India’s icon

His employees talk of an almost obsessive attention to detail, and the considered pauses he takes before he delivers approval or reproach. His critics begrudge him as the inheritor of an opportunity, a legend by dint of dynastic succession rather than entrepreneurial distinction. The rural poor speak of him as an almost otherworldly figure, able to change lives at the stroke of a pen or the inflection of a bushy grey eyebrow.

In the flesh, Ratan Tata addresses all three perceptions. He reels off statistics as though they were laid out in front of him, speaking slowly and deliberately and clarifying even the most innocuous of verbal missteps. He makes no claim to have been an empire-builder, when referring to his past as the “custodian” of a company of which less than 2 per cent is owned by the Tata family. When he speaks of India’s manifold problems, he does so with a fierce authority that would lift the hearts of millions of Indians without a voice.

“Slumdog Millionaire was a successful movie and there are a number of people who think it showed India in a bad light,’ he says. “It showed India in a realistic light. We should all be ashamed of what [inequality] there is, and try to solve it. Are we doing it? No. And that’s something that really needs to change.”

From his nondescript offices in Mumbai, the 76-year-old former chairman of the Tata business empire is attempting to spearhead that change. Now retired from the corporate sphere, he retains the chairmanship of the Tata trusts, a group of some of the country’s oldest and certainly most high-profile philanthropic organisations.

The trusts hold around 66 per cent of the equity capital of Tata Sons Limited, the holding company of the Tata Group. Founded in 1868, the Tata Group encompasses more than 100 companies across sectors as diverse as IT, engineering, energy, steel, chemicals and automobiles.

For more than a century, a significant proportion of the conglomerate’s profits have been ploughed back into helping change the lives of impoverished Indians. While the Tata Group routinely spends 4 per cent of its net profits on activities related to corporate social responsibility (CSR), the two largest Tata trusts between them disbursed an additional $800m during Tata’s two-decade tenure as chairman of both organisations.

And, as has become de rigueur for successful business leaders intensifying their efforts in the philanthropic sphere, Tata is attempting to instil a corporate culture in the charitable trusts he now oversees on a day-to-day basis.

“One hopes that one can treat the philanthropic activities of the trusts as a corporate entity: setting goals, looking at efficiencies, monitoring the outcome and benefits of what we’re doing,” he says.

“The first thing is to question a lot of what is going on already, and it’s something I faced with the Tata Group when I started. I was told; ‘This is the way we’ve been doing things for 25 years, and who are you to ask?’ But when you’re the chairman they have to answer, and so things did change in time.”

Tata’s methods, resented at first, helped turnover grow tenfold to $100bn during his chairmanship. If he can achieve even a small percentage of that impact now that his focus is directed solely towards the Tata trusts, the naysayers are likely to be proved wrong again.

“Operating traditionally is perhaps the greatest weakness of the trusts; there’s a tremendous resistance to change, and I have not shaken that attitude just yet,” he admits. “A priority is to go out and look at what other foundations are doing, broaden our thinking and benchmark ourselves against others.”

Today, one of Tata’s primary focuses is on India’s so-called invisible epidemic. A 2011 study provided reliable – and saddening – estimates of child nutrition in India. The Hunger and Malnutrition survey found that some 42 per cent of children under five were underweight and 59 per cent were ‘stunted’, or chronically malnourished. Of those children who were stunted, about half were classified as ‘severely stunted’. The prevalence of underweight children in India was double that of sub-Saharan Africa.

In 2012, another report by British charity Save the Children estimated that 1.83 million Indian children die every year before the age of five, the majority from preventable diseases made lethal by the malnourished child’s inability to fight back.

“We are a large population: we grow at about 17 million people a year; the equivalent of one Australia or Malaysia,” says Tata. “If that new generation is weak or suffers physical and mental defects due to malnutrition, or has a high mortality rate, it’s a major issue.

"You cannot have a prosperous tomorrow if, each year, 17 million people are vulnerable to this infirmity," he adds. "If you then look at those who do survive but survive with weakness and low resistance to various ills, then you have another problem of a high cost of health.”

He argues that malnutrition is not a problem that has “gone unnoticed by the government”. He does, however, believe that the disbursement of “huge budgetary allocations” has been rendered ineffective thanks to inefficiency and corruption.

It’s difficult to mitigate a distribution network, he admits, where government-supplied nutrient packages are more likely to be sold in the local market, than they are to find their way into the feeble young hands that need them most.

Although the Tata trusts are grantmaking organisations that often work hand-in-hand with government bodies, Tata is less forgiving when it comes to other government efforts to redress India’s all-too-evident inequalities. He is particularly critical of a specific clause in the country’s new Companies Act, which mandates that large corporations must spend at least 2 per cent of their profits on CSR.

“We have a phenomenon which is meant to be good but is going to be chaotic,” he says, warning that India does not have the infrastructure or oversight to successfully introduce such a scheme.

“You’ll see an enormous growth in NGOs, everybody tripping over themselves to register to attract this money. However we don’t as yet know what kind of monitoring there’ll be in terms of how this money is used," he suggests.

“You'll have a registered NGO, the money will goes to the NGO and it may be three or four years before the whole thing explodes in a series of fraudulent operations; money being given to people that don’t exist, or causes that are subterfuge for something else.”

In addition, Tata suspects that some companies will consider the mandated donations a form of taxation, and therefore employ every means possible to funnel the money back into corporate coffers.

“The NGOs need to be certified by the government, but their causes are not defined, their mandates are their own, and there will be those venal corporates that short-circuit those funds back into NGOs that they are connected with under the surface,” he cautions.