The Tata Group is India's biggest conglomerate and is now a sprawling empire of some 80 companies across industries. But as the country slowly deregulates and allows in foreign companies, the Tata behemoth is having to shape up and face entirely new competitors. Many Tata companies, have been failing to pull their weight of late, so Ratan Tata has been getting out of some where Tata's market share had melted. Now he wants to shape the group around seven businesses, but reshaping Tata is not as simple as it might be due to the group's complicated structure. He wanted to re-establish some sort of control over the companies that-bore the Tata name, tackle the problem of the small stakes, and revamp a younger management. In addition to strengthening the stakes of the holding company, he is beefing up central management. In it, Mr. Tata wants to create a lean corporate office of directors with enough clout to enforce discipline on the operating unit.

While steel makes healthy profits for Tata, the same can no longer be said of Tata Engineering (formerly known as Telco), the heart of the traditional group. Tata has cut about 4,000 jobs in the business as it has trimmed capacity. And now Mr. Tata already has a strategy to bolster his venture into the car market. Should the car venture prove onerous, he has another option-computer. Its computer consultancy, TCS, is India's biggest software company by far, and has become the new lifeblood of the Tata empire. For sometime, Tata has been considering a flotation of the company, and for sur, it is coming.

Tata, with its paternalistic, charitable heritage, cannot reshape itself as blithely as an American or European group when steel workers are from Jamshedpur, a very poor part of India, and depend on the group. Mr. Tata is adamant that he is not going to pour away the group's software wealth in traditional industries such as car making. But he knows that the harvest to be reaped from the software investment might have to carry tata through some lean years ahead.