Tata

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evolution of tata (economic times article)

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Tata

  1. 1. Evolution of TATAs DAY IN PICS27 Nov, 2011, 06.23AM IST
  2. 2. Tata group from Ratan Tata to Cyrus Mistry, and the country & the futureCyrus Mistry will succeed Ratan Tata as Tata group chairman. Ratan Tatas two-decade-long reign began in 1991, the year India started economic reforms. The groupsrevenues grew to $83 billion from $5 billion in that period. It was also a period inwhich India transformed from a third-world backwater to one of the worlds fastest-growing economies.Before 1991, India was a closed economy. The Tata group too was largely domestic innature. Today, India is a globalised economy and the Tata group a global giant thatoperates in 80 countries and draws 58% of its revenues from foreign markets. Heres alook at how India and the Tatas grew together and the challenges that lie ahead of thecorporate giant as the country evolves.
  3. 3. The Ratan Years: 1996India Then: India had launched mobile telephony a year earlier. Growthinitially was slow due to high mobile handset prices and costly (morethan Rs 16 a minute) call tariffs.Tata Milestone: Group establishes Tata Teleservices to enter the telecomsector. But it had to wait another nine years to launch mobile operationsunder the brand name Tata Indicom.
  4. 4. The Ratan Years: 1998India Then: The government began to free up automobile segments,accelerating industry growth. India quickly turned into a major magnetfor investments in commercial vehicles and cars.Tata Milestone: Tata Motors launches Indica, the countrys firstindigenous car, spearheading the groups entry into a lucrative segment.
  5. 5. The Ratan Years: 1999India Then: Infosys became the first Indian company to debut on Nasdaqin 1999. A raft of companies such as ICICI Bank and Dr Reddys flocked toAmerican exchanges.Tata Milestone: The Tatas thought there was no better time to unveil anew group corporate mark and logo. A new phase of growth kicks in forthe group.
  6. 6. The Ratan Years: 2000India Then: As Indian IT majors like Infosys and TCS started building BrandIndia overseas, Indian companies started to venture outside their homemarkets. The Tatas led the charge.Tata Milestone: Tata Tea buys Tetley - the inventor of tea bags - for £271million in 2000, the first of several acquisitions. Tata set the tone for allother India Inc overseas acquisitions.
  7. 7. The Ratan Years: 2003India Then: After the 2001 dotcom bust and 9/11, Indian IT sectorexperienced a slowdown of sorts. But as US offshoring to India took off,Indian IT giants like Infosys and TCS began to grow rapidly.Tata Milestone: In 2003, TCS becomes the first Indian software companyto cross $1 bn in revenue. A year later, Infosys would cross that mark.That year, TCS went public, raising $1.2 billion.
  8. 8. The Ratan Years: 2008India Then: Indian companies were in the thick of an acquisition spree.Revenues and profits rode a consumption boom to record peaks. 2008began well but would not end well.Tata Milestone: Tata Motors unveils Nano in January 2008. In June, itbuys Jaguar Land Rover. The financial crisis spoils the party. JLR posts$520-mn loss in 2009, but has since turned profits.
  9. 9. How the Cyrus Years May Play OutHow the Cyrus Years May Play Out The group has diversified into more than 100 businesses. Obviously, thereare business challenges to confront. And that will be partly influenced by how India will evolve.Takeaway: Profits are too little for a globalised company, and for one that operates in so many sectors.Majority of firms contribute little towards revenues. For comparison, take Apples market value - it is around$350 billion. Tatas is $74 billion. Jaguar Land Rover reported record profits of more than £1 billion in the yearto end May 2011. The European steel operations continue to be in the red, but profitable home operationscushion those losses.India Factor: Were the Tatas to decide to focus on the home market more, given the economic troubles in theWest, improved domestic investment climate would be critical. Does retail FDI signal a change? Too early totake a bet. UPA 2 policy capacity will be the groups biggest short-term worry.
  10. 10. The Big Nano Problem1,26,691 No. of Nanos sold since April 2009Takeaway: Too few Nanos sold, but too early to write off Nano. Tata has launcheda new marketing drive, and more cars are appearing on the road.India Factor : The auto market will get more competitive, especially in the smallcar segment. As incomes and aspirations grow, whether a small car whose sellingpoint is mostly low price will be the aam aadmis first choice will remain a bigquestion.
  11. 11. Telecom DisconnectRs 40,000 cr Investment in telecomTakeaway: The group has never been sure-footed in telecom, wobbling from a fixed lineplayer to a limited mobility wireless to a full mobility wireless, and finally to dual technology.The groups telecom business is stuck in a ferocious price war with more than a dozen rivals.It is also woefully short of spectrum. However, the Tatas have always said they are in telecomfor the long haul.India Factor: Telecom in India is due for a shakeup. Number of players, tariff levels andtechnology are all set for a big churn. Tatas telecom business will therefore face anespecially big challenge as Indian telecom enters the maturity phase.

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