Second steely punch from the subcontinent


October 16, 2006

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MONTHS after Lakshmi Mittal took over European steel giant Arcelor in the face of stiff competition and a hostile campaign that bordered on racism, another Indian is bracing to deliver a steely punch.

The differences between the two are many. Mittal is India-born, but has his global headquarters in Amsterdam, the proverbial prodigal returning home. But Tata is a very Indian venture, steeped in Indian corporate traditions.

And while Mittal was an acknowledged steel giant long before it got Arcelor, Tata, despite nine decades of steel-making, remains a David out to take on Corus, Europe’s Goliath.

Tata pioneered steel production in British India, emerging as a major supplier during the two world wars and after. But its steel base is modest, an annual seven million tonnes.

To the uninitiated, it may seem audacious for Tata to seek the Corus empire of 18 million tonnes. But the back-up is a vast empire that includes Asia’s largest software firm (Tata Consultancy Services), a worldwide hotel chain (Indian Hotels) and a sprawling vehicle-manufacturing arm (Tata Motors).

The group has over the past six years been on a US$1.9 billion (RM7.03 billion) acquisition spree that has netted Britain’s Tetley Tea, South Korea’s Daewoo Commercial Vehicles, Singapore’s NatSteel and New York’s Pierre Hotel. The list has a dozen other names.

Before trying to take on the Anglo- Dutch Corus, a household name in Europe, Tata gave the British a taste of their very own Tetley with a US$435 million acquisition.

Pioneer of India’s industrialisation — not because of but despite the British rulers — Tata has continued to lead the process in the six decades since independence.

More than any other conglomerate, Tata exemplifies India’s transformation to economic powerhouse. It is by far the most trusted name.

It has come a long way from running the country’s only private power generation network that kept Mumbai ticking with rare breakdowns through the days of what was dubbed the “licence Raj”, the era of the state manning the “commanding heights of the economy”.

Tata, like other private entre- preneurs, needed to wait hours outside government offices to get official nods. It is no longer so. And all through, the group’s leaders never joined politics, a route other high-flyers have taken to acquire clout.

For much of their 138-year history, the Tata companies were the heart of India’s business establishment.

The group’s founder, Jamsetjee 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. All that was achieved in an era of shortages. Now, the sky, literally, is the limit.

At the helm is Ratan Tata, a 68- year-old bachelor. He said in a recent interview that he did fall in love once, but it did not work out, and since has had no time to think of matrimony.

His taking over from J.R.D. Tata in 1991 coincided with India’s economic reforms. Ratan has innovated and pushed the group ahead.

Tata is a Parsi, practising the ancient Zoroastrian faith of Iran. His ancestors sailed to India 1,400 years ago. The Parsis are a small, exclusive community, numbering less than 100,000 across the world.

But this exclusiveness has not affected the group’s vision or work. Though family-owned, it has people in key positions from different communities and regions. Indeed, this has been its strength, when some other business families have split and suffered because of internal crises.

The ideals of the founder are intact. Hence, the group prefers to work in developing countries while expanding at home or abroad. It is pure business, though, not charity. But for charity and philanthropy, too, Tata has an unmatched reputation.

It has meant spreading wealth — a legion of enterprising young men and women whom Tata helped out in studies or enterprise went on to scale great heights.

Tata Sons, the holding company that manages the group, is 65.8 per cent owned by 11 charitable trusts which spent US$379.2 million on social causes in 2003-2004 alone. Over the following 12 months, Tata companies donated another US$97.8 million. Beneficiaries range from a host of Tata educational, health and scientific institutes to the Ganges River’s giant mahseer, saved from extinction by a breeding programme.

The owners of the magnificent Taj Mahal Hotel on the Mumbai seafront are now working on a chain of budget hotels where a room would cost as little as US$22 a day.

Always aiming to touch the less privileged sections and to make consumers out of people, one of Tata’s current pet projects is a US$2,200 car, a four-door, rear-engine runabout that he designed himself and that is under development.

Although the acquiring of land to set up the plant has run into trouble, he plans to sell a million a year in India after it is launched in 2008.

A stake in Corus, therefore, if it works out, will be a giant leap forward. It will not only represent the most expensive acquisition in Indian business history, it will also dramatically raise Tata Steel’s position in the global steel pecking order.

Says India’s Commerce Minister Kamal Nath, who earlier batted for Mittal: “India is a big investor and is putting capital into foreign shores. We would expect to be treated fairly. Cases like Arcelor and Corus are test cases of how ready the other economies and governments are to play the rules of free trade.”

Original article here