Ratan Tata

In 1991 Ratan Tata was JRD Tata's surprise choice to helm the Tata Group. Singularly, it was the largest privately-owned group in the country, it was also amongst the most problematic. Several of its core companies, including Tata Steel, were struggling.

Ratan, himself, was facing criticism for the bankruptcy of two of the group's businesses under his tenure;, Nelco and Empress Mill. To make matters worse, Russi Mody and Nani Palkhivala, two senior lieutenants (and most likely successors) under JRD's Tata's tenure, were keen to oust him.

Major Achievements

• Modernised the Tata Group from an engineering-to-services conglomerate into new areas such as telecom, passenger cars, retail, biotech
  
• Turned Tata Steel into the world's lowest-cost steel producer
  
• Introdced India's first Indigenous car, the Indica and, now, the Tata-Nano, which has nearly doubled the value of Tata Motors
  
• Led the Tata Group into the global marketplace with acquisitions of Tetley Tea for $475m, steelmaker Corus for $11.3bn, Jaguar and Landrover for $2.3bn

Ratan Tata, who turned 70 in December 2007, has never married and bears no children. In an interview with Business Week last year Ratan stated his wish to retire once the Tata-Nano had hit the market. This presents a major problem, Ratan has no heir-apparent. Such is the singular force innate within Ratan Tata that no number two has ever been needed. Now Ratan, himself, admits that a successor will need at least 18 months training.

Ratan Tata has already increased the retirement age for non-executives from 70 to 75 to allow time to find a successor. He's unlikely to do the same again. It's known that Ratan is currently seeking a man in his 40s. This rules out Noel Tata, Ratan's step-brother and the only remaining Tata working in the group.

Ratan Tata has been frequently criticised for being the wrong choice of successor, showing little regard for the environment and working with unethical partners.

Successor Criticisms

Ratan Tata was relatively unknown prior to his succession of JRD Tata. Both the failure of Neclo (National Radio and Electronics Company Limited) and Empress Mill were blamed upon his management incompetence.

However, Ratan claims that prior to his Nelco tenure the company had just 2% of the market share and rarely paid dividends. By 1975 the company had achieved 20% market share, paid a dividends and recouped its losses. In 1975 Gandhi declared a state of emergency which provided Union strikes and the failure of the company.

Two years later Ratan took the helm of Empress Mills, a struggling textile company within the Tata Group. Despite declaring the company's first dividends, Empress Mill hit upon turbulent times and failed. Ratan claims that the group needed greater investment to modernise the Mill, and Nani Palkhivala had not been willing to make such an investment.

Shortly after being named successor in 1991, Ratan Tata reduced the retirement age from 70 to 65, which forced out many of the company's older stewards. This was a controversial decision, and one which Ratan claimed was necessary for the company to progress. During this time both Nani Palkhivala and Russi Mody, JRD Tata's favourites, were released from the group.

Environmental Criticisms

The thought of millions more Indian motorists taking to the road in a Tata Motors car worries environmentalist. Whilst the major environmental concern is currently focused upon China, India is clearly next in the firing line and Ratan Tata has not helped matters.

Unethical Partners - The Dow Chemical Controversy

In 1984, lethal methyl isocyanate (a poisonious gas) escaped from a tank at the Union Carbide plant and breezed through Bhopal, mainly a slum city inhabited by 900,000 people. Over 3000 people are estimated to have died (survivors claim 20,000 related-deaths since) in what is ranked as one of the world's worst industrial disasters.

Union Carbide deserted the plant leaving much of the facilities and toxic chemicals remaining. Despite many promises, no-one has since returned to clean up the plant and in 2001 Union Carbide was acquired by Dow Chemicals.

Serving in his capacity of the co-chairman of US-India CEO Forum, Ratan Tata proposed paying to clean up the site to attract investment by Dow-Chemical into India. This upset Bhopal survivor groups who believe that Dow-Chemical, acquired this responsibility when they acquired Union Carbide.

As a result these organisations proposed a boycott of all Tata group products and protests at all of the group's ventures. Survivor groups have claimed that Ratan Tata should instead focus on efforts of clearing up the contanimation around his own plants and factories before taking on the responsibilities of others.

There have been some reports lately that the price of the Tata Nano car is only cheap because of government subsidies. In the free market and without the subsidies the car will not be sold at such a cheap rate.

This presents a problem. If the Indian government cuts the subsidies it could lead to a downturn economically. This means that jobs could go, the Tata Nano might consider external locations and could do more harm than good.

It's a tricky choice.