Little Car
04-04-2008, 01:28 AM
MUMBAI, India -- A dozen years ago, many thought that India's Tata Group, the country's oldest and largest conglomerate, was a bloated behemoth that would eventually go under.
Instead, it has become a powerhouse in the 21st century, focusing on core businesses such as steel and automobiles and seizing opportunities, including the hugely profitable outsourcing business, that came with India's dramatic economic transformation.
India's Tata Motors bought Ford's Jaguar and Land Rover brands in January for $1.7 billion, about a third of the price the automaker originally paid for the two luxury brands.
Tata has made a slew of other acquisitions recently, including Britain's Tetley Tea and Boston's Ritz-Carlton Hotel. The deals have thrust the Tata conglomerate -- which comprises 98 companies and was largely unknown outside India until recently -- into the global spotlight.
A year ago, Tata Steel Ltd. became the world's sixth-largest steelmaker when it bought Britain's Corus Group for $13 billion. Then in January, Tata Motors Ltd. grabbed the world's attention when it unveiled the planet's cheapest car: a $2,500 four-seater that could change the global auto industry.
"We have been thinking bigger than we have done in the past," said Chairman Ratan N. Tata, 70, in an interview at Bombay House, the group's headquarters since 1926. "We have been bolder ... and we have been more aggressive in the marketplace."
In five years through March 2007, annual group sales more than doubled to $29 billion, while market capitalization of its 27 listed companies increased six-fold, to $78 billion. The numbers do not include Corus, whose sales totaled $19 billion in 2006.
While recent rapid earnings growth at Tata Steel and Tata Motors has slowed, net profit at Tata Consultancy, India's biggest outsourcing company, continues to rise, climbing 21 percent in the October-December quarter.
The globalization strategy will only get bigger, Tata said.
"We are at an early stage. We are still feeling our way."
The resurgence of the 140-year-old Tata brand is as much a story of the country's economic rise as it is about the success of the chairman, whose ascent to the top job in 1991 coincided with India's shift from a socialist-style state to a market economy.
The Tata Group had a tough time under socialism because it strove to create a business culture that emphasized transparency and integrity. Tata executives are known for refusing to pay bribes, a widespread Indian practice, and their lifestyles are mostly modest.
Ratan Tata, a bachelor, lives in a beachfront Mumbai apartment and is driven to work in an inexpensive Tata sedan.
When Ratan took over the company from his uncle, J.R.D. Tata, the Tata group was almost falling apart. J.R.D.'s hands-off approach had led to inflated egos and squabbling among top executives.
The company was founded in 1868 when Jamsetji N. Tata, a young trader, set out to establish India's first textile mill. The company went on to build the first steel plant, overcoming the resistance of British colonial rulers, and later built the airline that became the nation's flagship carrier, Air India.
When Ratan became chairman, many heads of group companies had scant respect for him. He was a loner who had graduated from Cornell University with a bachelor's degree in architecture and had led a variety of Tata businesses far from the limelight.
Unlike his uncle, Ratan took charge from the start. It took him years to clean up the mess from the power struggles, pushing out a generation of executives and jettisoning several peripheral businesses.
At Tata Steel, tens of thousands of jobs were cut. Tata Motors built the first fully Indian-designed car, the Indica, a roomy hatchback rolled out in 1998.
Meanwhile, Tata Consultancy Services hired thousands to become a global power in outsourcing, doing back-office work and software engineering for Western firms.
Just as the group's fortunes were reviving, the Indian economy hit a slump, a slowdown aggravated in 2002 by new tensions with Pakistan. That's when it became compelling for Tata to look overseas.
What followed was a broad push to acquire businesses abroad. Nearly 30 overseas buyouts have since helped the group's international revenues grow fourfold to $11 billion and contributed more than a third to its total sales last year.
Takeovers include the truck unit of South Korea's Daewoo Motors, Singapore's Natsteel and Thailand's Millennium Steel.
For all that, Ratan Tata insists he hasn't traded away the group's long-cherished values.
No Tata family members are on the country's list of billionaires because the business is owned mostly by Tata-funded charitable trusts.
A substantial portion of the group's income is channeled into various philanthropies that have helped build some of the country's finest institutions, including India's first cancer hospital.
Tata companies are also known for offering worker benefits that are rare in India, including pension and child-care allowances.
"The one thing I had always felt is that I wanted to go to bed at night saying I had not succumbed to the temptation of giving up the values and the ethics that the group had been built on just for short-term gains," Tata said.
http://www.columbusdispatch.com/wwwexportcontent/sites/dispatch/business/stories/2008/04/03/tata01.jpg
ASSOCIATED PRESS PHOTOS
Tata Group Chairman Ratan N. Tata, above, has led his Mumbai-based conglomerate to acquire the Ritz-Carlton Hotel in Boston, right, to go along with its chain of Taj hotels, which includes the Taj Mahal Palace & Towers in Mumbai, below right. It also has developed the country's first Indian-designed car and recently unveiled the Nano, below left, a four-seater city car that costs as little as $2,500.
Instead, it has become a powerhouse in the 21st century, focusing on core businesses such as steel and automobiles and seizing opportunities, including the hugely profitable outsourcing business, that came with India's dramatic economic transformation.
India's Tata Motors bought Ford's Jaguar and Land Rover brands in January for $1.7 billion, about a third of the price the automaker originally paid for the two luxury brands.
Tata has made a slew of other acquisitions recently, including Britain's Tetley Tea and Boston's Ritz-Carlton Hotel. The deals have thrust the Tata conglomerate -- which comprises 98 companies and was largely unknown outside India until recently -- into the global spotlight.
A year ago, Tata Steel Ltd. became the world's sixth-largest steelmaker when it bought Britain's Corus Group for $13 billion. Then in January, Tata Motors Ltd. grabbed the world's attention when it unveiled the planet's cheapest car: a $2,500 four-seater that could change the global auto industry.
"We have been thinking bigger than we have done in the past," said Chairman Ratan N. Tata, 70, in an interview at Bombay House, the group's headquarters since 1926. "We have been bolder ... and we have been more aggressive in the marketplace."
In five years through March 2007, annual group sales more than doubled to $29 billion, while market capitalization of its 27 listed companies increased six-fold, to $78 billion. The numbers do not include Corus, whose sales totaled $19 billion in 2006.
While recent rapid earnings growth at Tata Steel and Tata Motors has slowed, net profit at Tata Consultancy, India's biggest outsourcing company, continues to rise, climbing 21 percent in the October-December quarter.
The globalization strategy will only get bigger, Tata said.
"We are at an early stage. We are still feeling our way."
The resurgence of the 140-year-old Tata brand is as much a story of the country's economic rise as it is about the success of the chairman, whose ascent to the top job in 1991 coincided with India's shift from a socialist-style state to a market economy.
The Tata Group had a tough time under socialism because it strove to create a business culture that emphasized transparency and integrity. Tata executives are known for refusing to pay bribes, a widespread Indian practice, and their lifestyles are mostly modest.
Ratan Tata, a bachelor, lives in a beachfront Mumbai apartment and is driven to work in an inexpensive Tata sedan.
When Ratan took over the company from his uncle, J.R.D. Tata, the Tata group was almost falling apart. J.R.D.'s hands-off approach had led to inflated egos and squabbling among top executives.
The company was founded in 1868 when Jamsetji N. Tata, a young trader, set out to establish India's first textile mill. The company went on to build the first steel plant, overcoming the resistance of British colonial rulers, and later built the airline that became the nation's flagship carrier, Air India.
When Ratan became chairman, many heads of group companies had scant respect for him. He was a loner who had graduated from Cornell University with a bachelor's degree in architecture and had led a variety of Tata businesses far from the limelight.
Unlike his uncle, Ratan took charge from the start. It took him years to clean up the mess from the power struggles, pushing out a generation of executives and jettisoning several peripheral businesses.
At Tata Steel, tens of thousands of jobs were cut. Tata Motors built the first fully Indian-designed car, the Indica, a roomy hatchback rolled out in 1998.
Meanwhile, Tata Consultancy Services hired thousands to become a global power in outsourcing, doing back-office work and software engineering for Western firms.
Just as the group's fortunes were reviving, the Indian economy hit a slump, a slowdown aggravated in 2002 by new tensions with Pakistan. That's when it became compelling for Tata to look overseas.
What followed was a broad push to acquire businesses abroad. Nearly 30 overseas buyouts have since helped the group's international revenues grow fourfold to $11 billion and contributed more than a third to its total sales last year.
Takeovers include the truck unit of South Korea's Daewoo Motors, Singapore's Natsteel and Thailand's Millennium Steel.
For all that, Ratan Tata insists he hasn't traded away the group's long-cherished values.
No Tata family members are on the country's list of billionaires because the business is owned mostly by Tata-funded charitable trusts.
A substantial portion of the group's income is channeled into various philanthropies that have helped build some of the country's finest institutions, including India's first cancer hospital.
Tata companies are also known for offering worker benefits that are rare in India, including pension and child-care allowances.
"The one thing I had always felt is that I wanted to go to bed at night saying I had not succumbed to the temptation of giving up the values and the ethics that the group had been built on just for short-term gains," Tata said.
http://www.columbusdispatch.com/wwwexportcontent/sites/dispatch/business/stories/2008/04/03/tata01.jpg
ASSOCIATED PRESS PHOTOS
Tata Group Chairman Ratan N. Tata, above, has led his Mumbai-based conglomerate to acquire the Ritz-Carlton Hotel in Boston, right, to go along with its chain of Taj hotels, which includes the Taj Mahal Palace & Towers in Mumbai, below right. It also has developed the country's first Indian-designed car and recently unveiled the Nano, below left, a four-seater city car that costs as little as $2,500.