This Article is From Dec 28, 2012

The opportunity that Ratan Tata missed

New Delhi:

The Tata group, a $100 billion conglomerate that spans over 100 companies, is present in nearly every major sector in the country—IT, retail, steel, automobile, education, power—but one sector where the group is conspicuous by its absence is aviation. The reason: he did not want to pay a bribe. (Also see: Who is Ratan Tata)

The Tata group had in the 1990s floated a proposal to tie up with Singapore International Airlines (SIA) for a domestic carrier in India in the mid-1990s.

“It was a businessman who told me ‘why don't you pay? This is what the minister wants’," Mr Tata said years later in an interview after reports that he had been asked to pay Rs 15 crore for the deal.

Mr Tata, however, clarified that it was not the then Civil Aviation Minister who had asked him directly to pay.

"I told him that you don't understand. That is not how we do business. All he said to me was, 'look if you want the airline this is what you must pay. You know the minister wants that, Rs 15 crore'," he further explained.

Mr Tata recalled that after taking over as chairman in 1991, he had drawn up a strategic plan in which he had seen aerospace and defence as new areas for the private sector to enter in a big way.

"For several years, the fact that we had sanctions of various sorts on us, gave us no access to technology and that in itself was a challenge."

But that challenge was never thrown to the private sector which was a "bit of a disappointment to me", he said.

Recalling the group's proposal for a tie up with Singapore International Airlines, the Tata patriarch pointed out: "it is a different sector today than it was at that time.”

"It is somewhat like telecom. It has been proliferated by many operators, some of them in financial trouble. I would hesitate to go into the sector today in the sense that the chances are that you would have a great deal of competition which would be unhealthy competition."

Asked if he was worried about "cut throat" competition, Mr Tata responded in the negative but went on to say, "cut throat competition which is done to keep you out is destructive competition”.

"Overseas people go bankrupt or companies go bankrupt. Here they never do—they continue to be sick and still operate. Then they are operating to kill you."

With inputs from agencies