of that nature. It did also dealt heavily in terms of individual hardships. So, through the years, the trusts have dealt with individual hardships, they have given scholarships to students. We have had past Presidents of India who had been scholars of those Tata Scholarships. We have created institutions which stand today, like the Indian Institute of Sciences -- the trusts did not set that up, Jamsetji Tata set that up.
 
Q: There is an interesting anecdote about the conversations that Jamsetji Tata had with Swami Vivekananda aboard a ship?
I don’t specifically know about that conversation but they met each other and were inspired by each other, I know that.
 
Over the years, the trusts have focused on either creating institutions that served the common good like cancer hospitals, institutions of learning -- some international, some domestic -- and causes which were said to be for the common good.
 
What is refreshing is that the holding company for the whole Tata Group, which Jamsetji Tata set up, that 66 percent and at that time more than 85 percent of its income and dividend outflow became income to the trust for the common good of the Indian citizen and foreign causes.
 
Q: As you rightly said at that time there was no need, there was no mandate. Today we have CSR. What do you think went through the minds of the founders when they set this up and especially transferring their value in Tata Sons to the trusts?
I think it was a different view of ownership. JRD Tata often used to refer to the Tatas as being the ‘trustees of the people’. The Tata family could have become tremendously wealthy by having distributorships, by having partnerships etc in businesses but most of the businesses whether it was steel, power, or institutions were set up as institutions for the country.
 
So, Jamsetji Tata could just as well have dedicated Tata Steel to the nation or dedicated Tata Power to the nation, they belonged to shareholders and to the people. Personal ownership and personal wealth happened when it happened but was never the criteria for these companies to be established.
 
So, it was natural that he did leave his ownership to his two sons and then his two sons who had no children left them in charitable trusts as beneficiaries of the companies that they held.
 
So it is a refreshing change that gave way to ownership in an industry and not being for the beneficial interest of A or B or C  but for the better good of humanity.
 
Q: If you look at the trusts today, they span a wide range of sectors and there is a certain stress that you have laid on technology being a great intervention in some of the applications. Where do you believe the transformation of trusts actually began and why?
If you look at India through the years, the needs of India have changed. We had food famines in the British times, we don’t have famines any longer. We had a majority of people living in the rural areas, today there is vast migration to the urban areas, creating an important issue of urban poverty and hardships that didn’t exist before.
 
Today automation and differences in terms of value chains etc make human jobs less important than machine jobs in many companies. So the needs of the nation have changed. Food shortages continue to exist in pockets, water shortage is something that never existed in the past but is an issue today. A much larger population, and creating jobs and knowledge, these are all the issues that are issues of the changing times. 
 
For the trusts to continue to do what they did at the turn of the century would be to be sitting in the twilight thinking that the issues of the country are the same and to me that would have been a disappointment.
 
So the trusts have gone through and are going through transformation that to use a short term is making the trust relevant today, if we had not done that they would have become irrelevant and created edifices that stood up as evidence of what the trusts did but did not make a contribution to the country.

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Q: While I completely agree about the relevance of the trusts, the one thing that a lot of people talk about is the Tata culture- the Tata way of life. If you work for the Tatas on one hand it’s almost like we are working for a family and on the other it’s as if you are part of a legacy. How have successive leaders, before you JRD, how have you managed to retain that Tata culture in times which are sadly materialistic, competitive?
First of all that culture becomes embodied in the DNA of an organisation. It is set off by the early leaders – the founder in our case, who never was in need of wealth because he had it all but it wasn’t what drove him. The success of giving India its own independence in steel or power or in the hospitality area, is what gave him the pride that he had made India self-sufficient. He didn’t at that time look at the companies as being ‘his’ but belonging to the country.
 
Somehow that prevailed through the years through his sons and then through JRD Tata for 50 years or so, where JRD would stand in a line rather than jump a queue, where he would give way to a customer first and not him and that humility become embodied in what all the leaders of Tata companies had done, and we should protect that ferociously.
 
The day we lose that, I think we have lost an important facet of our input in the companies that we have. The day we decide to cheat, the day we decide to do something, hold something for us and not for the customer, I think we would have lost a very, very important asset.
 
Q:  Has it been tough to stick by these values, especially during times when values were being trampled upon because of politics, competition etc? Were there times that you often felt that thank God we were not the short-cut Tatas because you could have taken that short-cut?
I would be lying if I said there weren’t moments when those issues came up and those decisions had to be made. Happily, at every time boards stood together and leadership stood together in saying that is not what we do. We, over the years, on occasion have suffered as a result of that. However on the whole I believe it’s very important to come back at night and say ‘I have not succumbed.’
 
Q: I like that, because it is very easy to succumb?
Yes.
 
Q: You must have faced political pressures, economic pressures and yet you stayed the course?
Sometimes you did not know you were doing the right thing. All things are not black and white - you have choice, one choice leads you down a certain path long-term and another leads you down another path short-term and you have to weigh one issue against another and hopefully you make the right decisions, sometimes we don’t’ but we do it with innocence or naivete rather than intent and negativity.
 
So, I think that is a sort of dilemma that faces many leaders in the corporate world or politics and so it does in the business community too.
 
Q: In 1991 when you took over you were stepping into giant shoes - JRD Tata’s shoes. Then you brought the entire group together. I still remember the work that you did around brand Tata. When you took over and sat in that corner office in 1991, what is the one thought that raced through your mind because you were now the torchbearer and the legacy holder of almost 120-130 years of existence?
On the one hand it was a big move for me but on the other hand I joined the group in 1962. I had been in various positions on the shop floor in Australia, in textiles, in steel, in Tata Motors through the years and it was in relative terms easy for me to relate to the bigger issue.
 
The one thing I had which maybe is not so evident is, I had a terrific mentor in JRD Tata. I remember walking back from the meeting in where I was appointed chairman, when he walked back, I walked with him to his office and he told his secretary, we will have to move out of here now. I said no J, you don’t move out, this is your office as long as you want it. He said, really? I said yes it is. He said, where would you sit? I said where I am sitting today, I have an office down the hall and that is fine.
 
Then I was deadly afraid that JRD would forget that he had stepped down because he never stepped off the companies. He remained on the board of Tata Steel or Telco at that time and I thought suppose he runs the group from behind and forces his view on – he never did. In fact he was my greatest mentor and the years that he was alive, I used to go into his office and say J, I wish this had happened 10 years ago, we have got such a great relationship. He said I wish so too.
 
So, I was very lucky in having him there. He lent his weight when he had to, example the retirement age. Without his support, I could never have done that. He would explode if he thought something that was being done that was wrong. However on the whole he was a terrific mentor. He was like a father, brother, gave advice – a terrific relationship and very important, not enough has been said about that.

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Q: You too have been pretty reticent and shy talking about the experiences that you went through. Some of the things that we are hearing now, we have never heard before. In your interactions with JRD, what was the one thing that you took away from that interaction? What was the core of his brand values or his kernel as it were?
I would think if I were to have to pick one, humility would be on the top of the list. He was just a person who would love to be anonymous and to some extent that has rubbed off on me.
 
I love to be anonymous. As you go through life, you find that, that becomes less so and less possible and then you look at seeking anonymity by hiding.
 
Q: Were you always shy, you didn’t want the arc lights on you?
I think so because when I was in school etc, you wanted to be part of the school and not the rich man’s son or the chairman’s son or have a big car take you home while your classmates went by bus or smaller cars. I just wanted to be a normal person. I think I owe a lot to my father to ensure that we at no stage grew up, my brother and I, as pompous young people but as people who would like to be every day and I think that has stayed with me.
 
Q: I want to come back to the city you were born in - Mumbai. What was it like growing up, I know the personal trauma you went through on 26/11. What went through your mind on that evening? I remember you rushed to the Taj to see what was happening. What went through your mind and it must have broken your heart to a great extent?
To me it started by one of my colleagues telephoning me and saying that there is some shooting at the Taj. I called the Taj and nobody replied from the switch board. As things turned out I was not allowed into the lobby. The police came and they pushed everybody out. Krishna Kumar was standing on the footpath outside, I was partly there, partly home watching on television and it became very clear in a couple of hours that it was not a gang fight or an underworld thing, it was an attack by terrorists or by enemies of the state.
 
The next morning the government rang me to say it was all over. I in fact issued TV statement that morning, saying it was all over and it was not. It went on for three days. By that time everyone knew what it was. It was an attack by the enemy of the state. My take on that was that whatever happened, we were under siege in this hotel and whatever they did we would rebuild the hotel. The city would stand up and not fall down. There was a tremendous galvanising of the citizens of Mumbai, something that made everybody very proud of the way everybody stepped up to play a role. Nobody walked away from the situation as it stood and you felt a great sense of pride that you were a part of this great city with citizens who are not running away from what we did.
 
Q: I remember you were particularly aggrieved at the loss of so many people, including people who were working at the Taj at that time. I want to come back to a large national picture. You have seen prime ministers, you have seen governments at work at the state level, at the international level. India is at an exciting time, at an exciting place. What are your views about Narendra Modi?
I have known Narendra Modi when he was Chief Minister of Gujarat. I turned to him when we had to change factories from Singur in West Bengal to Gujarat. I have seen him and will never forget the way he found solutions for a company that was looking for a home.
 
Q: How was that meeting when you met Mr Modi in those days and told him about this move?
What I have said publicly is he invited me to move the factory to Gujarat and I said we would come if we had a home and he said, I will get you the land you want in three days. And then he delivered that. On the third morning he said,' here is the land that I promised.' And that just does not happen in India.
 
So, Mr Modi as Prime Minister now is offering India, the Indian people, a new India. We need to give him that opportunity to offer that new India. He is able, capable and innovative enough to look at India afresh and I for one, am optimistic that with his leadership, India will be that new India that he has promised.

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Q: It is interesting that you mentioned a new India because you are playing a very interesting role in that new India. You have made several investments in start-ups from cab hailing companies to your favourite area which is pet care. How did you and why do you pick up these start-ups and what has been the engagement with these entrepreneurs that you have had?
I was interested in innovative companies, usually small. I had Tatas invest in a computer company in San Jose in the Bay Area in the 1970s and I have always been sorry that India was not a part of this new wave of entrepreneurs that have set themselves up both, in the east coast and west coast of the US. But I could do very little in it because while I was in Tatas, that would be a conflict of interest somewhere.
 
So after I retired, I started taking the interest of looking at some of the new young start-ups in the country. Of course, it was a time when new start-ups were starting to take form in India.
 
How would I make a decision? It is a learning exercise for me. I found that the real key to deciding on how much you invested and what you did and how involved you became was to meet the founders.
 
The key would lie with the people that you met, who formed the company, they impressed you at times and at times they did not. Those that impressed you usually are the ones that led their companies to prosperity. Sometimes that went wrong.
 
The vision of the founder, however small that might be, whether it would be pet care, whether it would be fashion or healthcare as the case might be, it is what that person had in his or her vision that would impress me. I made small investments in many companies and some of them have been those that I have been proud of.
 
Q: It is interesting you mentioned the new India. Of late, we have seen you invest in a lot of start-ups. You are backing a lot of entrepreneurs, young people who are taking great risks. What is your philosophy and why do you choose the kind of investments you make?
First of all, the embodiment of vision that makes a start-up happen is important. I am not going to invest in a business that I have no interest in. So, the business or the vision of that start-up is important, first. But the most important issue is to meet the founders. I have changed my view sometimes from negative to positive, sometimes positive to negative with the founders. For example, a founder that intends to just scale up his company to sell off is not a company I obviously want to be with. A founder who has a passion to stay with something and build it into a sustainable company that is taking its place is somebody I tend to support.
 
So, it varies. When I was Chairman, I could not take this kind of view because somewhere or the other, it would be conflicting with something that Tatas were doing. Now as a free person, it is in invigorating to do this and meeting a lot of young people who one day will be leaders of their industry and it is nice to interact with them.

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Q: But I do not think you will ever be free in a sense. I am sure, Chandra comes to you, seeks your advice, seeks your views, he too needs a mentor, which brings me to a very interesting point. You have done so much from flying planes to running conglomerates to sitting on international boards. What is the one thing that continues to drive you to this day?
It is a difficult question to answer because you get driven by some fire within yourself. You do not necessarily know what it is. It could be the people who lead an organisation, it could be the passion with which somebody is pursuing what he wants to do. It may be taking the side of the downtrodden because he is being picked on. It varies from time to time, but there is an issue of wanting to make a difference. And if you can help make that happen, that consumes you and provides you with a motivation to go forward.
 
Q: As you said at the beginning of this conversation that there are still some sociological, societal issues that afflict our country. Let us imagine if the Prime Minister were to say, 'Mr Tata, please lead one specific nation altering mission.' What would you pick, if asked?
First of all, I hope I would never be asked anything like that because I would not be the kind of person to lead that. I do not think I could answer that off the cuff and it is too important an issue to give a flippant answer. But, the way such a thing ought to be done is to be freed of political baggage that often, such a thing would carry and the freedom to the person who is asked to do whatever is necessary to make that happen. Far too often, you have a good idea that is squelched because of political or sociological things. It just cannot be done or it is too difficult to be done or it is too risky to be done as such with public funds and those might be the very things that are necessary to pull a country out of a particular morass that it may be in an area. So, I would like to duck that question.
 
Q: From your vantage point, seeing what you have seen of the trust, of the relationship that the trusts have with the people and with the holding company, do you believe corporate India has really pulled its weight in the area of philanthropy and involved itself in nation-building like in many other countries where individuals get involved with nation-building as well?
The only fair answer to that is there have been certain companies that would make everybody proud with what they have done be it in the pharmaceutical area or be it in chemicals or be it in areas relating to rural development,  where they have done more than they need to do to have a public face. And there are companies who have not. But, I think, if you go to any country, you would have the same mix. Companies that are conscientious and compassionate about the have-nots in their country and those who do not care.
 
Q: Now that you are at arm's length from the operations of the Tata Group, what excites you the most about the group and what worries you the most, if anything worries you at all?
What excites me is the area we are working in now in trying to transform the Trust because we are actually in a manner of speaking, having the same excitement as one did in setting up an industrial enterprise, dealing now with trying to reach people, trying to provide healthcare.
 
Q: The National Cancer Grid.
The cancer grid, nutrition and while the Trust cannot take care of the country, we are setting some footfalls in the sand which I must say, the state governments and the central government, they are all supporting us fully and what we are trying to do is taken as being genuine and honest and it is very rewarding to see state governments and the centre working with us, things that some people would say could never happen.
 
Q: What excites you about the House of Tata, the industrial bit and what worries you the most, if anything?
It is too hot a question to answer given what we have been going through in the last several months. All I would like to say is that I feel that the group is in very able hands with Chandra. Businesses are cyclic, they will have their ups and downs. We have been a group that has worked with companies when they are in peril and brought them up and I hope we can continue to do that.
 
The group will probably look different over the next 10 years. There will be companies that were not there earlier and there will be companies that were there and not there 10 years from now because they will not be relevant or they may have been sold or transferred to another company. So the face of Tatas may change, but so long as there is still the same drive to make this an enterprise or a conglomeration of enterprises, that operate with ethical standards and value systems, I would feel very proud.
 
Q: I know you are not the preachy kind and you do not like pontificating, but there are going to be tons of young people watching this conversation. They are going to be watching it on television, they are going to see snippets online, many and you know this yourself, admire the House of Tata, they admire the Tata way of life and they admire Ratan Tata. If you were to send out a message to these young people who are watching the programme today, what would that be? It could be anything. It could be business, nation, whatever.
What I would tend to want to convey is that people should do what they believe is the right thing to do. However usually, that is also the most difficult thing to do and it is the riskiest thing to do, but if they believe in something, they should pursue it and they should, like I said earlier, try to make a difference. Not a difference that is disruptive or negative but a constructive difference.
 
One other thing I would like to add which sounds political, but it is not. We as a country or the citizens of a country need to get back that pride that we should have that we are Indians, not that we are Punjabis or Parsis or Tamils, but that we are Indians first, that we have a country that we belong to and we should be proud of. We seem to be losing that somewhere.

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Q: Why?
There are many reasons for that, but I think that can be won back. We should not have that sense of pride only every time we go to war or have a conflict or get attacked by terrorists. It should be there all the time.
 
Q: And to my mind, Modi is working on that and he has been working on that.
A: Yes, he has. Absolutely. He has built a vision of a unified India and people may disagree with that, but I think that is what the country needs at this point in time. It needs everybody to rally around the direction that the leaders are giving us. So, one hopes that the young of tomorrow will be driven by that to some extent.
 
Q: At your sprightly age, you still have multifarious hobbies from tinkering and driving cars to flying planes to reading to architecture. Do you think in many ways, this cross-functionality shaped you?
A: That is for someone else to say.
 
Q: But what do you feel?
I think you cannot just have one interest. You need to be able to jump. So I think I have been fortunate in having those interests. I failed in some ways, when I retired, I said I would relearn the piano. I have not done that.
 
Q: But you used to play the piano at one time?
Long, long ago. And I actually started relearning the piano. I got a very able piano teacher to come and teach me, but other things overtook my ability to be consistent. On the piano, I had one real problem. I found that I could not relate my left hand to do something different from my right hand. It became a frustrating issue and that sort of waned my urge to do what would give me many hours of joy.
 
Q: When you look back at this life, biggest achievement to your mind? What would you define as your biggest achievement?
I really would not be able to define that. There have been many moments which make one feel a sense of great satisfaction and there have been a few times when it is almost despair.
 
Q: So then I want to ask you which is your most despaired moment, as it were.
That is an easier one to answer because I always felt the greatest despair I had was when Tatas decided to put Central India Mills which was what Jamsetji started, into liquidation. If I recall at that time, it was Rs 50 lakh. I thought this was a very un-Tata like move, but it was done and many people went out of work. I saw the misery that it caused. Blue-collar workers got taken care of by the government, but the officers of the company really suffered and that has remained in my heart as something that was a moment of despair.
 
Q: You have sat on international boards. You continue to. You have feted by governments, nations, admired a lot. Who do you admire?
Two people that, apart from JRD Tata, whom I have mentioned, who I admire greatly and sort of oscillates between being a family member and a mentor and a businessman I admire, two people not connected with me have been an inspiration to me and have had a profound impression on what I have done and how I have done it, have been Dr Amar Bose who developed the Bose speakers, the Bose Corporation. He and I enjoyed a friendship that was very close and was very personal because he opened his company to me. We spent hours and hours together and discussed various things. In fact I knew more about the Bose Corporation than most people might have done.
 
And the other person is a person called Henry Schacht who was the chairman Cummins Engine Company where we had a joint venture. Then became the Chairman of Lucent which was the telecom company that merged with Alcatel. Henry continues to be today, Dr Bose died a couple of years ago and those two people are people that have had a great influence on my career.

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Q: The one thing that you have managed to hide very successfully from people is a deep sense of wit that you possess. We saw glimpses of it when you related that street urchin story. Is that not a very Parsi trait to have, I would not say wicked, but to have a titillating wit, and why have you hidden it from people?
I have not hidden it from people. Some people bring it out. The other day, had that not been mentioned, it would never have occurred to me to allude to something that I do all the time.
 
Q: So what happened with that street urchin? You were driving and then?
I always used to stop and talk to them because many of them are bright young kids who just do not have a chance. They are not interested in going to school. They are interested in a job and they make more money than they would make and they are just a part of India that is fascinating. It is the young India of tomorrow.
 
Q: Do you think, when you look back, the appetite for risk amongst the youth in India has increased? Earlier, we would follow traditional patterns of jobs, now more and more people are self-starters.
Depends on the area. People like the street urchins, what chance do they have? They look for a job. They live by day-to-day and they sometimes skate on thin ice in terms of the law. It is a difficult thing and to relate them to a middle class family that works hard, goes to school or college and aspires to be in a company, the wants are different, the aspirations are different. But all of them put together would make a tremendously entrepreneurial India.
 
Q: Next year, and I know you do not like anniversaries, but next year, the House of Tata will turn 150. It is a significant milestone for any industrial group, especially in young, vibrant democracies like ours. What are your thoughts about that?
I am very happy to see that we have held together for that period of time. Many companies disintegrate in that kind of period or are just a tombstone and we should do everything we can to preserve it and to continue that. As I said earlier, the group may change. It may look different in the next 30 years, 50 years, but it should embody the same values and the same ethical standards that it has had. It should never forget that most of its earnings go to philanthropy, not in the pockets of founders and leaders and that it is doing something for the common good of mankind and that is very satisfying if that were to happen.

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Q: Finally, how would Ratan Tata like to be remembered?
I would like to be remembered as a person who made a difference, not anything more, not anything less.

(Disclaimer: CNBC-TV18 is a part of Network 18, publisher of Forbes India)         

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