As the Tata Group navigates troubled waters, Brand India must not be the ultimate loser, writes India Inc. Founder & CEO Manoj Ladwa.
I have admired the Tata Group for almost as long as I can remember. I took great pride when Tata acquired marquee British brands such as Tetley, Corus (renamed Tata Steel Europe) and Jaguar Land Rover. And I celebrated when the group emerged as the UK’s largest manufacturing sector employer. It helped prove my consistent argument that Indians are “job makers, not job takers” when investing abroad.
Not only was the Tata Group riding a crest, it was also basking in the global attention bestowed on its fabled ethical management standards, including introducing an eight-hour work day at Tata Steel years before it became mandatory in much of the West and the launch of a provident fund for workers, three decades before it was mandated by law in India.
But following the sudden unceremonious sacking of Cyrus Mistry as Chairman, the public domain began to fill up with stories about alleged governance breaches and conflicts of interest at or near the top of Tata’s hierarchical pyramid. These are now matters for the Indian courts.
Tata’s growth was the easy part but culturally integrating discrete parts spread across Thailand, South Korea, the UK, the US and large parts of Africa seems to have taken their toll.
Here, I am not even getting into the issues faced by Tata Steel Europe, which is now being merged with ThyssenKrupp’s steelworks in a 50:50 joint venture. Allowances have to be made for a business decision that did not pan out as planned. It has happened to the most hallowed names in global business and will doubtless happen many times again.
In one of our articles last year, we had been critical of another iconic Indian business leader, Infosys founder N.R. Narayana Murthy, for not being able to let go of his “baby” even after formally retiring from all executive and non-executive roles.
Tragically, Ratan Tata, another equally iconic Indian business titan, has done the same. The exact sequence of events leading up to that sad denouncement is lost in a welter of accusations and counter-accusations but most accounts agree that the Tata Trusts used their special powers, vested in them around the time Tata demitted office, to oust Mistry. Such a significant decision and its manner impacting the $140-billion group ought to have been a lot more sensitive and transparent.
There are now serious allegations about the Tata Group’s investments in Air Asia India being in breach of foreign investment norms. Tata must confront these charges head on, and place in the public domain all material facts instead of taking refuge behind legalese. That’s what the world has come to expect of the Tata and any deviation from its own high behavioural benchmarks is bound to raise eyebrows.
There are also similar imputations of impropriety in the decision to keep Tata Motors’ Nano production line in operation despite mounting losses.
As the messy legal battle meanders through the Indian courts, the merits of the case won’t matter to the public but a perception that something is not right may gain currency. Given the public’s general lack of faith these days in Indian business houses, the good name of the Tata runs a big risk of getting tarnished. That will be a sad day for Indian businesses and overseas Indians such as myself who have often used the Tata Group’s achievements as a proxy for the global successes of India.
Therefore, if there is an amicable settlement in sight, and this a big ‘if’, then both parties must for the sake of all its stakeholders, make that extra effort. That will save the group any further beating and can, arguably, help it regain some lost ground in the global brand sweepstakes.
Otherwise this epic feud, increasingly playing out like David versus Goliath, will continue to be a drag on all concerned. And, as in many past instances of such corporate battles, history may ultimately judge Cyrus Mistry better. But there are much bigger stakes for Brand India here also.Manoj Ladwa is the founder of India Inc. and chief executive of MLS Chase Group @manojladwa