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Tata firms to collaborate for better performance

August 18, 2014 10:17 IST

Tata Sons, holding company for the Tata group, is working on building a centralised rural business platform that could be leveraged for the entire group’s benefit, instead of each company looking at it separately. 

The group already has companies like Rallis, Tata Chemicals, Tata Steel, Tata Motors and Tata Teleservices that have strong presence in rural markets. Besides, it has got a huge network of supply chain and channel partners across the country.

Also, there are companies like Tata Capital and Titan that are making inroads into rural markets. All Tata companies have their own strategy, directed by their respective boards and implemented by their respective management teams. Accordingly, the group companies that market their products and services in rural India implement tailored action plans. 

The group is now working on leveraging these individual strengths, using the available data and best practices in its ecosystem, for better use. This will be further bolstered with collaborated efforts in marketing to get the best results. 

“In a group like Tata, there always is immense scope for synergy. An important leg of the Tata group’s strategy is to harness these synergies to maximise the performance of companies,” a spokesperson for Tata Sons told Business Standard in response to an emailed query. “This entails groupwide initiatives on various strengths, including rural marketing in India, through greater sharing of best practices, investment in joint development of capabilities and future technologies,” he said. 

When Ratan Tata (now chairman emeritus) had become chairman in the early 1990s, he had faced the problem of group companies not talking to each other. After he eased out powerful chieftains like Russi Mody, Ajit Kerkar and Darbari Seth, a group identity was forged. But collaboration still did not happen.

Then he established Tata Group Innovation Forum, which set up InnoClusters, or groups of companies that could work together in different areas. Cyrus Mistry, the present chairman, is taking this legacy forward by pushing the culture of collaboration in the group. 

According to a study by global consultancy firm Accenture released last year, since 2000, per-capita gross domestic product has grown faster in rural areas — at compound annual rate of 6.2 per cent, compared with 4.7 per cent in urban centres — as the rural income is growing and consumers are buying discretionary goods and lifestyle products, such as mobile phones, television sets and two wheelers.

Between 2009 and 2012, spending in rural India reached $69 billion, significantly higher than the $55 billion spent by the urban population. This has made companies, such as the Tata group ones, rush to tap this market. 

“We are looking at rural finances as our key growth strategy. So, we have created a separate business vertical for that,” said Praveen Kadle, managing director & chief executive officer at non-banking financial company Tata Capital, in a recent interview. 

Cyrus Mistry’s investment plan, named vision 2025, lays focus on four clusters — consumer & retail, defence & aerospace, financial service and retail & infrastructure. Barring defence & aerospace, the other three verticals have potential to grow in rural markets. 

This initiative is expected to be driven by the newly created group executive committee (GEC), which works under the aegis of the Tata Sons board.

The GEC includes former Tata Global Beverages managing director Harish Bhat and group strategy head Nirmalaya Kumar. Other members are head of business development Madhu Kannan, chief human resources officer N S Rajan; brand custodian and chief ethics officer Mukund Govind Rajan. 

ROAD TO BHARAT

Main objectives of the rural platform for Tata Group companies

  • Joint development of technology
  • Joint marketing campaigns
  • Combined investment
  • Sharing best practices
  • Saving cost
  • Cutting down time to market
Source: