Tatas line up $35b capex in ambitious 3-year plan

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Vision 2025 aims to make it one of top 25 brands globally

Tatas line up $35b capex in ambitious 3-year plan
As the Tata group won praise from US secretary of state John Kerry for creating thousands of jobs in the US and the group crossed the $100 billion revenue mark for fiscal year 2013-14, group chairman Cyrus Mistry declared the company's Vision 2025. This includes plans to invest close to $35 billion in three years and make the group comparable to top 25 global companies by committing to improve the quality of life of 25 per cent of the world's population.

Vision 2025 entails moves like divestment of stake, restructuring of group companies and inorganic growth routes to meet targets, besides building the reputation of the Tata brand globally.

The initiative also focuses on four new clusters: defence & aerospace, retail, infrastructure and finance to maximise synergies.

A Tata group spokes­person in a written communication to Financial Chronicle said while details of this internal event could not be shared, it could only be confirmed that the Tata group has adopted a vision to be achieved by 2025. “The vision is that 25 per cent of the world’s population will experience the Tata commitment to improving the quality of life of customers and communities. As a result, Tata will be amongst the 25 most admired corporate and employer brands globally, with a market capitalisation comparable to the 25 most valuable companies in the world,” the spoke­sperson said.

“Towards fulfilling this vision, the Tata group will be investing about $35 billion or Rs 2.10 lakh crore in the next three years,” the spokesperson added.

The vision also entails nurturing group companies by leveraging the parenting advantage of the group centre and harnessing synergies to maximise the performance of companies.

The group will nurture its companies by building the reputation of the Tata brand globally, attracting and developing leaders of tomorrow, and improving the Tata business excellence model process to strengthen performance discipline within the group.

“Group wide initiatives on aspects like customer insight, diversity, and internationalisation will allow harnessing of synergies among companies, along with greater sharing of best practices, investment in joint development of capabilities and future technologies, and leveraging the Tata presence in countries to help companies expand their international footprint,” the spokesperson said.

Tata Group has 10 companies that have $1 billion in revenues and six companies with $600 million in sales. The group's total revenue is around 5.5 per cent of India’s GDP and the group market capitalisation at $138 billion has an over 24 per cent compounded rate of growth per annum.

On July 28, US secretary of state John Kerry praised the Indian conglomerate for creating thousands of jobs in a major foreign policy speech at the Centre for American Progress. He said: “Take a look at the jobs that Tata is creating for Americans by expanding auto design and sales in the United States, adding to its 24,000 employees already in this country.” Tata Group announced on its website on July 29 that revenues of the group jumped 18.5 per cent for the fiscal year 2013-14 to Rs 6,24,757 crore or $103.27 billion.

The international revenue of the group also rose 27 per cent in the fiscal 2013-14 at Rs 4,19,860 crore. Tata firms have operations in more than 100 countries across six continents, and exports products and services to over 150 countries. Net foreign exchange earnings during the fiscal jumped 93.5 per cent to reach Rs 32,129 crore, as compared to Rs 16,604 crore in the year-ago period.

The group's 32 listed companies had a m-cap of Rs 8,46,535 crore on July 24, 2014 as compared to Rs 6,84,859 crore in March-end 2014 and Rs 5,18,716 crore in March-end 2013.

In 2013-14, the group's employee count increased by 6.8 per cent to 5,81,473 from 5,44,502 in the previous year. The information technology and communications sector accounted for 57.5 per cent of the total employee count with 3,34,569 people in 2013-14.

The group's total tax paid to the government stood at Rs 36,312 crore during the financial year.

Tata firms are implementing capex plans of over Rs 65,000 crore in FY15 as part of their respective medium-term strategies. The capex is spread over both India and intended geographies. The majority of the investments will be by the group's top firms Tata Steel, Tata Motors and Tata Consultancy Services (TCS).

While Tata Steel would have a capex of nearly Rs 16,500 crore in FY15, Tata Motors has earmarked around Rs 38,500 crore, out of which Rs 35,000 crore will be for its British arm JLR and Rs 3,500 crore for its operations in India. The group's information technology major TCS has also outlined a capex of Rs 4,000 crore for this financial year.

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