Christabelle Noronha

With the Tetley tea business takeover, the Tata Group has signalled its intention to be a more active player in the global marketplace. Among the areas in which it is best positioned to expand aggressively is the communications and information technology business

On March 10, 2000, when Britons woke up to their familiar cup of Tetley tea, they got their first taste of the Tata Group’s recipe for global success. India's biggest private sector business house had just acquired Tetley's tea business worldwide, catapulting itself into the top rungs of the world consumer products industry.

When the Tatas withdrew from the soaps and detergents business in 1993, cynics said the Tata Group didn't have the stomach for competition. The prevailing belief in corporate circles in India then was that selling a business (especially a reputed company like Tata Oil Mills) was a sign of weakness. The Tata Group has proved its cynics wrong.

Divestments are not necessarily a sign of running away from battle. At the Tata Group, they are a step towards restructuring the group, re-focusing it, and equipping it better for competition. For the group, being competitive among Indian companies is not enough. To be truly competitive, Indian companies must be able to compete with the biggest and the best anywhere in the world.

Also, to be truly competitive, a group must absorb the latest technologies and management practices. This is what Group Chairman Ratan Tata is in the process of doing with the support of the Group Executive Office.

The change is visible across the group's companies. Group Chairman Ratan Tata is in the process of transforming the group with the help of the Group Executive Office. In this process, the increasing use of electronics and IT solutions is inevitable.

Some of the old economy brick and mortar businesses in the group have successfully adopted new economy tools to face global challenges and meet international quality standards.Take the case of Tata Steel, the country’s oldest steel company. This company, which has been in operation for close to 100 years, has made remarkable progress in transforming its processes to face the challenges of the future through the intensive use of information technology. It recently commissioned a 1.2-tonne cold rolling complex at Jamshedpur in a record 28 months against the world's best of 29 months. Says Tata Steel managing director Dr J.J. Irani, "We are fast emerging as the world’s lowest-cost steel producer."

In early 1999, Tata Engineering, the country's biggest maker of commercial vehicles, rolled out India’s first indigenously designed and manufactured passenger car, the Indica. This involved a massive and systematic effort to assimilate new technologies and management systems.

In areas that are at the forefront of change, like information technology and telecommunications, the Tata Group has been the vanguard in India. It is the only group in the country to cover the entire gamut of operations in these businesses, and these businesses are growing rapidly. Says Group Chairman Ratan Tata, "This sector will play a much greater role in the group than it has hitherto done. This is a sunrise sector and it is important that the Tata’s have a place in the sun. We will be devoting much more resources to this area and this sector will see a lot of activity in the near future."

The Tata Group is one of the largest groups in India in the area of information technology with its finger in almost every pie. Of an overall software export revenue of Rs 15,300 crore (Rs 16,050 crore including IT-enabled services) Tata Consultancy Services alone accounted for Rs 1,820 crore out of a total revenue of Rs 2,100 crore in the year 1999-2000. It continued to be the largest software exporter from India growing in leaps and bounds and has doubled its revenue every second year. TCS expects a turnover of Rs 3,000 crore in the current year.

With over 14,000 engineers, TCS is today the largest software company in Asia and aspires to be one of the top ten in the world. The company is also growing aggressively in the management consulting and related areas. This unfailing growth engine has already chalked out an elaborate business plan to boost its e-business offerings, revenues from which are slated to rise from the current 10 per cent of total sales to over 25 per cent in the current financial year, according to S.Ramadorai, CEO, TCS.

To enhance its position in the e-business sector, the company has identified the key drivers of future growth, including e-assessment, e-architecture and e-application. In order to expand its range of offerings, TCS has partnered with leading e-business companies like Broad Vision, Siebel, and ATG Dynamo.

TCS’s product-based business too is set to expand. Currently a mere 5 per cent of its total revenue, it is expected to go upto 35 per cent in the next three to four years. The company has already patented 12 e-commerce solution product packages and has filed an application for licences for an additional six patents. It has put into place quality and processes and has moved to the e-commerce sphere with the traditional base of banking, finance and telecom services.

This qualifies TCS as an independent systems integrator that can develop and implement e-business solutions across all major technology platforms, says Ramadorai.

The group's other IT winners include Tata Infotech, which is into systems integration in the domestic market and software solutions in the overseas market. Then there is Tata Elxsi, which is into design and development work and is the only Tata company that does entertainment graphics. It has several post-production studios, and companies such as Pentamedia Graphics as its customers. And there's the somewhat less known Tata Technologies.

"We’re the group's best kept secret," comments Patrick McGoldrick, managing director, Tata Technologies. The company focuses on solutions for the manufacturing sector, applying IT to achieve strategic business improvements. It operates India’s largest e-commerce site, myValueChain.net, and logged $450,000 in B2B supply chain transactions during the year 1999-2000. The company also serves its worldwide clients through its consulting and remote services arms in CAD/CAM/CAE, knowledge-based engineering (KBE), collaborative product commerce (CPC), and enterprise resource planning (ERP).

Another group company, Tata Internet Services, will be focussing on new areas of the communications spectrum. It will offer Internet connectivity, set up international gateways in Mumbai, Delhi and Hyderabad, build and manage portals, set up data centres and create B2B exchanges along with other group companies.

In another area of the communications business, the $1-billion cellular combine comprising Tatas, the AV Birla group and AT&T of the US is targeting a base of over 1.5 lakh cellular subscribers in Andhra Pradesh, Maharashtra (excluding Mumbai), Gujarat, Madhya Pradesh and Goa, where it has licences.

Tata Teleservices has operations in the area of basic telephony in AP. With a large optic fibre network in Mumbai alone, power supplier Tata Electric is poised for a massive thrust in broadband and convergence technologies. Tata Cellular and Tata Teleservices have microwave links and fibre optic networks in Andhra Pradesh. Together the companies plan to bid for more circles to own and manage backbone infrastructure. The group also has a V-sat network covering 100 locations in a closed user group called Tatanet.

From steel to communications has been a long trek for the Tata Group. It reflects the group's constant self-renewal and realignment with global changes. Having been a pioneer in the information-related businesses, the group is today ideally placed to expand in a world dominated by IT. Expect the Tata brand to become a global brand very soon.