Ratan Tata’s tenure as the chairman of Tata Sons from 1991 to 2012 transformed the Tata Group into a globalised diversified conglomerate from an Indian legacy house, with its market capitalisation ballooning 17 times. The group, with its listed entities’ combined market capitalisation at Rs 30 lakh crore, saw a dramatic growth with his strategic decisions and well-timed acquisitions.
During Ratan Tata's tenure at the helm, Tata Group’s revenues grew from about Rs 18,000 crore to Rs 5.5 lakh crore (from $6 billion to $100 billion). The group's market capitalisation ballooned from about Rs 30,000 crore to Rs 5 lakh crore (from $9.5 billion to $91.2 billion), according to a paper published by IIM Bangalore in December 2012.
Ratan Tata’s early days: Setting the stage for growth
When Ratan Tata took over as chairman, he inherited a diverse conglomerate of over 95 companies, many of which were operating independently, with little synergy or strategic alignment. These companies were operating in a diverse range of businesses that included chemicals, hotels, salt, software, steel, soaps, and watches.
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One of Tata’s first priorities was restructuring and consolidating the group, streamlining operations, and enforcing a singular corporate identity across its various subsidiaries. “I think the group needed cohesion… My concern was that after him [group patriarch JRD Tata], it would be difficult to hold it together,” Tata had said about his taking over as the group Chairman.
The 144-year old Tata group was a “slow, bureaucratic, domestic market focused, loosely connected agglomerate of businesses,” wrote K.S. Manikandan, K. Rajyalakshmi and J. Ramachandran in a paper for Indian Institute of Management (IIM)-Bangalore. Tata transformed it into an “ambitious, integrated business house that realised over 60 per cent of its revenues from global markets,” they wrote.
India’s economic liberalisation and Ratan Tata’s Group captaincy
A key turning point came with the liberalisation of the Indian economy in 1991. Ratan Tata’s appointment as chairman of the group coincided with the liberalisation, which dramatically changed the country’s industrial landscape. Tata recognised the need to innovate and become globally competitive, positioning the conglomerate to benefit from the opening up of the Indian economy to foreign investments and partnerships.
Tata entered into collaborations with multinationals and set up several high technology ventures such as Tata Teleservices (Bell Canada) and Tata Communications in the telecom sector, Tata Petrodyne in upstream oil and gas (with BP), Tata Information Systems in information technology (with IBM) and initiated talks with Singapore Airlines to launch airline services in India.
To fund the new ventures, Tata sold a 20 percent stake in Tata Industries Ltd. to Hong Kong-based Jardine Matheson group for $35 million, according to the IIM-B paper.
Globalisation of Tata group under Ratan Tata's leadership
Ratan Tata also transformed the Tata Group from a primarily India-focused entity into a global player. The aggressive global expansion of the Tata Group during this period was evident in several key acquisitions.
Tata Motors emerged as a significant player in the global automotive market, especially with its acquisition of British luxury car brands, Jaguar and Land Rover, in 2008.
Tata Global Beverages, which encompasses brands like Tetley, also showed the group’s ambition and strategy of tapping into international markets. The acquisition of Tetley in 2000 positioned Tata as a major player in the global tea market, leveraging the brand's international appeal.
Institutionalised leadership at Tata Group
Ratan Tata introduced a strong leadership ethos and ensured that the group's companies were led by professional managers, allowing each entity to thrive in its respective market while contributing to the conglomerate’s growth. He appointed professional managers who were equipped to lead each company based on merit and expertise, such as Cyrus Mistry for Tata Sons and S. Ramadorai for Tata Consultancy Services (TCS). This was acknowledged by commentators at the time.
“I’ve spent a lot of time and energy trying to transform the Tatas from a patriarchal concern to an institutional enterprise… What I have done is establish growth mechanisms, play down individuals and play up the team that has made the companies what they are,” Tata had said upon stepping down as Group Chairman.
Tata Group’s landmark acquisitions: The global expansion under Ratan Tata
One of the most significant phases in the group’s growth was its series of high-profile global acquisitions, which not only diversified its portfolio but also added significant value to its market capitalisation. Two of the most notable acquisitions were Tata Steel’s purchase of Corus and Tata Motors’ acquisition of Jaguar Land Rover (JLR).
Tata Steel’s Acquisition of Corus (2007): In what was then India's largest-ever foreign acquisition, Tata Steel acquired the Anglo-Dutch steelmaker Corus for $12 billion. This acquisition catapulted Tata Steel into the ranks of the world’s largest steel producers and was a major contributor to the group’s rising market value.
Before the acquisition, Tata Steel was largely focused on the domestic market. With Corus, it gained a significant foothold in Europe and became a more diversified and globally recognised steelmaker.
Tata Motors’ acquisition of Jaguar Land Rover (2008): In a bold move, Tata Motors acquired the iconic British brands Jaguar and Land Rover from Ford for $2.3 billion. While initially met with scepticism, this acquisition turned out to be a masterstroke.
Under Tata's ownership, JLR became profitable, and its global success bolstered Tata Motors' market capitalisation. By 2015, JLR was contributing more than 90 per cent of Tata Motors' profits, underscoring the success of this deal.
These acquisitions significantly boosted Tata Group’s overall market capitalisation over the next few years.
TCS: The crown jewel of Tata Group
A pivotal driver of the Tata Group’s market capitalisation growth has been TCS (Tata Consultancy Services), the group’s information technology (IT) services arm. While launched back in 1968, TCS truly spread its wings under Ratan Tata’s strategic leadership. TCS went public in 2004, raising Rs 4,713 crore through its initial public offering (IPO). The company’s stellar performance since then has transformed it into the group’s largest company by market capitalisation, contributing over Rs 15 lakh crore.
TCS’s growth, aided by the global IT outsourcing boom, positioned it as a leader in digital transformation services. The company continues to be the group’s most valuable asset, and its exponential rise in market cap has been a primary factor in the Tata Group's overall growth.
Key milestone: Tata Group surpassed Rs 30 lakh crore in market capitalisation in 2024, driven by continued strength in TCS, resurgence in Tata Motors, and growth in Tata Steel and Tata Power.
Tata Group’s strategic diversification
Beyond the headline-grabbing acquisitions, Tata's strategy of investing in emerging industries such as renewable energy, electric vehicles (EVs), and consumer products has also paid off. For instance, Tata Power has a major renewable energy portfolio, while Tata Motors is now India’s largest electric vehicles maker.
Tata's long-term investments in hospitality through Indian Hotels and the retail sector through Trent have also brought in a diversified growth. The group has entered into the e-commerce sector through Tata Neu; quick commerce through acquisition of Big Basket; medicine delivery through 1mg.
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