Table of Contents
Backbone of India
In today’s article we will talk about the backbone of India. Hello friends, take any aspect of your life you fill find some Tata company brand or the other.
You might travel in cars, Tata motors manufacture a wide range of them, you might take a flight Tata’s own the vistar Airlines and Air India as well, you might stay at hotels so Tatas own the Taj hotels, you definitely wear clothes so Tatas have a fashion brand westside, for your jewelry needs, Tatas Tanisha cater to you.
In addition to it, Tata steel, Tata power, Tata consultancy services, there are more than 100 companies in the Tata group. So, it’s no surprise that currently, Tata is India’s one of the most famous and successful companies.
But do you know that this company didn’t turn into a giant overnight? It took them 200 years. In this article, come let’s get to know the interesting story about India’s oldest business family. Backbone of India Tata’s group.
Nusserwanji Tata
Friends, our story begins in the year 1820 exactly 200 years ago. A boy was born in a village in Gujrat, to the family of Parsi priests, Nusserwanji Tata. He was a restless soul ever as a child. He wanted to do something great.
It’s said that he was the only person in his village, who strongly felt the need to move out of the village and do something. He believed it to be his destiny, so when he was 20 years old, he left his village and moved to Mumbai and tried to set up a new business.
Still today, many people do this, they move from villages to the cities to build a new future but the different was the he had a wife and a child. Back then child marriages were very common, he had become a father when he was about 17 or 18 years old.
He moved to Mumbai with his family, he was attracting to the cotton trade there and soon he was running a cotton export business. The revenue from the business he injured that it was spent on his son’s education, he wanted no compromise in it. He provided his son Jamshedji with the best education of the time, back then it meant an education in English.
Nusserwanji’s cotton trading business took of really well. Later when jamsetji reached adulthood and finished his education so his father decided to send him to Hong Kong for business expansion.
Today it might seem very common, businessman sending their children abroad for business expansion but friends do remember, this was in 1859 air travel would not be invented for 55 more years, back then it was a long and arduous journey by ship.
In 1859, when Jamsetji was 20 years old, his father sends him on the mission to set up an office in Hong Kong. Interestingly, Jamsetji was not alone either, he was married and had a child. It was not an easy decision to abroad the family and shift to another country and try to set up business there but Jamsetji was very ambitious, this led him to immense success.
Struggle life of Tata’s group
In his life of 65 years Jamsetji Tata(Backbone of India) worked on 3 continents started numerous cotton mills in India. In 1858, Jamsetji Tata joined his father’s export trading company and helped establish its branches in Japan, China, Europe and the United States.
In 1868 Jamsetji founded a trading company which later developed into a Tata group. In 1872 he focused on making cotton and then established Mills in Nagpur, Bombay, and Coorla. Additionally, he laid the foundation for the construction of India’s first steel factory and lunched India’s first 5-star hotel.
In 1901 JamSetji began organizing the first large scale iron in India, and six years later it was included as the Iron and Steel Company (now Tata Steel). Under the direction of his son, Sir Dorabji Jamsetji Tata (1859-1932) and Sir Ratanji Tata (1871-1932), Tata Iron and Steel Company became the largest private steel maker in India.
Jamsetji’s other commercial ventures included the Taj Mahal Palace, the first luxury hotel in India. It was the first hotel in India to have electricity. To date, it is among the most prestigious hotels in India. Backbone of India.
In 1904, when Jamsetji Tata passed away, he left behind a legacy that remains unmatched even now and I’m not saying this from strictly a business point of view.
Building a profitable business has become quite common nowadays, you will find many such business they work for profits but Jamsetji set a tremendous legacy of principles and ethics as well.
Let see some examples to understand this; In 1874 Jamsetji set up his first cotton mill factory in Nagpur, this was his first experience of moving beyond cotton trading and entering the cotton production business, when you’re start a new business, you encounter new problems he saw that the Laboure’s working in his cotton mill in Nagpur was very lazy.
They would make up reasons for being absent, they would not come to work. What would a superior do in such a situation? Threaten the workers with the termination of employment due to absenteeism, reprimand the workers but his were contrary to common practices.
He assumed that there would be some reason for the laziness of the Laboure’s. Since he wanted to motivate them, he wanted to look for a long-term human’s solutions so he set up a general provident fund for them to ensure that even after his retirement these Laboure’s keep getting a pension.
Additionally, he started an insurance scheme in case any worker met with an accident then the medical costs related to the accident were to be borne by the company, not only this he started family days, sport days so that the workers could bring their families and form a stronger bond among each other to foster a sense of community. This might be quite common in today’s world but keep in mind the era this was being done in.
During civil war Tata’s business
In the rest of the world during the 1800s, the working condition used to be terrible. Astoundingly he was bearing these expenses out of his funds, then in 1861 the American civil war began indirectly this was good news for Jamsetji business.
Earlier, England used to import most of its cotton raw material from America but due to the civil war the supply was discontinued. Jamsetji utilized the opportunity and doubled the rates of cotton supplied by him because England had no other option but to import cotton from India during this time.
He set up his office in London and worked from there and he raked in huge profits for the next four years but after four years the American civil war ended and the supplies from American resumed, this had an adverse impact on Tata’s business and it started making losses, investors started harrowing him for returns on their investment but Jamsetji remained steadfast. Jamsetji convinced his creditors that his problems were entirely sure to an abnormal situation and was in no way a reflection of the intrinsic strength of his firm.
He promised to ensure that all investors would get their returns and simply asked for some time, investor looked at his honesty and permitted him to continue working but the investor said that Jamsetji’s monthly salary would be meagre $20 only even though he was the owner of the company.
It was quite insulting for him working in the company he owns as a fixed salaried employee but the remained undeterred. It goes to show Jamsetji dedication to his business, his father was the same when Nusserwanji’s cotton business was not doing well and the investors were asking for their money back so he had his mansion to pay the investors, in both case the decision provided successful.
Nusserwanji’s and Jamsetji’s both could protect their business and their reputation. This situation teaches us that if we have the passion, dedication and skills than the chances of your success grow manifold. Today software engineering and data science are among the highest paid jobs in the world.
Many of Jamsetji dreams were voluntary for his time like setting up a hydroelectric power plant, establishing world class education institution in India, setting of Steel plant, building of five-star hotel which can be enjoyed by people irrespective for their race; racism was quite rampant back then.
During his lifetime, he could build the hotel but the other 3 dreams projects before his death work in them had already started. Later, his son Dorabji Tata ensured that the rest of his dreams would become a reality.
By 1910, Tata’s steel plant was built and they had started steel production, around this time World War 1 began and the British Empire required a lot of Steel then so Tata Steel became the largest steel supplier in the country.
Tata’s steel was used to make the British tanks as well as for the weapons and the railway tracks. In fact, a famous statement by a British politician during first World war holds that “Tata Steel saved us” because the quality of their steel was so good, that even when bombs were dropped on these tanks, they weren’t able to penetrate these tanks.
Following this the name Tata Steel gained even more popularity. After the end of first World war, Tata Steel had built a very strong reputation in Great Britain and in 1914 the Tata group had become so huge that it encompassed 14 different companies but it was just the beginning.
Darabji Tata oversaw the activities of the Tata’s till 1938 after that, a distant cousin Jahangir Ratan Tata took over the reins of the company. Jahangir Ratan Tata, we know him as JRD Tata. Another passionate young man with big dreams.
JRD Tata grew up in France, he was a licensed pilot there, his passion for flying is widely known and so he set up India’s first airline, the Tata Air Lines; It was later renamed as Air India. Air India has an elaborate and interesting story, we will talk about this later.
Story of Tata’s business group after independence
The story till now was taking place before the Independence, India gained Independence in 1947, socialism was the norm then. Our freedom fighters like Gandhi, Bhagat Singh, Swami Vivekanand all believed in socialist principles.
So quite obviously, when the country won Independence Jawaharlal Nehru’s economic policies were socialist as well. He decided to nationalize the major business and institutions in the country, they would be under government control. This is seen as a positive decision given the circumstances but for the Tata’s, this was bad news.
The Tata Air Lines was nationalized as well, JRD Tata heart broken by the news but right from its inception, the Tata’s believed that business is not only for profits, it is for nation-building as well after the nationalization, the Nehru Government offered JRD Tata a position to lead Air India, that was gladly accepted by JRD Tata, this is why during the 1970s-1980s Air India was considered to be one the most prestigious airlines in the world apart from this, JRD expanded the business in many other sectors.
In 1945, the very first Tata motors product was made locomotive engines to be run on tracks. In 1968, the Tata consultancy services (TCS) was founded which providing electronic data processing services.
Today, TCS is the second largest employer in the country following the Indian Railways; additionally, cancer research and Treatment center, their salt business, electronics manufacturing. JRD Tata remained the Chairperson of the Tata’s for 52 years and during this time there were 95 companies in the Tata group.
In 1969, the Monopolies and Restrictive Trade Practices Act was passed, the Tata group was the most affected by this law. The government aimed to ensure that no company could grow so big that it creates a monopoly in every sector.
Despite such rules being passed under JRD Tata’s supervision, the Tata group continue to grow, how? With the growing number of subsidiaries under the Tata group, he diluted the ownership of Tata Sons in the companies by doing so the new companies were not considered monopolies but over the course of many years this approach proved wrong for the business when other people started handling Tata’s businesses, it could not be successful always.
For example, their electronics arm, Nelco used to manufacture radios. By 1917, the market share of Nelco had fallen to 2% where it used to be at 20% once. If we talk about Nelco specifically so Jamsetji Tata’s grandson was called to bring Nelco back on track, this was none other than Mr. Ratan Tata. He was for the family business since 1962 but in 1971 Nelco was assigned to him.
Ratan Tata decided to stop manufacturing radios and wanted to invest in new technologies to revive Nelco, such as satellite communication and within 3 years, the business turned around. By 1975, Nelco’s market share was back at 20%, unfortunately during this time, the emergency was declared causing adverse impact on Nelco’s business yet again.
Eventually, it had to be shut down because of this but do you know what, the cotton mill set up in Nagpur by Jamsetji Tata has a similar story. Ratan Tata was given the responsibility to revive it but this mission failed short of being successful by a hairbreadth but by this point the senior management had taken notice of Ratan Tata’s capabilities.
This is why in 1991, he was announced as the successor of JRD Tata and he became the chairperson of the Tata group. 1991 was the year when India’s finance minister Dr Manmohan Singh announced the liberalization of India, opening of the Indian market to the rest of the world.
Suddenly, India let go of the socialist model and started moving towards a Capitalist model, it’s said that it was the only way to protect India’s economy. From Tata groups perspective seeing it play out, Ratan Tata decided to do exact opposite of what JRD Tata had done, he started raising Tata son’s ownership in all Tata group subsidiaries.
This was done so that the Tata group companies could not be taken over by any international companies, this decision proved immensely successful not only the Tata group survive this period but the Tata group started acquiring foreign companies.
The Tetley Tea company in England was acquired by the Tata group $12 billion, Europe’s steel gaunt Corus was acquired by the Tata group. In another interesting instance, the Jaguar Land Rover company a car manufacturing company in UK was in talks of being sold off so the workers of this company wanted that Tata group to take over the company, Jaguar Land Rover had received offers from 3-4 companies among those prospective acquirers Tata group was chosen by the workers.
This was a luxury brand but it didn’t mean Tata overlooked its grassroots level customers. In November 2003, it’s said that Ratan Tata saw a family travelling on a scooter, four people were squeezed into a scooter and it was raining, they were barely managing.
After five years later, Ratan Tata launched the Nano car while launching it, he told a story, the Tata group believes that the core philosophy of their business is social Upliftment, they wanted to give the lower middle class the chance to own a car in only 100,000 rupees.
It’s another thing that the marketing strategy of this car terrible, they marketed it as the most affordable car it’s price of only of 100,000 rupees, they didn’t consider people’s perception to this fact, who would want to buy this car? If someone bought this car, wouldn’t they be considered cheap people?
This was a marketing flaw but Tata’s never focused much on branding strategies, you can see this based on the fact that the Tata’s set up many institutions and businesses which were not named after the Tata’s, such as the Indian institute of science and the cotton mill in Nagpur that I told you about it was named the Empress mill, it was named so to commemorate the coronation of Queen Victoria and the brand of Taj hotel Tata’s aren’t named in it.
The city of Jamshedpur named after Jamsetji Tata wasn’t named so by the Tata’s rather, the British Viceroy of India at the time gave the city its name. This was the exciting story of the Tata group.
Hi mimprovement.com admin, You always provide great examples and real-world applications.