Ratan Tata, Chairman Emeritus, Tata Sons won the Lifetime Achievement Award by CNBC this year. His work is legendry, having built the country's biggest conglomerate, Tata Sons.
"India has at times been very exciting and at times it's been very frustrating. For me India once freed up in the early 1990s became a very exciting country; it was a country that was trying to catch-up with the free market environment in the world around, which we had been denied off for so many years," says Tata.
Also Read: Ratan Tata elected to board of US think tank
As India opened up, Tata grew the 145 year old company into a corporate behemoth with a tight grip on key sectors from IT consultancy to steel, to automobiles. He grew Tata Sons into USD 100 billion empire.
"We were headlong into forging joint venture, setting up in areas that are opened up to us now which had not been earlier rather than trying to fight and keep the openness of the market away," he says.
Tata believes all the acquisitions made by the company Corus, Jaguar Land Rover, among others were all perfect fits. He says had the economic downturn not hit Europe, Tata Steel and Corus together would have been a bigger, viable company.
He feels that Nano can still succeed. He believes that the cheapest car garners a lot of attention outside India.
Below is the verbatim transcript of Ratan Tata's interview on CNBC-TV18
Q: You like taking on new challenges?
A: Yes, I do. I enjoy that, in fact I am a bit of a stubborn person, if somebody stands in my way then that itself is motivation to get either around him or above him or under him.
Q: Beneath a hardnosed businessman is a self-confessed car buff, with a compassionate side feel get to see. What he envisioned as the people's car for families that could only afford scooters, called the Nano. It was sold as the world's cheapest car at around USD 2,000.
A: I believed that we could make a difference. I also realized that we had to look at and cater to the lower end of the citizens' base and think of how we could do things for the lower segment of the population.
Q: Nano didn't takeoff. You headed overseas. Cutting a slue of mega deals were over USD 20 billion, acquiring companies like Tetley Tea in 2000, Corus in 2007 and Jaguar Land Rover (JLR) in 2009.
A: In the case of Corus, there is a view that we could put Tata Steel and Corus together and make a viable, bigger company, which in my view would have happened had it not been for the economic downturn in Europe, which certainly disabled Tata Steel Europe, the erstwhile Corus to achieve its full potential.
On Jaguar Land Rover, we had a couple of secret meetings at Heathrow Airport and I didn't know what we could do with Jaguar. Land Rover was very interesting for me because it sat on top of our sports utility vehicle (SUV) activity and was a nice fit.
Q: Many of these brands were British? You are fond of buying British companies?
A: It's just by circumstances.
Q: Your biggest deal was Corus, at USD 13billion. You actually bid for a company that was four times the size of Tata Steel. You normally like to take on such risks?
A: It was always USD 13 billion or USD 14 billion. It was initially at 5 or 6, which is the time I told the management team that we should buy it and the real reason it went up to that level was in the final last few months. It became a bidding context with the Brazilians and at that stage the stubbornness was an issue, we will see this through.
Q: How did you know that it was a right decision to make?
A: We didn't. You never know that you have made the right the decision. If the meltdown in Europe hadn't happened, Corus was making money, we would have been in somewhat the same boat as Jaguar and Land Rover and I had many people telling me how stupid we have been to take Jaguar Land Rover, this is a company that has never made profit and then the market situation changed and fortunately Jaguar Land Rover came through beautifully.
Q: At USD 13 billion, the amount you paid for Corus, you think you might have made a fair price for the company, was it too expensive in hindsight?
A: It was expensive and in a way it's like buying a house, it's the one you want. It have us a global position, put us in the European and US market which could not have been addressed and gave us the capacity which at that time was crucial. We were only 5 million tonne company in India and this gave us about 20 million tonne so it was a high price but not a price that would do what the economic situation did to us, which is unfortunate, maybe a few years from now, I hope we can put up our feet and say it was tough during that time, but it is still worthwhile.
Q: I understand Corus is still losing about USD 1 billion a year. Are we approaching a situation where you might have to consider selling all or part of the company? Will it boil down to that?
A: I don't know. In fact, I have been away from the situation now for nine months. So I wouldn't like to comment. I understand that very slowly things are turning around. I think there are many things that Corus probably needs to do.
Q: What does Corus need to do?
A: I do not want to comment on what the management should or should not do. Europe is still flat or down, and the company needs to look at different markets including the emerging markets as a market for its products.
Q: Given the accolade you have received bringing Tata to where it is today; would you admit that Corus was the one deal that was a flop?
A: No. We need to be fair to Corus and make a judgement as to whether we can improve the market for the company. It seems like the world wants to say that Corus is a flop. I think that is a wrong signal to a company that is trying to claw its way up or otherwise in fairness one should say any investment in steel would be a flop.
Q: Any valuable lessons from the Corus acquisition, you think can be applied to any future deals that Tata might make?
A: Yes, in hindsight we should have focused more on raw materials than finished steel because what did happen is as the economy went sour in Europe, ore prices continued to rise, it became a shortage issue, the strength of the business was in how much of raw material we had and so the other way round we would have been ahead of the game. So, I do not think it is fair to say that Corus is a flop. I think there are still things that can be done to Corus.
Q: You are hopeful that you can revise Corus?
A: If the economy doesn't revive, reviving Corus will be extremely difficult and if the economy does start to revive then Corus will come into its own.
Q: Are you prepared to wait?
A: What do you do, you just clinically decide to send several thousand people home and does one have no responsibility for the people that work for you or the people who are still with you. I think those are the issues that any management needs to take in place. I think European assets of Corus are doing better than the English assets of Corus. The English assets have had no investment in terms of modernized process improvement for many years because the British Steel has been under pressure and at the same time the economy had changed or continued as it was when we bought it. We would have had a 20 million tonne steel company, sixth or seventh largest in the world, playing its role in a booming economy, which steel was at one time and I hope it will become again.
Q: In your 21 years driving Tata Sons integrity has always been an important part in the way you conduct business. How do you do it in a country that is riddled with corruption and crony capitalism?
A: It is difficult, but if you take a view to not be corrupted and to be corrupted is separated by a thin thread and not a band, not an ocean you have only one choice that is not to cross that thread. If you do you are on the other side.
