For Tata Group, its Indian roots matter

Dubai: It’s biggest acquisition bets — the $2.3 billion (Dh8.4 billion) Jaguar Land Rover and $7.6 billion for Anglo-Dutch steelmaker Corus — may have happened overseas, but the Tata Group has no intention to go slow in India. The Group’s participation in the recently launched carrier AirAsia India is part of that take all opportunities as they come mindset.

There is also the soon-to-be-commissioned massive steel plant in Kalinganagar (in the eastern state of Odisha), where two modules will have a combined annual capacity of 6 million tonnes. (It is the largest single location Greenfield steel plant in the country, and the two phases will cost an estimated Rs400 billion.) “Whatever statistical measure is used — the old one or the new version — fact is India is the fastest growing emerging market now,” said Dr Mukund Rajan, member of the six-man Group Executive Council as well as being the brand custodian and Chief Ethics Officer. “Who wouldn’t want to do more in the fastest growing emerging market?

“And 30 per cent of our revenues still come from India. We will keep investing (in India) whenever we see opportunities. It’s the same internationally.”

According to Dr Rajan, the “de-risking across geographies” — where the Group is not held hostage to changing fortunes in any single market, territory or industry — will be a continuous process.

“It’s true that from the early 2000s, the whole focus had been on going international — and it paid off growing the Group from $10 billion into a $100 billion enterprise,” said Dr Rajan, who was in Dubai early last week for a Group-wide meeting of senior management from its global operations. (Dubai is one of five key overseas bases for the Group.) “At that time, India was opening up and all global majors wanted to be in the Indian market. A benchmark was set within the Group to not just compete with the best multinationals within India, but to do so at the international level.”

Currently, its North America, the UK and China operations represent the biggest chunk of overall revenues.

Market direction

The current spell of uncertainty sweeping over the global economy will not force Tata Group into taking any radical counter measures. “Being underweight in any market or going by currency fluctuations is not how we do things,” said Dr Rajan.

“As of now, there’s no absolute clarity on where the markets are headed. The implications of what’s happening with China were quite sudden.

“But we can still move with agility and react quickly when opportunities come.”

The buy of Jaguar Land Rover in 2008 — when it was even felt by many that the storied UK auto marques had lost their relevance — and their subsequent turnaround is the stuff of legends. Both Jaguar and Land Rover volumes have been giving heft to Tata Motors’ bottom-line in recent years. Even though China’s auto market has slowed down, others beckon the sheer premium and motoring experience of both brands.

Tata Steel’s experience with Corus has been less wholesome. The debt on the former’s books had swollen to Rs690 billion as of March 31 this year. Paring it down from these heights have been obstructed by indifferent conditions for the commodity.

But the Tata Group will be steadfast in taking the long term view on both opportunities as well as hurdles. It can safely be said it has had ample practice.

“[Economic] cycles are important, but one cannot let that dramatically de-focus our priorities,” said Dr Rajan. “In the 147-year history of the company, there have been only six leaders, and that explains how long-term our views tend to be.”