Indian behemoth struggles

NEW DELHI - When Tata, India's oldest and largest conglomerate, bought the fabled Jaguar auto brand last year, the country celebrated the gleaming trophy as affirmation of its new role as a global superpower.

What a difference a year makes.

Today, a string of blows has left the Tata group drowning in condolence calls, not applause. Many see Tata's woes as especially alarming because, as has been the case for over a century, where Tata goes, India goes.

"There's a sense of foreboding and fear," said Ramachandra Guha, a prominent historian and author of India after Gandhi. "If it happens to the Tatas, it means something much more than if it was happening to other companies."

The last year, which has seen the stock price of Tata's listed companies fall nearly 60 percent, has been perhaps the most difficult in the group's history. Tata faces a global meltdown that is eating into some of its most high-profile brands, terrorism that scarred its landmark hotel, and political demonstrations that have crippled business plans.

Tata Motors revenues' fell more than 34 percent in the most recent quarter, its first loss in seven years. And Tata Steel reported its first drop in quarterly profits in nearly three years.

In India, Tata is everywhere - tea, salt, steel, cars, chemicals, hotels, housing, telecommunications. The Tata group is a sprawling collection of nearly 100 companies that includes the country's largest automaker, the largest private steel company, and a leading outsourcing firm. The companies employ more than 350,000 people around the world.

From the current chairman, Ratan Tata, to his great-grandfather, Jamsetji N. Tata, the Tata men are famously philanthropic and civic-minded. They are seen as something like national uncles: kindly, wise and dependable.

The 141-year-old company's story is intertwined with that of modern India. The company's founder, Jamsetji N. Tata, a young trader from India's Parsi minority, helped usher in the industrial era when he established India's first textile mill, its first shipping line, and its first cement factory.

Despite the racism of the British Raj, Tata expanded into steel, power distribution and hotels. Tata founded Mumbai's grand Taj Mahal hotel after a doorman refused to let him into one of the city's elegant hotels because he was Indian, according to the company's own history.

After independence in 1947, Tata limped along during decades of stifling socialist-style rule that saw the government fix prices, impose strict tax laws and severely limit what a company could produce. Tata's rivals prospered thanks to better access to officials - and, some say, fewer scruples about bribes. Many predicted the bloated Tata Group would succumb to executive squabbles and sluggish sales and splinter apart.

But then in the early 1990s, India shifted to a market economy and Tata's fortunes took off. The country saw explosive growth, led by outsourcing companies such as Tata Consulting Services. Tata led the charge with a spree of overseas acquisitions.

Tata's purchase of Jaguar and Land Rover last March was an opportunity to strut. "The Empire Strikes Back!" was one of many headlines at the time that reveled in talk of the Indian century.

Today, in the sobering light of the global recession, a harsh reality has set in. With car sales everywhere plummeting, the Jaguar and Land Rover brands have been a drag on Tata Motors, forcing the company to approach British authorities for a bailout and take the extraordinary step of appealing directly to the public for funds.

Tata Group still makes enormous profits - $5.4 billion in 2007-08. But the value of the 28 publicly listed Tata companies has tumbled from $59.7 billion last March to $24.29 billion as of Feb. 5. That does not include Corus Group, the British steel giant Tata acquired in 2007.

Tata's most dramatic setback came on Nov. 26, when 10 gunmen launched a coordinated attack against Mumbai landmarks, the Taj Mahal hotel chief among them.

The militants were better armed and trained than the police, and they managed to hold off security forces for 60 hours. The final death toll was 164 people, one of India's worst-ever attacks.

For Tata, the siege was devastating. Its elegant, signature hotel - for 100 years the height of Mumbai sophistication - was turned into a war zone. The famous dome was blackened by flames. The walls were pocked with gunfire. The windows were shattered by grenades.

Tata reopened a section of the hotel within a month of the attacks, but renovations are still under way in the older wing.

Meanwhile, Tata was in the middle of another Indian drama, a land-rights dispute that shows the challenges of development in the world's largest democracy.

Tata Motors' introduction of the world's cheapest car, a $2,000 engineering triumph called the Nano, sparked global excitement.

However, the ambitious project was upended by protests among the rural poor who felt they had been unfairly compensated when their land was purchased for Tata's factory.