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Globe & Mail has been running a series on India online. Here is an interesting one on Tata and thought it would be worh to share with all who may not have access to the newspaper.

Enjoy!

http://www.reportonbusiness.com/servlet/story/RTGAM.20080411.wrtycoontata11/BNStory/robAtWork/home

Ratan Tata talks to Marcus Gee about the challenges of delivering on a promise to build the world's cheapest car.
Industrial magnate Ratan Tata is shaking up the global auto market with his decision to launch the world's cheapest car.


Made in India





Game changer Tata is an empire of big ideas and very small cars, part 4
MARCUS GEE

From Friday's Globe and Mail

E-mail Marcus Gee | Read Bio | Latest Columns
April 11, 2008 at 1:09 AM EDT

MUMBAI — The story of the world's cheapest car begins on a rainy day in Bangalore.

Ratan Tata was in the south Indian city on business and on his way to the airport. The head of India's most famous business empire told his driver to be careful on the slick roadway.

As usual in India's crazy traffic, the streets were full of dodging scooters, many of them carrying whole families: father at the controls, mother holding on behind, children riding on their laps. Typically, none of them were wearing helmets.

Suddenly, a scooter turned in front of the Tata car and lost control, sending a family of four spilling onto the pavement.

He began to think: How could he make driving safer for Indian families?

His first notion was to build a safer scooter. Trained as an architect, he made notepad doodles of new designs – a scooter with two wheels at the back, a scooter with a protective cage – none of them very practical.

Then he played with the idea of an open-sided “rural vehicle” with safety bars in place of car doors. He decided “no one wanted a half a car.”

Finally, he hit upon the simplest and most audacious idea of all. Why not simply build a tiny car – just big enough to carry a family like the one that crashed in front of him that day in Bangalore, but cheap enough for a scooter-driving family to afford.

Thus was born the one-lakh car.

In India, one lakh means 100,000, so the car would cost 100,000 rupees, or about $2,500 (U.S.). No one had ever built a car for less than twice that much. Critics, including some within his own company, said he could never do it.

So it was with obvious pride that Mr. Tata drove the one-lakh car, rechristened the Nano, into the television lights at the New Delhi Auto Expo on Jan. 10. “A promise is a promise,” the Tata Group chairman said as he announced the price of the car: 100,000 rupees for the base model (tax not included).

The announcement made headlines around the world, supplying new evidence of India's dramatic rise from impoverished economic laggard to industrial and technological dynamo. It also drew attention to the quiet tycoon who conceived and nurtured the phenomenal car.

Mr. Tata was born into one of India's oldest and wealthiest business dynasties. The group was founded in the 1870s by Mr. Tata's great-grandfather, Jamsetji Tata, son of a Parsee merchant and banker. He made his fortune in cotton, an industry then dominated by imported textiles from Britain, then India's colonial master. Travelling to England to study the mills of Lancashire, he set out to beat the English at their own game, then rigged in England's favour. He later moved into iron and steel, laying the ground for what today is India's largest private business house, with 98 companies in everything from cellphones and hotels to tea and trucks.

Mr. Tata was raised by his grandmother after his parents, Naval and Soonoo Tata, divorced. Lady Ratan Tata, who had adopted Naval, presided over a stately Mumbai mansion, Tata House, where Mr. Tata grew up surrounded by British nannies, chauffeurs and footmen. He left India at the age of 15 to study in the United States, eventually completing a degree in architecture and structural engineering at Cornell University in Ithaca, N.Y.

“It was a great thing to be a in a place where you were just another person,” he recalled in a recent interview at Bombay House, the colonial-era sandstone pile where Tata has its headquarters. “For 10 years of your formative life you were just another guy and you'd be punched in the nose as easily as someone else if you did something wrong.”

Today, his style and mode of living are modest in a country where the rich aren't usually shy about flaunting their wealth. He carries his own bags into airports and insists on paying the bill when he visits one of the company's grand Taj hotels. A lanky, athletic-looking 70-year-old, he lives in a simple, three-bedroom apartment in old Mumbai, occasionally escaping with his dogs to a weekend beach house near the city that he designed to his own plan.

Called back to India from the United States by his ailing grandmother, Mr. Tata worked his way up the ranks of the firm, starting with “drudgery” on the shop floor at Tata Steel and Tata Motors. He got his first interesting job when the firm put him in charge of a failing electronics company. “You didn't know where the month's payroll was coming from,” he says. “You were fighting for your life and I think that's a great learning experience.”

When he was called to take the reins of the whole company from his uncle J.R.D. Tata in 1991, he wondered: “How do I fill his shoes?” The senior Tata was an outgoing, larger-than-life figure who bombed around Mumbai in Italian sports cars. He had ruled the company for more than half a century. “Do I mimic him and be his clone or do I just be myself?” Mr. Tata asked himself. “I chose the latter.”

Adopting a leadership style more “inspirational than dictatorial,” he got rid of extraneous businesses such as cement, paints and cosmetics. He halved the bloated work force at Tata Steel. He built Tata Consultancy Services into Asia's biggest software firm. In 1998, he took a gamble by launching the first Indian-made “people's car,” the low-cost Indica.

Looking abroad to hedge the company's risk in a volatile home market, he launched a go-global strategy that saw the company snap up Britain's Tetley Tea, Anglo-Dutch steel giant Corus and, finally, last month, two of the world's most famous luxury car brands, Jaguar and Land Rover.

When he told fellow executives the company should strive to get at least 30 per cent of its revenue from abroad, “one was told that it wasn't possible.” Today the figure is 60 per cent.

Mr. Tata does not like being told that something is not possible. Associates and rivals alike say that behind his gentlemanly demeanour lies a ferocious competitor. Nothing underscores that like the launch of the Nano, his most daring move yet.

When he first announced the venture, no less a figure than Suzuki Motors chief Osaka Suzuki said flatly that “Tata will not be able to make a one-lakh car.” That quotation flashed on the screen behind Mr. Tata as he unveiled the car in January – sweet revenge.

“A lot of personal success or failure revolved around what happened on a project that, rightly or wrongly, was connected with me,” Mr. Tata admits. “There would have been a great deal of attention if we'd fallen on our face.”

To make sure they didn't, he took intense personal interest in the project, travelling at least once a month to the design centre in Pune near Mumbai to huddle with the 500-member Nano team.

Project leader Girish Wagh says Mr. Tata often grabbed a pencil and a notebook to sketch out ideas, encouraging everyone to speak up. “Even a junior engineer could talk to him,” Mr. Wagh says. He wanted to be sure the car came in at 100,000 rupees, but “when we tried to compromise on customer requirements, he would say no.”

He drove a prototype of the car and thought it was underpowered, so the team added horsepower. The team had almost signed off on the styling of the car when Mr. Tata decided it wasn't bold enough and ordered another try, resulting in the rounded, futurist look of the Nano.

To save on costs, the team gave the car a windshield wiper with one arm instead of the usual two and one side-view rear mirror, too. They even attached the wheels with three bolts instead of four.

Along with the engineering, Mt. Tata hopes to change the manufacturing process. The company will produce a ready-to-build version of the car that can be distributed in kits. With help and training from Tata, groups of entrepreneurs could buy the kits and assemble the cars themselves, creating new businesses across India – “my idea of dispersing wealth,” he told a British newspaper.

The little, 33-horsepower, twin-cylinder engine is mounted in the rear, like the original Volkswagen Beetle. The base model has no air bags, air-conditioning, radio or power steering (later, upgraded export models may get them). Its top speed is 105 kilometres an hour. But, then, for the price of one Rolls-Royce Phantom, you can buy 240 Nanos. The first cars are expected to roll off the assembly line in October and the company plans to produce 250,000 a year to start.

Whether the company can make money on the car at the one-lakh price remains to be seen. Even on the Nano team, “people right up to the day of the launch said that we were giving it away,” Mr. Tata concedes.

But the car may already have achieved greater things. It has made the dream of car ownership a possibility for hundreds of millions of striving families in India and around the world. It has showed companies the value of pitching products to the lower end of the market – illustrated in C.K. Prahalad's book, The Fortune at the Bottom of the Pyramid. Perhaps most important, it showed that bold, innovative thinking – not just cheap goods from cheap labour – can come out of emerging economies like India's.

Auto maker Anand Mahindra, who competed against Tata for Land Rover and Jaguar, calls the Nano “a shot that was heard around the world.”

“Maybe it won't have great margins, or replace as many motorcycles as it would like to, but it was a game-changing move,” he said in a recent speech.

Billionaire Baba Kalyani, head of auto parts maker Bharat Forge, says that before the Nano, if you wanted to make a car, “you set up a big factory, you cut a lot of metal and off you went,” charging customers enough to cover your cost and make a profit. Mr. Tata turned things around, setting the price and adapting the product accordingly. “They started with a clean piece of paper.”

In Mr. Tata's case, that is quite literally true – a doodled superscooter on his notepad, then a doodled minicar, then the Nano itself.

Next time Ratan Tata has an idea, don't tell him it can't be done.

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“No one was hurt, but we could have run over the whole family; we were just behind them,” remembers Mr. Tata. He had seen before how vulnerable scooter riders were in the traffic, “but that was the first instance that scared me.”




By the numbers
Name: Ratan Tata, chairman, Tata Group
Age: 70
Residence: Mumbai
Main Industry: Steel, auto-making, information-technology
Family: Never married, no children
Education: Studied architecture at Cornell University in Ithaca, N.Y.
Biography: Great-grandson of Jamsetji Tata, the founder of the famous family business.
Joined the company in 1962, toiling on the shop floor of Tata Motors and shovelling limestone at Tata Steel. Became head of Tata Industries in 1981 and chairman of the Tata Group in 1991.
Quarterbacked the $7.6-billion acquisition of Anglo-Dutch steelmaker Corus in 2006, the largest Indian takeover of a foreign company. Launched the world’s cheapest car, the Nano, in January. Led the March purchase of Land Rover and Jaguar from Ford Motors

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Lovely article. Thank you.

Very interesting. Thanks for posting.

Here is another piece....

http://www.reportonbusiness.com/servlet/story/RTGAM.20080415.wasia0416/BNStory/robColumnsBlogs/?cid=al_gam_nletter_maropen


Also read the comments posted by people to this article



Behind the rise of India's billionaires
MARCUS GEE

Globe and Mail Update

E-mail Marcus Gee | Read Bio | Latest Columns
April 16, 2008 at 6:00 AM EDT

In the title bout of 21st century business – India versus China – China is way ahead on points. With vastly higher exports, energy production, foreign investment and infrastructure spending, it has a weight advantage India cannot hope to match. But India has one thing in its favour: the genius of its business leaders. Smart, ambitious, forward-looking, eager to learn, they are India's potential knockout punch.

Forbes reported recently that, for the first time, India has more billionaires than Japan, the usual Asian leader in the magazine's annual list. India has 53, up from 34 the year before. Four Indian billionaires are on the Top 10 list of the world's richest people, more than any other country can claim.

That's an extraordinary fact all on its own. India was an economic washout just a generation ago, its industries and businesses stifled by decades of government overregulation. Even today, India is a poor country where more than 300 million people live on less than a dollar a day. Yet, at the top end, Indians are accumulating wealth at a pace that puts even the Japanese in the 1980s or the Chinese in the 1990s to shame. They aren't shy about it either. The country's richest man, Mukesh Ambani, bought his wife, Neeta, a $60-million (U.S.) Airbus airliner for her 44th birthday, complete with satellite-TV and custom-fitted office.

What's most impressive about India's new tycoons isn't their sudden wealth, though. It's the way they are taking their companies, and in the process their country, forward. The companies they are building are not just big, bold and brawny in the Chinese model, but smart, nimble and surprisingly modern.

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I was lucky enough to talk to some of them during a recent visit to India to write the series of profiles published in this section last week (see Made in India at http://www.reportonbusiness.com/managing). With the openness, charm and eloquence that is characteristic of Indians, each sketched out his vision of the future. Consider just two of them.

Ratan Tata, father of the world's cheapest car, the Nano, is taking his company international. One of India's oldest business houses, Tata Group has hit the headlines with the big-money acquisitions of Tetley Tea, the Anglo-Dutch steel company Corus and the high-end auto brands Jaguar and Land Rover.

Mr. Tata doesn't like to call his company “global,” a “somewhat pompous word” in his view. He doesn't see Tata as some kind of national champion for India, either, and despite the splash made by the Nano, he doesn't expect Tata to become a global brand like Sony or Coca-Cola.

What he does want to do is see India think big, in the same way China does, about what it can do. The Nano was a way of thinking big by thinking small, achieving something that no one thought was possible: a stripped down ultracheap small car, selling for just $2,500, the price of the audio system on some luxury autos. That has set a standard for creativity and thrift that other companies are rushing to imitate, not just in India but around the world.

His ambition is simply to make Tata one of the most admired companies in the country. He deliberately says “admired” rather than “successful” or “profitable.” His greatest fear is that, as Tata grows and he moves off the stage (he just turned 70), it will succumb to temptation and lose the strict values and ethics (it refuses to pay bribes) that guide it. “I think the day we do that we have lost everything,” he said.

Azim Premji shares that vision of a bold, innovative, ethical company. He built one of Indian's leading information-technology outsourcing companies, Wipro [WIT-N], out of his father's stumbling vegetable-oil firm. Now, with other low-cost countries competing for the outsourcing business, he is trying to find ways to keep Wipro growing.

What impresses most about his Wipro is its discipline and its modernity. Though he never went to business school, Mr. Premji has imported all the best and latest management techniques. He encourages managers and employees to share all possible information with each other and to disagree openly with higher ups, something that goes against the grain in hierarchical India. He invests heavily in training and retraining, fosters innovation and excellence, rewards success with stock and other bonuses and keeps a tight rein on costs (managers fly economy and often stay in guest houses or company suites instead of hotels). The result is a lean, smart, progressive company that few in China could match and that many in North America might envy.

It happens that both men are major philanthropists. The Azim Premji Foundation has a proud place on the company's Bangalore campus. Using proceeds from his $17-billion fortune, it invests heavily in improving village education. Tata's charitable giving is institutional, because two-thirds of the stock in parent company Tata Sons is in the hands of charitable trusts.

Admirable? Certainly. But the real contribution that Indian tycoons such as these two are making is through building flexible, responsible modern companies. With men like these behind them, India may land the last blow.

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Rajeev Narula, Broker, REALTOR®
ACE TEAM REALTY INC., Brokerage
10 Kingsbridge Garden Circle, Suite 704
(Opp Square One - HWY10/403)
Mississauga, ON L5R 3K6
Bus: 1-888-355-3155 Ext. 300
Fax: 1-888-443-3155
Email:
Web: http://www.RAJEEV.ca" rel="nofollow">LINK

Superb article. This is reality. World must accept that now future of most of business and economy will depend on Asia.