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Ratan Tata was at home in south Mumbai late on November 26 when the call came. On the line was a frantic R K Krishna Kumar, head of the Tata group unit that owns the city's luxury Taj Mahal Palace and Tower Hotel.
The unthinkable had happened, Mr Kumar told the Tata chairman. Terrorists had taken over the Taj, the 105-year-old wedding cake-like structure on Mumbai's waterfront that was built by Mr Tata's great-grandfather and is the pride of India's largest private sector group. Scores had been killed. The building was on fire.
Unable to leave his apartment that evening because of the chaos on the streets, Mr Tata made it to the group's stately south Mumbai headquarters, Bombay House, the following day. As the country's politicians engaged in a blame game, Mr Tata was one of the few public figures who seemed to strike the right tone on the attacks. He bluntly criticised the state's lack of preparedness while expressing grief for those killed.
"This is a very, very unfortunate situation which none of us are going to forget. My message really is that the government and state authorities should also not forget," he told journalists on the steps of Bombay House.
The attacks bring a tragic end to what is shaping up to be one of the worst years in the 140-year history of Mr Tata's family-led conglomerate. Just 12 months ago the group and its statesmanlike chairman symbolised the ascendancy of Indian business, making bold acquisitions overseas and increasing its revenues at double-digit percentage rates.
Now Tata's woes are an example of how India and its economy, seen as one of the most promising emerging markets in the world alongside its fellow "Brics" of Brazil, Russia and China, is fast running into trouble as the global financial crisis spreads to the developing world.
A multinational with revenues in the year ended March of $62.5bn (pound 42.5bn, euro 49.2bn), 350,000 employees and operations in industries from steel to vehicles, telecommunications and retailing, the Tata group penetrates almost every area of Indian life. Tata Motors is India's largest truckmaker, Tata Steel its biggest private sector steelmaker and Tata Consultancy Services its largest information technology outsourcing company.
Controlled by three family-run trusts, an unlisted parent company, Tata Sons, acts as a provider of strategic direction and capital to the group, whose listed operating companies are given leeway to run themselves. "We're a strange combination. You could say we're a Berkshire Hathaway, you could say we're a GE - we're bits of each and neither," says Alan Rosling, an executive director of Tata Sons who works on international strategy.
The group's central figure is its 70-year-old chairman, a scion of the Tata business clan. The family hails from Mumbai's Parsee community, an ethnic minority that traces its origins to Iran and follows the ancient Zoroastrian religion.
An avid pilot - he is said to enjoy taking the controls whenever possible - Mr Tata took charge of the group in 1991 just as India was embarking on economic liberalisation. He modernised the conglomerate, preparing it first for foreign competition in its own markets. Then, in 2000, he launched the strategy for which he has become known - the internationalisation of the group - by acquiring Britain's Tetley Tea.
In 2006, the group followed this with the largest overseas acquisition by an Indian company: the pound 6.7bn acquisition by Tata Steel of Corus, the Anglo-Dutch steel producer.
Previously, no Indian overseas acquisition had been worth more than $1bn. The deal generated nationalist euphoria in India. Not only was Tata Steel taking over a company several times its size to become the world's fifth biggest steelmaker but Corus also included the old British Steel. The former colony had turned coloniser.
The group launched numerous other acquisitions, to the applause of the domestic business media. But even the most enthusiastic pundits were forced to pause when Tata this year bought Jaguar and Land Rover, the lossmaking Ford marques, for $2.3bn.
Few could see the rationale for the transaction. Tata Motors was primarily a builder of rudimentary trucks for the subcontinent's rutted roads. Its domestic car division specialised in producing low-cost vehicles suitable mainly for emerging markets, a world away from the luxury niche occupied by Jaguar and Land Rover.
But perhaps the high point of Mr Tata's career came in January when he unveiled the prototype of the Tata Nano - the world's lowest-cost car, with a price tag of around $2,000 - at the Delhi motor show.
The global media mobbed the launch, destroying part of the stage on which the prototype was being displayed in their eagerness to get a view. The Nano caught the world's imagination. Some even drew parallels between Mr Tata and Henry Ford, the inventor of the original people's car, the Model T.
As the year wore on, the news started to turn sour. The first setback came when a firebrand politician named Mamata Banerjee began a blockade in September of the site of the Nano plant in West Bengal, the communist-ruled state in India's east whose capital is Calcutta (now Kolkata). Ms Banerjee accused the Tata group of using land forcibly taken from farmers for the plant.
Mr Tata countered that the politician's supporters were violently obstructing his workers from completing the plant. Disgusted, he eventually shifted the plant to the western state of Gujarat, delaying production by what analysts estimate will be a year.
The episode threatened to take the sheen off the Tata group's reputation as the acceptable face of Indian capitalism. While Mr Tata accused Ms Banerjee of exploiting the farmers, independent studies show that the state government had used force to appropriate the site of the factory, which stood on fertile rice fields.
But the group's real troubles began with the worsening of the global liquidity crunch that followed the collapse in September of Lehman Brothers, the US investment bank. In November, Mr Tata circulated a letter to his managing directors in which he warned of tough times to come for at least 12 months, calling on them "drastically" to reduce costs so as to avoid getting into "irretrievable positions".
"Some of our companies with substantial foreign operations or those which have made substantial acquisitions are already facing major problems in raising capital or establishing lines of credit for their operations," he wrote.'
Tata Steel - by far the group's biggest subsidiary, accounting for nearly half of its revenue - was among the first to be hit, particularly at the UK-based Corus. The group began to cut costs, with Corus announcing it would make savings of pound 350m, including through job cuts.
The sudden slowdown has inevitably led to questions over whether buying Corus was a good idea. Tata Steel's Indian operation has among the highest margins in the steel industry, while Corus has among the lowest.
The company insists that the combination with Corus, which brings in three-quarters of Tata Steel's revenue, will prove worthwhile. A high-technology manufacturer, Corus will be able to help Tata's Indian operations improve their product range as India's market increases in sophistication.
"In India, cars are at best mid-segment but today or tomorrow such [high-end] cars will be made in India and we need the capability to service that market," says Kaushik Chatterjee, Tata Steel's chief financial officer.
Markets are unconvinced. Tata Steel's shares have fallen 81 per cent this year and are now at levels that analysts describe as "liquidation" prices. Moody's Investors Service has already downgraded Tata Steel's credit rating outlook to negative because of the business downturn and the debt taken on as part of the Corus transaction.
Some analysts see a silver lining. "This crisis might be a blessing in disguise - this gives them the chance to cut the flab out of Corus without anyone saying anything," says Rakesh Arora from Macquarie Securities.
But there is less optimism about Tata Motors, the other flagship company. Indian automotive sales have collapsed in the past two months, forcing Tata to close its plants temporarily at least five times to reduce inventory.
Worse, the company is struggling to refinance a $3bn bridging loan for its acquisition of Jaguar and Land Rover, even resorting to an old Indian corporate trick of raising fixed-term deposits from the public, something it has not done for 13 years.
Moody's has cut Tata Motors' credit rating twice in six months and warned of more to come.
Others also worry about the cost of keeping the loss-making marques on the road. Says one private equity executive in Mumbai: "Buying a sick elephant is one thing, but treating that elephant and keeping it alive is another."
Ravi Kant, Tata Motors' managing director, says the group is standing by the acquisition and has no plans to offload the purchases. "Nobody really predicted the extent of the financial difficulty the world is going to see," he said. "It was like a tsunami."
Executives reject claims that the Tata group is overstretched. It still has its outsourcing cash cow, Tata Consultancy Services, which although slowing remains strong. "The group in the short term obviously needs to adjust the sail according to the way the wind is blowing but the direction of the ship remains in the right direction," says Mr Rosling.
Whether it stays the course, depends on Tata's helmsman. Mr Tata now needs to show more leadership than ever before. If he can take Tata through the current storms, it would confirm the group's and corporate India's place as an emerging force. If he stumbles, so too will his group but also India's national economic ambitions.
Ironically, one of his greatest challenges during the coming year will be writing himself out of the script. He has already extended his term as chairman once but is expected to step down when he reaches 75. There is no obvious successor.
In the near term, the chairman's focus will be on nurturing Tata's battered spirit after the terrorist attacks, in which 12 hotel staff died.
Last week, Mr Tata presided over a remembrance ceremony attended by staff and clerics of all faiths. In the programme the words of India's independence leader, Mahatma Gandhi, were quoted: "Strength does not come from physical capacity. It comes from an indomitable will."
With the outlook darkening for India's economy, the Tata group and Indian business in general will need willpower in abundance if they are to overcome what promises to be a difficult 2009.
With grim resignation, D P Yadav, a driver at Mindspace, an outsourcing hub in Mumbai's suburbs, spits out his paan, the Indian betel leaf equivalent of chewing tobacco. He has seen passengers and fares disappear as the global economic slowdown has made its impact felt on a place that only a few months ago bustled like a university campus.
"I have not got my salary for the last one month," says Mr Yadav, one of hundreds who ferry the information technology park's thousands of young workers between their homes and the office. "Our bosses say that their bills have not been paid by the call centre players. Hence they are unable to pay us."
Even before last week's terrorist attacks on India's financial centre, the country's outsourcing industry was starting to experience something unprecedented: a slowdown.
The sector, which handles everything from the computer systems of its overseas clients to their mortgage processing businesses and customer contact centres, has risen in the past 10 years to become one of the country's main economic drivers.
Last year it brought in more than $40bn (pound 27bn, euro 32bn), while its relatively highly paid, big-spending workforce whose average age is in the mid-20s has become a mainstay of India's new consumer economy.
"This is one of the most serious (slowdowns) I've seen personally because it's affecting the whole world," says S Ramadorai, chief executive of Tata Consultancy Services, India's largest IT outsourcing company.
TCS and its peers say the restructuring or collapse of some of their biggest clients in the west is leading to fewer fresh outsourcing contracts. While some may still achieve growth in revenue this year of up to 20 per cent, most expect next year to be worse. Gone are the annual growth rates of the past decade of about 30 per cent or more.
No one will predict what might happen next year, given the uncertainty affecting their overseas clients. The ultimate effect of the terror attacks is also unknown. But the companies fear that growing western protectionism as more people lose jobs could further hurt them.
The larger groups, including TCS, Infosys Technologies and Firstsource, say they are honouring their existing recruitment commitments but are allowing natural attrition to prune headcounts. More severely affected, they say, are smaller operators that are dependent on only a few clients or are owned by overseas institutions.
"Clearly, in a market where the big guys are finding growth hard to come by, the smaller guys will find it very difficult to get growth," says Ananda Mukerji of Firstsource. Staff at Goldman Sachs' centre in Bangalore, which employs young analysts, say meanwhile they have been told they will be affected by the bank's worldwide plans to shed at least 10 per cent of its employees. "Until now, I had thought that we would sail through these turbulent times," says one young Goldman employee.
In October, a unit of the US-based Gridstone that crunches numbers on listed companies for its analysts in the US asked half its 175 workers in Mumbai to leave after clients such as Lehman Brothers went bust. "Just a month earlier, I bought a motorbike, borrowing at an 18 per cent interest rate. I don't know what to do," says one employee, who was given a month's salary for redundancy.
At the Sports Bar in a new mall near Mindspace, a venue that normally caters to crowds of outsourcing workers, only one of the many tables is occupied. "We opened this place in July and business is already down by half," says Ashwini Kumar, the assistant manager. "If things continue like this, we might not continue beyond a few months."
Additional reporting by Varun Sood
Copyright The Financial Times Limited 2008
