Evolution of TATAs

DAY IN PICS27 Nov, 2011, 06.23AM IST

Tata group from Ratan Tata to Cyrus Mistry, and the country & the futureCyrus Mistry will succeed Ratan Tata as Tata group chairman. Ratan Tata's two-decade-long reign began in 1991, the year India started economic reforms. The group's revenues grew to $83 billion from $5 billion in that period. It was also a period in which India transformed from a third-world backwater to one of the world's fastest-growing economies.

Before 1991, India was a closed economy. The Tata group too was largely domestic in nature. Today, India is a globalised economy and the Tata group a global giant that operates in 80 countries and draws 58% of its revenues from foreign markets. Here's a look at how India and the Tatas grew together and the challenges that lie ahead of the corporate giant as the country evolves.

The Ratan Years: 1996

India Then: India had launched mobile telephony a year earlier. Growth initially was slow due to high mobile handset prices and costly (more than Rs 16 a minute) call tariffs.

Tata Milestone: Group establishes Tata Teleservices to enter the telecom sector. But it had to wait another nine years to launch mobile operations under the brand name Tata Indicom.

The Ratan Years: 1998

India Then: The government began to free up automobile segments, accelerating industry growth. India quickly turned into a major magnet for investments in commercial vehicles and cars.

Tata Milestone: Tata Motors launches Indica, the country's first indigenous car, spearheading the group's entry into a lucrative segment.

The Ratan Years: 1999

India Then: Infosys became the first Indian company to debut on Nasdaq in 1999. A raft of companies such as ICICI Bank and Dr Reddy's flocked to American exchanges.

Tata Milestone: The Tatas thought there was no better time to unveil a new group corporate mark and logo. A new phase of growth kicks in for the group.

The Ratan Years: 2000

India Then: As Indian IT majors like Infosys and TCS started building Brand India overseas, Indian companies started to venture outside their home markets. The Tatas led the charge.

Tata Milestone: Tata Tea buys Tetley - the inventor of tea bags - for £271 million in 2000, the first of several acquisitions. Tata set the tone for all other India Inc overseas acquisitions.

The Ratan Years: 2003

India Then: After the 2001 dotcom bust and 9/11, Indian IT sector experienced 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 company to cross $1 bn in revenue. A year later, Infosys would cross that mark. That year, TCS went public, raising $1.2 billion.

The Ratan Years: 2008

India Then: Indian companies were in the thick of an acquisition spree. Revenues and profits rode a consumption boom to record peaks. 2008 began well but would not end well.

Tata Milestone: Tata Motors unveils Nano in January 2008. In June, it buys Jaguar Land Rover. The financial crisis spoils the party. JLR posts $520-mn loss in 2009, but has since turned profits.

How the Cyrus Years May Play Out

How the Cyrus Years May Play Out The group has diversified into more than 100 businesses. Obviously, there are 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 Apple's market value - it is around $350 billion. Tata's is $74 billion. Jaguar Land Rover reported record profits of more than £1 billion in the year to end May 2011. The European steel operations continue to be in the red, but profitable home operations cushion those losses.

India Factor: Were the Tatas to decide to focus on the home market more, given the economic troubles in the West, improved domestic investment climate would be critical. Does retail FDI signal a change? Too early to take a bet. UPA 2 policy capacity will be the group's biggest short-term worry.

The Big Nano Problem

1,26,691 No. of Nanos sold since April 2009

Takeaway: Too few Nanos sold, but too early to write off Nano. Tata has launched a new marketing drive, and more cars are appearing on the road.

India Factor : The auto market will get more competitive, especially in the small car segment. As incomes and aspirations grow, whether a small car whose selling point is mostly low price will be the aam aadmi's first choice will remain a big question.

Telecom Disconnect

Rs 40,000 cr Investment in telecom

Takeaway: The group has never been sure-footed in telecom, wobbling from a fixed line player to a limited mobility wireless to a full mobility wireless, and finally to dual technology. The group's 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 telecom for the long haul.

India Factor: Telecom in India is due for a shakeup. Number of players, tariff levels and technology are all set for a big churn. Tatas' telecom business will therefore face an especially big challenge as Indian telecom enters the maturity phase.