Tata – integral part of Indian life


February 8, 2007

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India | Industry

We also make steel.

This was the triumphant punch line of a happy Tata Steel television commercial not very long ago.

The commercial wasn’t wide of the mark.

If you wake up in India, you are likely to sip Tata tea, make early morning calls on your Tata mobile phone and take a Tata sedan to work.

There is a good chance that you will be wearing a Tata watch or shoes sold by Tata as well. Back home, you may be leaving your wife and children surfing more than 100 channels on the local direct-to-home television system launched by Tata along with Star.

Your children may work in any of the Tata companies which already employ nearly 250,000 people or opt for higher studies at a science or social sciences school run by the Tatas. If you fall ill, you might head to the nearest Tata hospital.

If you are growing up in India, the smoke-belching Tata buses and trucks are among the first vehicles you will ever see in the cities and countryside. Two years ago, the oil-epic Syriana starring George Clooney opened with a shot of oil workers struggling to get into an overloaded Tata bus.

There is no other Indian business conglomerate which quite dominates the lives of middle-class Indians the way Tata Group does with its 96 companies, seven business divisions. Its turnover of $21.9bn, unsurprisingly, equals nearly 3% of India’s gross domestic product (GDP).

Analysts call the group a “model of good behaviour”.

$21.9bn: Revenues
2.8%: Contribution to India’s GDP
246,000: Number of employees
96: Group companies
2 million: Shareholders
$52bn: Market capitalisation
54: Number of countries the group operates in

Tata Steel, for example, began the eight-hour work day for employees in 1912, long before the US or Europe, and a year after Britain accepted the 12-hour day. It introduced leave with pay in 1920, 25 years before it became law in India. It set up a provident fund for employees in 1920, 32 years before it became law in India.

There is also no other Indian company which straddles the new and old economy with equal ease – the group owns the country’s largest integrated steel company with a 100-year-old flagship plant, and Asia’s largest software company, which is also one of the biggest employers in the country.

Now that Tata Steel has won a tense takeover battle for Anglo-Dutch steelmaker Corus, with a bid of £5.75bn ($11.3bn), the group seems finally ready to flex its considerable muscles on the international stage.


After spending about $1.5bn buying foreign companies and ensuring that some 30% of its revenues are generated outside India, the group is fiercely taking advantage of the globalised economy.

Ratan Tata with a newly launched Tata car
Last year, Tatas produced their four millionth vehicle
So how does an enterprising mid-19th Century group formed by a scion of a Mumbai (Bombay)-based Parsee priest born in a stifling and sclerotic economy flower into a plucky and agile 21st Century business?

Gurcharan Das, who has served on the board of one of the Tata companies, says what is remarkable about the Tatas is the way the group has changed with the times and transformed itself from a bureaucratic, risk-averse company to an aggressive one.

Tata Steel, for example, cut costs and trimmed its large and well-paid workforce to become one of the lowest-cost steel-makers in the world. On the other hand, they sold off old, but increasingly unprofitable, businesses like soaps and detergents.

“Tata Steel, for example, is a completely different company from what is was even 10 years ago. It has reinvented, gone up the value chain, and their products have become more specialities than commodities, commanding a higher value,” says Mr Das, also former chief operating officer of Proctor and Gamble.

Expansion spree

The company has also continued to churn out top-class science and social science graduates for India’s leading institutes and corporations.

In recent years, under Ratan Tata, the Tatas have become hungrier.

Last year the group set up a new drug discovery centre, signed deals to launch hotels in Qatar and build a new undersea submarine cable linking India, the Middle East and Western Europe. It also entered China with its software company in collaboration with the Chinese government and Microsoft.

Protests against Tatas acquiring land for a motor plant in West Bengal
Plans to launch a car factory have met stiff opposition
The group bought a stake, too, in an international vitamin water company, sold its four-millionth vehicle in India, bought hotels in Boston, plotted a coffee plant in Uganda and entered the promising direct-to-home television market in India.

Such unfettered growth is not without its pitfalls, even if the group is Tata, warn analysts.

Efforts to launch small car and steel plants in West Bengal and Orissa states have run into stiff local opposition, sullying the image of the group a little. Tata Sky’s direct-to-home television service is plagued by late deliveries and inefficient service.

“All these companies are not going to be stars. The jury is still out, for example, about Tata Telecom, the group’s phone company. Acquisitions for the sake of acquisitions is not something which you should do,” says Gurcharan Das.

For the moment, however, few companies in India or Asia can match Tata for the range of goods and services it offers.

Original article here