Shaking The Foundations

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After nine years of consolidation and streamlining, Tata signaled a new prominence for the emerging Asian conglomerate in 2000 when the most Indian of brands bought one of the most English, Tetley Tea. At $435 million, the deal was the biggest in Indian history, and it presaged a wave of international expansion by Indian and Chinese businesses like Mittal Steel and Lenovo. For Tata, entering the West was not an end in itself. Buying Tetley was simply a way to grow Tata Tea. "We look for the acquisition of companies that fill a product gap or have a strategic connection with what we do, wherever that company might be," says Tata. The same holds true for the latest steel deal: it fills a gap. Corus makes a wide range of high-end products not in Tata Steel's repertoire. The pairing will give Corus access to cheaper steel while handing new markets and know-how to Tata. Says Rothschild's Bhandarkar: "Other Indian groups look at things opportunistically. Tata is the only one with an international strategy."

An eye for strategy clearly runs in the family. Group founder Jamsetji Nusserwanji Tata knew how to turn a profit. But J.N. also had a patrician vision of spreading wealth and lifting a nation. In a 1902 letter to his son about building a workers' city around his Tata Steel works, he deplored the squalor of industrial England and anticipated what would become a standard for urban planning: "Be sure to lay wide streets planted with shady trees ... Be sure that there is plenty of space for lawns and gardens." After his death in 1904, the city took his name, becoming Jamshedpur. Tata Steel introduced a series of worker benefits that would become common only much later in the West, such as the eight-hour working day in 1912, maternity benefits in 1928 and profit sharing in 1934. Today Jamshedpur, with free housing, free hospitals and free schools, sports stadiums and clean streets, remains the envy of the country. In 2004, the U.N. chose it — along with Melbourne and San Francisco — as one of six examples of urban-planning excellence.

J.N. Tata's ideals survive today. Tata Sons, the holding company that manages the group, is 65.8% owned by 11 charitable trusts, which spent $379.2 million on social causes in 2003-04 alone. Over the following 12 months, Tata companies donated another $97.8 million. Beneficiaries range from a host of Tata educational, health and scientific institutes that dot India to the Ganges River's giant mahseer fish, saved from extinction by a Tata-funded breeding program.

The group's corporate piety extends to the boss's pay. Though the business house carries his name, Ratan Tata merely draws a salary from Tata Sons. And while hardly poor, he takes personal modesty seriously. Tall, guarded and retaining the outsider's accent he picked up in an earlier life as a trainee architect in the U.S., he is famously private. He lives with his two German shepherds, Tito and Tango, in the same second-floor apartment in Bombay that he has kept for 20 years. He is one floor below his stepmother, and neighbors say they have never known him to throw a party. His one indulgence, apart from his dogs — he is frequently spotted muddying his pinstripes as he plays with them in a park near his home — is a personal collection of cars. Apparently embarrassed by the extravagance, he excuses his interest as stemming from a love of design, not show. "I drive them periodically," he says, "and then back to the garage."

What really excites Tata is his ability to combine the group's philanthropic heritage with modern business sense. Targeting the bottom of the income pyramid — a lot of people with a little, rather than a few with a lot — ticks both boxes. Tata points out that consumption, as it is understood in the West, is still a dream for all but a fraction of 3 billion people in the developing world. Only 58 million Indians, out of the country's 1.1 billion population, earn more than $4,400 a year, according to Delhi's National Council of Applied Economic Research. The challenge is to make consumers out of people whose disposable income would be pocket money for many American children.