Tag Archives: Tata

TATA Corus Job Losses – is this the Indian way?

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In my book I comment on how in the run up to their acquisition of Corus, the TATA’s faced an absolute grilling from several quarters regarding their ambitions for the steelmaker, which today has announced job lay-offs for 1,700 staff in Teeside. Naturally, the unions were worried about the intentions of a firm that they’d probably never heard of. Sensing their discomfort, the firm put in place a programme of briefings in which their iconic CEO – Ratan Tata actually went and met with groups of people, including Parliamentarians, from the regions that Corus employed people.

At one such briefing, he made the point, which was well taken, that Indian firms don’t have it in their DNA to be vultures or become asset strippers. He looked them in the eye and said that not only were they buying Corus for sound strategic reasons but that he assured them that Corus would create more jobs, as he intended to take the firm forward. Sadly, not even he had predicted the global downturn and the circumstances behind this decision need to be presented so that no one jumps to any other conclusion than that the TATA’s tried everything to minimise losses, such as:

  • My sources tell me that the decision has been pending for over 8 months, and that the number of losses is smaller than what could’ve been the case.
  • The long term strategic partners, who pulled out, will be taken to court for failing to stick to their original commitments.
  • And finally, that there’s been an ongoing dialogue about the situation with all stakeholders for some time, so this comes as no surprise.

My reason for writing this blog is not to defend TATA, but to highlight that I wrote my book as a result of realising that the western markets need to know more about Indian firms who are increasingly making acquisitions in Europe & America, as a result of their improved understanding of thes histories and cultures of such people and firms, I hope they’ll be better armed to combat the negative headlines that often lead the news agenda as a result of my book India Inc. How India’s Top Ten Entrepreneurs are Winning Globally.

Wipro sells soaps and perfumes…

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Having read the following piece (http://publication.samachar.com/pub_article.php?id=6362247) I was reminded that many of the firms that we see in the top rankings of India’s business pages actually started life as something totally different.

Understanding their evolution helps, at least in my opinion, to understand the Indian business landscape a lot better.

There are some notable examples:

For example, as the article states, Wipro actually started off as a consumer goods firm that sold cooking oil and soap to Indians, it was only in 1980 that Azim Premji had his eureka moment and decided to change tack and add an IT business to his group. Subsequently – as we all know – that’s what Wipro’s become known for, but it still stands true that Wipro has a thriving consumer goods business, also.

The other is KV Kamath, who turned a boring development finance agency into a juggernaut in the banking sector. Whilst this doesn’t doesn’t seem to be a major divergence today, in those days it was a huge leap he had to take to make the transition.

My final example is that of Sunil Mittal’s Bharti group, which today is best known for its mobile phone business, but I have no doubt that in a decade or so, we’ll be wondering how he made the leap from telecoms czar to retail guru, with thousands of supermarkets scattered all over India, selling groceries, vegetables and all kinds of stuff that the discerning Indian shopper wishes to buy. Let’s not forget he’s done this before, after all he had a successful venture selling bicycle parts in the 70s and then electricity generators in the 80s.

Of course, we could go into the TATA story just as well, but the point of writing this piece was simply to highlight the fact that these companies have incredible histories, which if you read into and factor into your dealings, makes doing business with them a lot more meaningful.

The traits of entrepreneurship

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Having completed writing a book about some of India’s biggest and most successful entrepreneurs, I was asked about what differentiates them from the rest, which isn’t as straight forward to answer as it seems.

However, having attended an event yesterday evening hosted by my friend Deepak Haria at Deloitte for the promotion of  TATA Jagriti, which is an Indian NGO that literally takes a trainload of enterprising Indian youth across India (on a yatra / journey) to expose them to subjects of importance to India’s development and introduces them to entrepreneurial thinking, I’m pleased to say that this question was posed, albeit in a different way, to Mr Gopalakrishnan who is a Board Director of TATA (http://www.tata.com/aboutus/articles/inside.aspx?artid=vyj45RCRud4=).

He was asked whether the Jagriti Sansthan – the NGO (http://www.jagritiyatra.com) – equips the participants in political skills that help them overcome political problems, which the TATA man rebutted by explaining that a programme like the yatra doesn’t aspire in providing such training, as in his mind, entrepreneurs – by definition – find ways, by themselves, to overcome obstacles and achieve success.

Interesting, I thought.

Let me know what you think characterises a successful entrepreneur. Please leave your comments on this post.

TATA secures private funding for JLR

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Given all the flack that’s been flying about for eternity about the terms being imposed by the British Government on Tata for a loan to save JLR, I was pleased to read that Tata has secured non-government finance for JLR, which I’m sure would’ve been their first choice of funding, in any case.

In Tata’s benefit, I’d like to add that their track record demonstrates their commitment to fairness and responsible behaviour. They, themselves, wouldn’t have wanted taxpayer money, unless they were in such dire straits, as has been the case with JLR.

However, Mandelson was right to ensure that the benefit of any funds has to favour the taxpayer. He’s played a great game in ensuring that Tata work harder to secure funding from other sources.

For me what has been remarkable is the way and extent that Tata have used the media to get their points across. Generally speaking, Indian CEO’s shoot from the hip and everything Tata has said on-air has been well scripted and spoken. Take for example Ratan Tata’s appearance on Sky News in which he asked the government not to “play chicken with him”. Such articulation is rare in Indian business circles.

Full marks to his advisers.

David Cameron meets Indian CEOs

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I’d organised a meeting yesterday between David Cameron, Leader of the Opposition, and a client of ours called ‘The India Group’, which is an alliance of the European based CEOs of large Indian private sector firms. Not only did we meet someone who’s described as our next Prime Minister, he also made sure that William Hague, Shadow Foreign Minister, and Ken Clarke, Shadow Business Minister, both of whom are considered ‘heavyweights’ in the Conservative Party, and should retain their high profile portfolios if they form the next government, attended this meeting.

Cameron was relaxed despite having to respond to the Prime Minister’s Iraq Inquiry statement later in the day. He appeared knowledgable and personable and had, what seemed obvious to me, been briefed appropriately in advance on the key issues that may arise.

So, it’s no surprise that business immigration featured highly with the IT companies leading the charge on labour mobility within the UK in the context of TUPE legislation. He spoke about Ken Clarke leading a review on Whitehall red tape that will help form their policies in advance of the next general election.

On trade promotion in India, Cameron suggested that some of the Regional Development Agencies across England would be put on notice. He recognised that trade promotion in India may also need looking at and the India Group recommended that just as Indian SMEs seemed to be embracing opportunities in the UK, the Government really needed to push British SMEs to do more with India. Banks like ICICI had tried linking up with counterparts in the UK to provide trade finance for their clients interested in India, with not much success, which seems a shame given the scale of the opportunity.

Hague spoke about a better relationship on foreign policy, which all India watcher’s will agree about, especially as Miliband’s visit to India was seen as an unmitigated disaster. Hague spoke of their support for India and Japan for permanent seats on the UN Security Council, which we know China has a different view on.

The Conservative team were interested in the pace of market reforms the new Congress lead coalition would take, to which the India Group agreed that the Insurance sector would probably be the first to have FDI levels increased. What was interesting was that the CEO’s, all, were united in conveying that despite the shortcomings in some industry sectors, India was open for business. It just so happens that the two big sectors that the UK has particular competence in – financial services and retail – are the one’s that have yet to be liberalised. Fair point.

Closer to the hearts of some of those was the issue of personal taxation and non-dom, to which Cameron was quick off the blocks to suggest that had the government adopted the plans they’d suggested, those around the table would have the certainty they desired.

I’ll conclude with sharing how they started as it’s an important point. Cameron emphasised that both – the Labour Party & the Conservatives (a) didn’t really differ on issues concerning India – whether this was trade or foreign policy and (b) that both parties shared the view that Britain was a better place as an open globalised economy, one which market protectionism and restrictive practices were unwelcome.

Jaguar / Land Rover & Tata

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I’m writing this post in the context of hearing on the news that Lord Mandelson has placed a call, this morning, to  Bombay House, the Tata HQ in India.

I was speaking with a senior government figure, who’s involved in this matter, two evenings ago at a Whitehall pub in which he began enquiring as to what the Tatas would do if the UK Government refused to lend them the £1bn bailout they’ve requested for Jaguar / Land Rover.

To say that the Tatas have no other options would be misleading, as it wasn’t so long ago that the media reported that they had deep pockets and more importantly the intent on making the new venture a success. Let’s also not forget that within the Tata Group, there are a couple of companies which can only be described as ‘cash cows’, such as TCS, the IT firm from which they can divert resources to the benefit of Jaguar / Land Rover.

However, what I found interesting was his take on the cultural differences between the parent and child. He suggested that the Tata’s weren’t used to a culture where their plans would be stress tested and scrutinised as, in their opinion, their track record, trust, and their brand should prove to be enough of a guarantee for the UK taxpayer.

I disagree with the suggestion that the Tatas are naive and culturally backward. The Tata’s have been in the UK for more than a century and employ almost 50,000 people here in some of the most intensive and unloved sectors of the economy. As a result of their experiences here, they would understand the nervousness of the Government and therefore not take it as an affront to their heritage if certain questions were asked. After all, they understand that government money, ultimately is raised through taxation – our money.

With that comes responsibility. The Tata’s understand that, all too well.