Wednesday, 8 October, 2008

Buddhu and Buddha

This morning’s Times of India has a longish interview of Ratan Tata. Essentially, the old man is relived that "There is a bad M and a good M and we have made the transition." 

Very well. But certain excerpts are telling: 
TOI: What made you go to West Bengal in the first place? Buddhadeb Bhattacharjee? 
Tata: Did you say Mamata? (Laughs) Yes, it was Mr Buddhadeb Bhattacharjee. I have known him literally from the day he took over as chief minister from Jyoti Basu. We were at that time with the Haldia Petrochemicals Complex and because we had a problem, not with the state government, but with Purnendu Sen, we withdrew. At that time, I met Mr Bhattacharjee and was extremely impressed with his sincerity. And that sincerity has been there throughout. He told me that I should not withdraw and I told him we must but we would come back with a bigger investment to West Bengal because I believe he was doing the right thing. Then one day when we were inaugurating the cancer hospital in Kolkata he said why don't you bring your automotive project to West Bengal. I told him the incentives you have will not match with what other states are offering. And both he and Nirupam Sen (industry minister) set themselves the task of meeting what was needed. 

To be honest, he first offered us land at Kharagpur. But then that was far from Kolkata. I told him that if we wanted the project to be showcased to the world as a world-class enterprise, we should have it at a location where we could bring in our best people, give them the best schools, best colleges etc. In deference to my wish, he showed several plots out of which we found Singur most suitable. 

Unfortunately, what followed was something unexpected while we had something wonderful going. It would have brought investments to a part of a country which has been neglected. It was a forerunner of future investments in that part of the country.

In other words, he held a gun to Buddababu’s head. 

TOI: What is the loss to the Nano project because of time overrun? 
Tata: First of all, all the equipment will come good. So there is no loss on equipment. One may ask what have you left behind and how much of it is totally wasted. You can retrieve a fair amount of the fixed assets that you may have and relocate it. It is our view that in terms of the current year we will not have to reflect any appreciable loss in our books. We have also not discussed with the state government what we would do with the land because its still leased to us. The state government wants us to look at other projects, which we have agreed to do. We just said that we will do it if the environment is conducive, otherwise we will not. So it's not that we have walked out of West Bengal and left a crater or a barren piece of land behind.

Oh, but all along we were told that the slightest alteration in the configuration of the plant will make the project unviable. Now it’s being shifted across the subcontinent with minimal loss!

And some questions are not being asked at all. The Tatas were and are being given land virtually for free. The state governments are ready to bloody their hands and noses for the Nano’s sake. So what is Tata’s exit penalty? I mean, if you and I are in a deal, and I’m doing the dirty work, what do I get if you don’t, or can’t, do the good work? 

Second, we were told that this deal will generate jobs. Jobs for whom? If nearness to Kolkata was a criterion simply because the city gave better facilities to the employees at the plant, does it not mean that they were not looking at signing up hundreds of unlettered, underfed villagers. 

And why was all that followed the MoU so unexpected? Did Tata think that our most sincere Buddababu had dictatorial powers over Bengal, even if it was a benevolent dictatorship? Was one man’s word good enough to take a decision that big that it could make or break a state’s industrialisation? Is corporate social responsibility about charities or is it first about due diligence in running a business? 

TOI: From Bengal to Gujarat, it's the same country and two very different stories. What lessons do you draw as a senior business leader? 
Tata: I don't know how much problem that we faced was really that of the famers. I would just say that political opposition and political aspiration should always be subordinated to the better welfare of the country or the state. I don't know who would be the losers. You have talked about ourselves being one of the losers in the sense of losses owing to time overruns. But I wonder what we have left behind. I am sure West Bengal can attract other investments and will attract other investments and we will be as supportive as we can in attracting new investments. But what about the people who had aspirations for jobs? The people who have made this issue of land-for-land — will they prosper? Has anything been done to increase their yeilds, their income levels? Many of them are below subsistence levels — they say so themselves. On the one hand, they talk of drinking their money away or not having money, and on the other hand, they talk of having their land back. I mean are we doing anything to improve their lot? These are the questions that come to my mind. So, political opposition should hold the country first and not themselves. That's all I am saying. 

Wonderful! Politicians shouldn’t interfere in economics… or religion, or education, or sports, or culture. What is the politician supposed to interfere in? The politician is probably very happy to be everyone’s favourite scapegoat as long as he can enjoy his ill-gotten millions. But can we afford to do without politics? Who takes the decisions for the state, for us? 

Or are we switching to anarchy (as in the political term, not mayhem)? Does that work? Or will we need a state in cold storage to bail us out when everything crashes? Even Lord George of Bagdad is having a tough time rescuing Wall St. What happens when Main Street gets all dug up too?

By the by, why didn’t anyone bother about what form compensation will take? I mean, doctors don’t just push medicine done patients’ throats, do they? Why didn’t good corporate citizen Ratan Tata think a bit about the starving millions he was rescuing with his factory, instead of asking his minion Buddababu to give them cake since they didn’t have bread? 

Marx toiled in vain. Mr Tata and his ilk will bury capitalism without Das Kapital


Nirvanesque said...

Excellent (start of) analysis made in this Tata-nano failure. Remotely, it is difficult to analyse the news and understand the reasons and connotations of this failure story.

So what are the lessons we learn from this fiasco? What pitfalls to avoid? For e.g. if I had a large investment project to bring to West Bengal, what issues should I be aware about / take into account? Whom (or who all) should I approach? To what extent is agriculture important in West Bengal, while considering an industrial investment opportunity? What other issues may oppose industrial investments - like environmental factors, tribes & communities, etc?

Also in your opinion, will the above problem move investors away from the state or will other investors move in eventually, to fill the vacuum?

N&P said...

Juventus, I commneted on an article and a media circus. If I say any more I will be guilty of the same crime that I accuse Tata of: theorising without data. What made matters worse is that he acted on that theory. I think it is logical to believe that when a giant project goes wrong, we cannot blame chance alone. A good many people took a good many things for granted.

So I don't have a checklist. I don't think anyone has. But some are humble enough to admit that and start from scratch, observing everything, assuming nothing, connecting dots.

However, my opinion is that investors will not come. The dog has got a bad name, now made worse by Tata's whining. We will hang it.