Ratan Tata with Noel Tata (second row, right), managing director of Tata International, and Tata Sons deputy chairman Cyrus Mistry (second row, left) in New Delhi on Thursday. Picture by Sanjay Sakaria
New Delhi, Jan. 5: Ratan Tata plans to stay on as a director on the boards of Fiat of Italy and Alcoa of the US even after he steps down as the chairman of the Tata group in December.
I am interested in continuing on the boards of non-Tata companies because of the global perspective that these associations bring, Tata told editors at a breakfast meeting that preceded several product launches at the 11th Auto Expo that started here today.
Under a succession plan that was put in place last month, Tata will pass on the baton of leadership of the $83.3-billion group to Cyrus Mistry.
But Tata — who has been on the board of Fiat since May 2006 and of Alcoa since February 2007 — isnt prepared to snap his ties with these illustrious foreign companies just yet.
Asked whether Tata Motors prickly relations with Fiat in India would overshadow his association with the Italian auto maker, Tata said: It is up to them (Fiat) to decide whether they want to have me on their board as a Tata Motors director or in my personal capacity.
Tata had joined the Fiat board as a nominee of the Agnelli family, which has the largest stake in the Turin-based Italian auto maker.
IFIL, an Agnelli company that owns 30 per cent of Fiat, had proposed Tatas name as one of the eight independent directors on the 15-member board in 2006. His term has been extended several times since. His current term expires later this year.
Fiat recently decided to set up its own dealerships to sell its cars in India. Back in 2006, it had formalised an agreement with the Tatas to sell its cars through the latters dealers. But sluggish Fiat sales had soured relations between the two partners with both talking of the need to redraw the contours of their relationship.
Fiat and Tata Motors also have a 50:50 joint venture — Fiat India Automobiles Ltd — that makes cars and engines for both brands at a factory in Maharashtra.
In a free-wheeling interaction with the editors, Tata deftly handled a volley of loaded questions on the issue of succession, the economic slowdown in India, corporate Indias increasing frustration with a government thats unable to hash out the next phase of economic reforms, corruption within the system, and the global ambitions of the Tata group.
He said Cyrus Mistry would have to decide how to structure his position within the group after assuming leadership of the Tata group.
JRD Tata wasnt the chairman of the top companies within the group. Sumant Moolgaokar, for example, headed Telco (now Tata Motors). I, on the other hand, chose to head all the major companies... Now dont go into casino mode and speculate about this too much. The board will decide, Tata added.
Need for austerity
Tata said he wasnt pessimistic about the next 12 months and remained a proud Indian. But there is no reason for us to accept the lower growth rate in this country, he said, adding that the government needed to take steps to increase expenditure in infrastructure projects. Like a number of industrialists who have done some straight talking lately, Tata said the slowdown was the result of the governments fiscal policy and the indecision in various ministries.
Last week, Tata had written to the groups employees urging them to prepare for a bout of austerity because of the uncertain headwinds in Europe and other extraneous factors over which we dont have any control.
We need to conserve cash right now to be ready to face the uncertain days ahead. But that doesnt mean I am pessimistic. We cannot afford to be extravagant, he said, signalling that the groups expansion plans would come under the scanner this year.
The Tata group chairman said the Tatas were the victim of the 2G scam and not its perpetrator. We do not participate in corruption. Sometimes, we have had to pay a price for it, he said without elaboration.
He said about 60 to 70 per cent of the groups revenues now came from overseas markets — and it would increasingly expand its global footprint. Asia, Africa and Latin America were the geographies that the group would look at because they are not dissimilar to our own market in terms of scale and buying preferences.
While Jaguar Land Rover has been a huge success, the acquisition of Corus — the British steel maker in a big bidding war in 2007 — is proving to be a bit of a drag on the groups fortunes. But Tata refused to compare the two buyouts. One is a commodity product while the other is a consumer product. We have also had different problems while integrating the two companies with Tata group entities, he added.
He said there were no plans to replace Carl Peter Forster who had stepped down as group CEO of Tata Motors and JLR. Ralph Speth will look after the European operations; his Indian counterparts will oversee Tata Motors here, he added.
Jaguar Land Rover and Tata Motors will strive to build synergies and look for areas of collaboration but there will be no merger of brands.
It would be stupid to merge the brands, he added. He also said there were no plans to list JLR at this point of time.
Ravi Kant added that Tata Motors had established a presence in all of South Asia barring Pakistan. We will be ready to go there when the political atmosphere improves and that country opens up, he added.
Asked whether the group would revive its plan to enter the airline business, Tata said tersely: Probably not. We no longer consider it to be an area of choice for us.