RTN takes Tata empire past $100 billion mark

In the 20-odd years of him holding the command, the turnover has increased over 17 times

As he prepares to hang up his boots as head of India’s largest and most respected business house at the end of December, Ratan Naval Tata has hit the century mark for the diversified group.

In just two decades of his leadership as chairman, the Tata group turnover has crossed the $100 billion mark for the first time in 2011-12.

“The total revenue of Tata companies taken together was $100.09 billion (Rs 5,42,461 crore) in 2011-2012 with 58 per cent of this coming from business outside India,” a group spokesperson told Financial Chronicle.

Tata firms now employ over 450,000 people worldwide. As recently as 2006-07, the group’s turnover was just $28.8 billion (Rs 1,56,229 crore). But in the 20-odd years of Rata Tata holding the corner room, the turnover has increased over 17 times from $5.8 billion in 1991-1992 — the first full year of his chairmanship — to over $100 billion.

“The growth of the group under Ratan Tata has been the result of the introduction and focus on the ‘Tata business excellence’, model which encouraged cleaning up of operations and removing impediments to growth,” says Bhaskar Bhat, MD of Titan Industries.

He points out that it’s under Tata that, the group entered new sectors such as telecom (with the acquisition of VSNL). “There is significant independence given to individual companies to excel in their fields, while retaining the human and community focus and values and integrity. This has allowed companies such as ours to get into fields such as jewellery and eyewear, among others,” Bhat adds.

The Tata group’s revenues are now more than the combined revenues of the Mahindra group ($15.4 billion), Godrej ($3.3 billion), Essar ($27 billion) and Aditya Birla group ($40 billion). Even Mukesh Ambani’s Reliance Industries had annual revenues of a little over $66 billion.

Compared to public sector companies, the Tata group as a whole is larger than SAIL ($9.57 billion) and ONGC ($29.51 billion) put together. The group’s 2011-12 turnover also exceeded that of Indian Oil Corporation’s $80.21 billion. According to Capitaline figures, the group’s market capitalisation of Rs 48,15,680 crore is more than the market cap of HDFC (Rs 26,65,000 crore) and of ITC group (Rs 22,23,000 crore). Its market cap also exceeds that of the Reliance group (Rs 26,45,000 crore), according to Capitaline.

The AV Birla group’s market cap stood at Rs 14,78,000 crore, followed by Hindustan Unilever group (Rs 12,58,000 crore), ICICI group (Rs 12,35,000 crore and L&T group (Rs 10,89,000 crore).

Big bang acquisitions since 2007-08 have catapulted several Tata companies from domestic into the top global league in their respective industries.

With the acquisition of Corus, Tata Steel entered the list of the world’s top 10 steel makers; Tata Motors is now among the world’s top five commercial vehicle makers; Tata Global Beverages, which took over Tetley of the UK, is the world’s second largest branded tea company; Tata Chemicals, which took over Brunner Mond and British Salt, is the world’s second largest soda ash producer; and Tata Communications which acquired Teleglobe is now among the world’s largest wholesale voice carriers.

The biggest contributors to the $100-billion-plus turnover are Tata Steel at $26.13 billion, TCS at $10.17 billion and Tata Motors, led by impressive growth at Jaguar Land Rover, at $32.5 billion.

“The focus on internationalisation has helped the group sidestep delays in approval for projects that are endemic in the Indian market. The global footprint has also given scale and ability to look at new markets. That, coupled with the focus on tapping new consumer segments, has powered growth,” said the managing director of another Tata companies who did not want to be identified.

The acquisitions and international growth, particularly in Europe, have helped rebalance its exposure to emerging markets in Asia and Africa with relatively more mature markets such as Europe and the US. But experts say it is creditable that despite the crisis facing the western world and the group’s particularly large exposure to these weak economies, Tata has been able to grow global revenues in 2011-12 by almost $17 billion (Rs 92,218 crore).

“Ratan Tata took over at a time when the India story was just taking off with the launch of liberalisation. This led to the opening up of the economy, which is reflected in the growth that the top 100 companies in India saw. Like JRD Tata before him, Ratan Tata too put together an amazing crack team of people such as S Ramadorai and Ravi Kant, among others. Ratan Tata is also a man of courage and took large bets, some of which have played out and powered growth,” said Gita Piramal, business historian and author of Business Maharajas.

She points out that Aditya Vikram Birla, father of Kumar Mangalam Birla, went to Southeast Asia frustrated by the limitations on expanding in India. Other industrialists such as Rahul Bajaj who tried to go overseas found their efforts frustrated by Indian bureaucracy, which was not ready to part with foreign exchange.

“In contrast Ratan Tata’s tenure has been a benign period where Indian businessmen were even encouraged to go abroad,” said Piramal.

Brand Finance, a UK-based consultancy firm, recently valued the Tata brand at $16.3 billion (Rs 88,421 crore) and ranked it 45th among the 500 most valuable global brands in report in March. “De-risking the business portfolio of the group by a spread of different geographies and industries and managing business well have helped growth,” said a top Tata Sons official.

“The ethics and integrity of the group drive growth. There is never a sense with any stakeholder that one will be shortchanged when dealing with them. Instead there is a sense of mutual respect and trust and this I think is the secret sauce of success. Ratan Tata’s success has been in spreading this culture and values across the whole group, earning it respect in global markets as a business that wants to do things the right way,” said Mritunjay Kapoor, country head of Protiviti Consulting.

Piramal points out that companies such as TCS focused on the Y2K opportunity where others were afraid to do so and in the process acquired very good customers. “In some cases, it’s also the issue of being in the right place at the right time with the right product — for example, the Chinese appetite for luxury goods was well capitalised on by Jaguar Land Rover,” said Piramal.

With inputs from Rajesh Gajra in Delhi)

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