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You wouldn't expect the head of Tata group, India's largest conglomerate, to say the rich are boring. But Ratan Tata comes close. Acting rich doesn't interest him. "I've never had the desire to own a yacht, to flaunt," he says. Nor does the Prada-wearing class excite him as a marketing opportunity. China and India, with their growing ranks of tycoons, should attract multinational[an error occurred while processing this directive] businesses, not because of the spare million in a few fat wallets, he argues, but because of the spare change in a billion slim ones. "Everyone is catering to the top of the pyramid," says the 68-year-old at his office in Bombay House, Tata group's elegant Edwardian headquarters in India's business capital. "The challenge we've given to all our companies is to address a different market. Pare your margins. Create new markets."

The Tata group's global clout means its chairman's thoughts on the world economy are worth listening to. The group comprises 96 companies, including the world's second largest tea business (Tata Tea); Asia's largest software firm (Tata Consultancy Services); a steel giant (Tata Steel); a worldwide hotel chain (Indian Hotels); and a sprawling vehicle-manufacturing arm (Tata Motors) that includes a bicycle factory in Zambia and a project to make a car selling for $2,200. Since Ratan Tata became chairman in 1991, he has multiplied Tata group revenues seven times to an annual $22 billion. Since 2000, the group's market value has multiplied almost 18 times to $49.1 billion. For the past six years, Tata has been on a $1.9 billion acquisition spree that has netted Britain's Tetley Tea, South Korea's Daewoo Commercial Vehicles, Singapore's NatSteel and New York City's Pierre Hotel, among more than a dozen others. And it's not over yet. Last week, Anglo-Dutch steelmaker Corus agreed an $8 billion takeover bid by Tata Steel. If the deal goes through, it would be the largest-ever Indian acquisition of a foreign firm, and it would catapult Tata from the world's 56th largest steel producer to the fifth. "Nothing succeeds like success," says Sanjay Bhandarkar, managing director of N.M. Rothschild private bank in India. "All credit goes to Ratan Tata. He clearly has a vision and knows what he's doing."

Tata is one of Asia's most influential businessmen. And perhaps more than any other company, Tata group exemplifies India's metamorphosis into a modern economy. For much of their 138-year history, the Tata family companies were the heart of India's insular business establishment — the last business group you'd have turned to for radical thinking, or owning anything abroad. The group's founder, J.N. Tata, was a nationalist driven by the idea of a strong, self-reliant India. He gave the country its first steel plant, first hydroelectric plant, first textile mill, first shipping line, first cement factory, first science university, even its first world-class hotel. His successors — among them J.R.D. Tata, India's first pilot — created the first airline, first motor company, first bank and first chemical plant.

But after independence in 1947, the group came to symbolize all that was bad about Indian business. It lost its airline and insurance arm to nationalization. To avoid giving up more to the Congress Party socialists who ruled India for a half-century, J.R.D. Tata, a distant cousin of Ratan Tata, emphasized individual companies over the group, keeping the conglomerate's stakes small and demanding little coordination. Meanwhile, shielded from competition by the restrictive bureaucracy of the "license Raj," Tata's companies became bloated and calcified. "We weren't driving ourselves hard enough in a protected environment," says Ratan Tata.

Ratan took over from J.R.D. in 1991. India was beginning economic reforms, and with state-sponsored monopolies on the way out, the new chairman saw the need to overhaul the firm's culture. He raised the conglomerate's stake in all its companies to a minimum 26%. And he ordered each to meet performance targets — to be first or second in its industry, and to meet quantified goals for leadership and innovation — or be sold. Most shaped up. Tata Steel, for example, shed half of its 78,000 workers between 1994 and 2005, using retirement and voluntary redundancies to lower costs and boost productivity. "The Tata group's relationship with its employees changed from the patriarchal to the practical," reads the Tata code of honor, which sets group-wide standards of conduct. Subir Gokarn, chief economist at ratings agency Crisil, says Ratan Tata read the runes of change and largely avoided the rash of business failures in India that followed reform: "He survived the bloodbath. Those who made no changes became extinct." After nine years of consolidation and streamlining, Tata signaled a new prominence for the emerging Asian conglomerate in 2000 when the most Indian of brands bought one of the most English, Tetley Tea. At $435 million, the deal was the biggest in Indian history, and it presaged a wave of international expansion by Indian and Chinese businesses like Mittal Steel and Lenovo. For Tata, entering the West was not an end in itself. Buying Tetley was simply a way to grow Tata Tea. "We look for the acquisition of companies that fill a product gap or have a strategic connection with what we do, wherever that company might be," says Tata. The same holds true for the latest steel deal: it fills a gap. Corus makes a wide range of high-end products not in Tata Steel's repertoire. The pairing will give Corus access to cheaper steel while handing new markets and know-how to Tata. Says Rothschild's Bhandarkar: "Other Indian groups look at things opportunistically. Tata is the only one with an international strategy."

An eye for strategy clearly runs in the family. Group founder Jamsetji Nusserwanji Tata knew how to turn a profit. But J.N. also had a patrician vision of spreading wealth and lifting a nation. In a 1902 letter to his son about building a workers' city around his Tata Steel works, he deplored the squalor of industrial England and anticipated what would become a standard for urban planning: "Be sure to lay wide streets planted with shady trees ... Be sure that there is plenty of space for lawns and gardens." After his death in 1904, the city took his name, becoming Jamshedpur. Tata Steel introduced a series of worker benefits that would become common only much later in the West, such as the eight-hour working day in 1912, maternity benefits in 1928 and profit sharing in 1934. Today Jamshedpur, with free housing, free hospitals and free schools, sports stadiums and clean streets, remains the envy of the country. In 2004, the U.N. chose it — along with Melbourne and San Francisco — as one of six examples of urban-planning excellence.

J.N. Tata's ideals survive today. Tata Sons, the holding company that manages the group, is 65.8% owned by 11 charitable trusts, which spent $379.2 million on social causes in 2003-04 alone. Over the following 12 months, Tata companies donated another $97.8 million. Beneficiaries range from a host of Tata educational, health and scientific institutes that dot India to the Ganges River's giant mahseer fish, saved from extinction by a Tata-funded breeding program.

The group's corporate piety extends to the boss's pay. Though the business house carries his name, Ratan Tata merely draws a salary from Tata Sons. And while hardly poor, he takes personal modesty seriously. Tall, guarded and retaining the outsider's accent he picked up in an earlier life as a trainee architect in the U.S., he is famously private. He lives with his two German shepherds, Tito and Tango, in the same second-floor apartment in Bombay that he has kept for 20 years. He is one floor below his stepmother, and neighbors say they have never known him to throw a party. His one indulgence, apart from his dogs — he is frequently spotted muddying his pinstripes as he plays with them in a park near his home — is a personal collection of cars. Apparently embarrassed by the extravagance, he excuses his interest as stemming from a love of design, not show. "I drive them periodically," he says, "and then back to the garage."

What really excites Tata is his ability to combine the group's philanthropic heritage with modern business sense. Targeting the bottom of the income pyramid — a lot of people with a little, rather than a few with a lot — ticks both boxes. Tata points out that consumption, as it is understood in the West, is still a dream for all but a fraction of 3 billion people in the developing world. Only 58 million Indians, out of the country's 1.1 billion population, earn more than $4,400 a year, according to Delhi's National Council of Applied Economic Research. The challenge is to make consumers out of people whose disposable income would be pocket money for many American children. One of Tata's answers is the $2,200 car, a four-door, rear-engine runabout he designed himself that's currently under development (he aims to sell a million a year in India after its release in 2008). Another is the Ace, a 700cc truck that Tata Motors sells for less than $5,000 and, since its launch in southern India in May 2005, has accounted for two-thirds of all trucks sold domestically. Purchases of these vehicles are supported by low-interest consumer loans from Tata Finance. Tata's hotel chain is building 200 hotels across India under the brand Ginger, offering rooms with wireless Internet access, air-conditioning and en-suite bathrooms for 1,000 rupees ($22), one-fifth of the cost of a typical room paid by budget business travelers in India today.

That same desire to market to, and invest in, some of the world's poorest countries is behind Tata's affinity for Africa. In South Africa, the group has investments in mining, tourism and engine manufacturing. There is an instant-coffee plant in Uganda, a bus factory in Senegal and a phosphate plant in Morocco. "We look at countries where we can play a role in development," says Tata. "Our hope in each is to create an enterprise that looks like a local company, but happens to be owned by a company in India."

Tata says the group's success proves his approach is good business, as well as good karma: "We are not in anything for charity." Lest this all sounds too good to be true, the group is not free from controversy. In 2001, Tata Finance sacked its managing director and five other senior managers over alleged financial irregularities. In January, Tata Steel's plans to build a mill in the eastern state of Orissa went tragically awry when police fired on protesters who were accusing the state government — acting as a broker in the development — of making profits on the sale of their land. Twelve were killed. But to shed 40,000 employees at Jamshedpur, Tata Steel offered to pay their current salaries until retirement age along with free health care for life, and allowed them to keep their company houses for three years. Initiatives like these have kept the group free of strikes and other industrial actions for 77 years.

After 15 years as chairman, however, Tata says he is thinking of retiring. Asked how he would spend his days, he says he gave up golf long ago and has almost no free time outside the business. On rare evenings off, he says he takes a half-hour boat ride across Bombay harbor to a small, scruffy beach house. "It seldom had power, so I had to put in a small generator," he says. "It's quiet and away from everywhere. There is a town and there are neighbors, but I go quietly on my own. I walk the beach and I read and I think about what I should do." It's not how you conventionally picture a tycoon's life. That's his point.