Tata International is now working towards realising a new ambition: to become a globally networked enterprise generating $25 million in annual profits by 2008. Managing director Sudhir Deoras, along with Rajiv Mukerji, chief (steel global business unit), and Probal Bhowmick, chief (minerals global business unit), share the road map ahead with Shobha Ramswamy.

Could you sketch the genesis of the company?
Deoras: Tata Exports, the precursor to Tata International,  was started in the 1960s to export trucks manufactured by Telco [now Tata Motors]. Back then we virtually had no products or presence in the global market. After much research, Africa, especially Zambia with its abundant copper mines, was targeted as an extremely good market for our products. That’s how our first foreign office was established. With the Indian government eager to earn foreign exchange earnings, export outfits such as ours were encouraged with various incentives and benefits. Over the years we created competencies and competitiveness in trading.

In the 1990s economic liberalisation ushered in a world of change. The enforcement of WTO regulations had begun, which made importing easy as restrictions eased. The need of the hour was to assimilate the new economic developments and redesign our business model. Therefore, besides exporting, we also started importing. Our changing model led to a change in name, from Tata Exports to Tata International.

At that time the two major exporters within the Tata Group were Tata Motors and Tata Steel. We were working closely with these companies, as well as trading independently. We also chose to dabble in leather, textiles and garments exports. These commodities, though not produced by the group, had good global markets. The belief that we could make a mark in the international market with these products was strong.

What were the strategies employed by Tata International to reach the $1-billion mark?
Deoras: Considering that we started with just two trucks in Zambia, it is a great feeling to touch this magical figure. The satisfaction derived in reaching the goal is highly motivating, but this is just the beginning for us.

In 2000, when we set our vision, our turnover was just Rs 400 million. Though it was essential to make money, it was also mandatory to enhance shareholder value. We made an exit from loss-making businesses such as textiles and garments. Simultaneously, we looked at adding value to our existing businesses and products. Working on many fronts, we started to build capacities within the company. Our focus was on training people and implementing the Tata Business Excellence Model across the board.

Another essential strategy employed was to double the size of the company. We were aware that in the initial period it would not increase profitability significantly. But it would give us the much-needed volume and critical mass to expand further. We learned to get volume from the same product as well as explore new products.

Which are your focus areas?
Deoras: On the product side the focus is on steel, minerals (iron ore, chrome ore and limestone), coal and coke, leather and automobiles and engineering. Each of them has a stronghold in different areas within the globe. So it is essentially a consequence of the demand. Steel is largely for southern and eastern Africa, while China, a massive importer of leather, is now also looking at mineral ore and steel. China, Hong Kong, the Middle East and Africa are our high-potential regions and we have established 100-per cent subsidiaries in these countries. Today Tata International has spread its wings to about 23 countries, with more offices in the offing.

What specific benefits did you hope to capture by integrating Tata Steel’s international business unit with Tata International?
Deoras: This division of Tata Steel was selling about 10-15 per cent of its production internationally. The potential was immense. We approached them to combine our international network and expertise with their business knowledge. This has  widened our canvas and brought economies of scale to their operations.

Mukerji: As a unit of Tata Steel, our basic strategy was to first capture the value in the neighbouring markets, because our competitive position vis-à-vis our geography is strong. Though we were present in large markets such as China and the US, our volumes were small and our focus was restricted.

After the integration, the sky was the limit. Our trading activities broadened and deepened considerably. We turned into a one-stop shop and a trading house with some volumes. Global networking is very crucial in our business. That was Tata International’s core strength. Today we have expanded our network to twice its size in just three years.

Also there was a fair amount of consolidation between the shipments of cargoes of the two companies. This resulted in major benefits, such as lower costs and quicker lead times. It was a win-win situation for the customer, since we have been developing a common set of customers.

Bhowmick: The integration gave us a whole new mandate. We no longer remained the marketing arm of a manufacturing company. Currently we also trade in products not produced by Tata Steel. Incidentally, we are the largest exporters for Steel Authority of India, the public sector steel giant.

Earlier we imported mineral ore only for Tata Steel and its subsidiaries. Today we do it for any company across the globe. More than 90 per cent of the requirements of imported 'met coke' are for non-Tata companies. In nickel, for example, we have managed to corner a 25-per cent market share despite the group-wide demand being low.

We are leveraging our common clientele, expertise and networking. We are developing and promoting products, even for non-Tata companies. Our unit is confident of touching Rs 900 crore this year.

Is any other integration on the cards?
Bhowmick: Group companies are discovering a certain value in trading through us. We expect this to grow enormously.

Tata Motors outsources its exports of spares through us. This business requires warehousing and intricate distribution network, which are our strengths. It made no commercial sense for the auto major to duplicate resources. We hope to replicate it with the passenger car business.

In Africa, in about nine countries, we are the preferred dealers. So, in these regions Tata Motors will be distributing their passenger cars through us. We already have a joint venture for the same. For us this means taking business to a different level, something we have never done before.

Similarly, for IT companies such as Tata Infotech and Tata Consultancy Services we offer support in the Middle East and Africa, where our presence is strong. This saves them the trouble of creating new assets.

Another company we are closely collaborating with is Tata Chemicals. We import their entire coal requirement and export 50 per cent of their soda ash production. We are also into promoting their salt in the Middle East, especially Dubai.

Leather is your major success story. What are the plans for that business?
Deoras: For years leather was just a Rs 150-crore business. Transformation happened when we starting tapping into our supply chain for marketing and production of leather and leather products. The company deals with many small outfits which produce quality leather. We also began third-country trade that involves, say, buying in Bangladesh and selling in China.

Additionally, we looked at adding value to leather in terms of converting it into products. Today Tata Leathers stands for high-quality leather. This Rs 500-crore unit will double its capacity in the next three years. We have put several joint ventures into place and are scouting for newer markets.

What is the road map for the coming year?
Mukerji: We have the network to get deeper into the value chain. This tightens our grip on the business and improves our capabilities to serve our customer. We have been doing it successfully in Africa and Dubai and may repeat it in China.

Deoras: Our global footprint permit us to leverage our businesses greatly. We do not want to be India-centric. South America, CIS countries, Indonesia, Vietnam and Myanmar are some of the places in which we will intensify our efforts in the coming years.

Uploaded on December 2, 2004