Ratan Tata retires

WSJ: MUMBAI-- Ratan Tata, one of India’s most respected corporate leaders and the driving force behind the world’s cheapest car, retired Friday with words of caution for the Tata Group’s nearly half a million employees.

The difficult economic environment is likely to continue for most of next year and will need a dramatic cut in costs, Tata wrote in a farewell message to employees of the $100 billion Tata Group.

“We will probably see continued constraints in consumer demand, over capacity and increased competition from imports [into India],” Tata, 75 years old, wrote in an email reviewed by The Wall Street Journal.

Tata hands over the post of chairman of Tata Sons--which owns a range of companies including U.K.-based Jaguar Land Rover Ltd. and Tetley Tea--to 44-year old Cyrus Mistry.

Tata companies, whose interests are spread across sectors such as salt, software and steel, need to be aggressive and widen their product range to better address customer needs, said Tata, who will continue to officially advise the group despite his retirement as chairman.

The group will also have to contain its debt and work hard to retain margins, he added.

However, “this seemingly gloomy picture will be a passing phase,” Tata said.

“I want to convey to you how privileged I have been to have had the opportunity of leading this great group over the last two decades, through good times and bad,” Tata said.

The industrialist, known for his strict adherence to ethics despite India’s sometimes murky corporate and government culture, said he is proud of the manner in which his employees have faced crises such as adverse market conditions, natural calamities and even terrorism.

Tata had stood outside Mumbai’s Taj Mahal Palace hotel in November 2008, helping evacuate employees and guests when terrorists attacked the property.

Friday, he said also that he is confident that India’s days of robust growth will return.

“The future growth of the group will be led in the coming years by Cyrus Mistry,” Tata said.

Mistry is the son of a construction baron who is the largest shareholder in Tata Sons, the holding company for the Tata Group’s wide-ranging interests.

Tata last addressed shareholders of his group on Aug. 31 in Kolkata, the capital of West Bengal state, while speaking at an annual general meeting of Tata Global Beverages, 500800.BY +0.50% which owns the Tetley brand of tea and has a tie-up with Starbucks Corp. SBUX -0.36% to run the U.S. company’s cafes in India.

On Oct. 3, 2008, Tata had announced in Kolkata that Tata Motors Ltd. 500570.BY +0.27% would abandon the site of a plant to build the Nano, the world’s cheapest car.

The Nano--which was expected to have an initial price tag of 100,000 rupees, or about $1,800--was eventually manufactured in Gujarat and went on sale in early 2009.

Tata, who has been heading the group since 1991, transformed the diversified conglomerate with his multi-billion-dollar purchases of overseas businesses such as European steelmaker Corus Group PLC as well as Jaguar and Land Rover.

He graduated from Cornell University in 1962 with a degree in architecture and worked briefly with Los Angeles-based architecture firm Jones & Emmons before moving to the Tata Group.