Journal of Case Research vol:1 issue: i
Tata Sons Limited: Firm Characteristics expressed under Competition
Amar K.J.R Nayak1
Abstract
The mainstream literature on strategy relating to firm performance is heavily oriented towards the managerial competence and the way they make use of the internal resources and capacities. While normal growth could be explained through the literature of strategy and performance using the two factors viz., the environmental deterministic approach and the employed managerial talent of the firms, the explosive growth of firms in India and other developing countries does not appear to fit the explanation. This compels us to examine if the approach of large firms have been positivist and that they extensively influence and shape the larger environment including policies, regulation, and socio-cultural behaviour of people. Further, it is important to examine the significant role of other external actor-network of large owners/proprietors of the firms with reference to the explosive growth of firms in India during the last about two decades. The case of Tata Sons raises some important theoretical question on the basis of firm growth and especially the explosive growth of relatively large business houses in the fast changing regulatory and institutionally deficient but large developing countries.
1 Amar K.J.R.Nayak, Ph.D., Strategic Management, Xavier Institute of Management, Bhubaneswar.
1 Journal of Case Research vol:1 issue: i Tata Sons Limited Firm Characteristics expressed under Competition
The Tata way of doing business has remained to be the role model of doing business for many in India and outside India. The Tatas have been reported to be one of the most respectable business houses in the world. John Canning in his book 100 Great Modern Lives had observed the same sentiment long before in the following words.
‘Probably no other family has ever contributed as much in the way of wise guidance, economic development and advancing philanthropy, to any country as the Tatas have to India, both before and since Independence’
The story of the Tatas and their business endeavours goes back to Jamshetji Nusserwanji, who about 140 years back started a private trading firm in 1868 that laid the foundation of today’s Tata Group of companies. Set up in 1917-18, Tata Sons Limited after 72 years of operation, in 1990 had a total income of INR 98.35 crores, and profit after tax of INR 8.92 crores with total net asset of INR 84.92 crores only. Its income consisted of commission, dividends and interest, income from services, rents and other incomes1. Tata Sons has been the owner of the Tata name and the Tata trademark, which are registered in India and several other countries. Apart from lending its brand name to group companies as per the Brand Equity and Business Promotion Agreement, Tata Sons activities has been to; to maintain shareholding in main operating companies, to invest in operating companies to facilitate growth, and to promote the group's entry into new businesses.2
Following the liberalization process in India begun by Rajiv Gandhi in 1985 and then with the watershed of liberalization in 1991, the company has had an explosive growth. In about the last 18 years, Tata Sons has increased its income from INR 98.35 crores to INR 4476.67 crores. It increased its profit after tax from INR 8.92 crores to INR 3379.80 crores. During the same period, Tata Sons increased its assets from INR 84.92 crores to
1 Tata Sons Limited, 72nd Annual Report, 1990. 2 http://www.tata.com/company/profile.aspx?sectid=DpOT+Lbrdvg=
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INR 27093.49 crores3. See Exhibit 1 for growth of Tata Sons on key financial indicators4 for the period 1991-2008.
While the power of control of the Tata family through the two Managing Agents viz., Tata Sons and Tata Industries were clipped by the Government of India on April 2, 1970; the house of the Tatas, have bounced back during the last 18 years of liberalization in India to emerge as the leading business conglomerate of India. In 2008, Tata Sons Limited along with Tata Industries, have financial holdings in 114 companies (see Exhibit 2), whose operation spans across the world. Tata Sons Limited has not only intensified its growth machine in India but has also expanded deeply to countries and markets outside India, both in the industrially advanced countries and the developing countries.
Comparative financial position on sales, PAT and total Assets of most of the Tata Sons companies during the period 1990 to 2008 have shown remarkable growth. The financial trends of 78 companies for three years viz., 1990, 2000, and 2008 are shown in Exhibit 3. Individual companies where the Tata Sons have high stakes and strategic interest have been performing superbly in the last about 20 years. The case of Tata Steel is a point in case. Established in 1907, Tata Iron and Steel Company (Tata Steel) in 1931 had a profit of only INR 0.19 crores and with total assets of INR 23.41 crores. After 50 years, in 1981, it had a profit of a 26.46 crores and assets of INR 550.48 crores. Ten years down the line in 1991, that is after 85 years of operations, the company had a profit of INR 160.13 crores and assets of INR 2703.29 crores. Within the last 18 years, however, with the onslaught of industrial and economic liberalization, Tata Steel has soared high with a profit reaching INR 4687.03 crores and enhancing its asset base to INR 20,746.57 crores. For details on growth in financial indicators of Tata Steel for the period 1931-2008, see Exhibit 4. Many of its holding companies like TCS have surged in their performance in the last about 10 years. The financial figures of sales, assets, PAT, PBDIT, investments, investment abroad, foreign exchange earned, number of shares, and market capitalization
3 Tata Sons Limited, Annual Report, 2008 4 Please note that CMIE data may slightly vary from the data in the Company Annual Reports because of data standardization / normalization followed by CMIE.
3 Journal of Case Research vol:1 issue: i of the 13 large companies of Tata Sons for the period 1991-2008 are provided in Exhibit 5 -14.
It is quite mesmerizing to observe the performance of Tata Sons in the last 18 years. What did the company do to achieve tremendous growth in a period of liberalization, market uncertainties, imperfections in the intermediate markets and the regulatory framework, and a poor image of Indian companies in foreign markets? How has the focus of the Tata Sons and their Trusts changed over the years? How did the company leverage the brand of the Tatas, goodwill created by the Tata Trusts and their social contribution, bureaucrats-regulators-policy makers-legislators-business leaders’ network for achieving growth? How was the house of the Tata companies reorganized and disciplined to achieve the performance? Did the company have to breach the trust on its Trusts to achieve some of its growth and profit objectives? How much did the stiff competition in the industry and economy shape its methods, processes and style of management?
Trusts and Development activities of the Tatas The Tatas have set up several trusts in India. In their philanthropic efforts, Jamsetji Nussewanji Tata, the founder of the Tata Group of companies started the JN Tata endowment scheme in 1892. This scheme was provided loan scholarship for higher education. Of the 37 beneficiaries of this scheme, 15 joined the India Civil Services during the British rule in India. Tata Group report that by 1924, a third of the ICS officers in India were Tata scholars. In September 1898, Jamshetji pledged to offer about half his personal wealth that is INR 30 lakhs (then 2 lakh pounds) to set up an institute of research. After 13 years of this, with the generous donation of 300 acres of land from the Maharaja of Mysore, the Indian Institute of Science, Bangalore was established5.
The sons of Jamshetji followed the father on his philanthropic endeavours. Both his sons, Sir Dorabji Tata and Sir Ratan Tata donated large amounts of their personal wealth to form trusts for various public services in India. The Sir Ratan Tata Trust was established in 1919, a year after the untimely death of the second son of Jamshetji Nusserwanji Tata. Later in 1932, Sir Dorabji Tata, the eldest son of Jamshetji Tata founded the Sir Dorabji
5 http://www.tata.com/ourcommitment/index.aspx?sectid=ei6stgDjpgA=
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Tata Trust. Of the many trusts of the Tatas, these two have remained to be the most prominent ones.
Through these trusts, the Tatas have been able to initiate several well known research institutions such as the Indian Institute of Science, Bangalore (1911), Tata Institute of Social Studies, Mumbai (1936), Tata Memorial Hospital, Mumbai (1941), Tata Institute of Fundamental Research, Mumbai (1945), and International Institute of Population Studies, Mumbai (1956). In the recent years, the Tatas have also set up the JRD Tata Ecotechnology Centre, Chennai (1996) and plans to commission the Tata Medical Centre, Kolkata by 20096. For details on the various activities and contributions of the Tatas, see Exhibit 15-16. A number of Tata trusts were formed before the sixties. They were not so active in the seventies and have begun new development initiatives in the nineties. While most of the national institutions that were partially started by the Tata trusts before the nineties were based in and around Mumbai, the new institutions supported by the Tatas have now begun to spread to other parts of the country where their business activities have increased substantially. These institutions have served the Tata Sons as well as India in different ways.
As in 2008, while the Tata Sons controls about 114 companies, about 66 % of its equity capital are held by the various trusts of Tata Sons like Sir Dorabji Tata, Sir Ratan Tata and the members of the Tata family. For shareholders of Tata Sons Limited, see Exhibit 17 for the detailed break-up of shareholding of Tata Sons Limited (TSL).
Industrial Pioneers and Building of Goodwill Being in trade and industry since 1868, the Tatas have had the business knowledge, experience, and the power to influence on the industrial policy in India. Being the pioneers in several industries, the Tatas were the natural choice of the bureaucrats and policy makers of the country for consultation. Being a leading industrial house since the early 20th century, the Tatas have commanded respect among the other business houses and industry associations in the country.
6 http://www.tata.com/ourcommitment/articles/inside.aspx?artid=mDZESzKS/54= < accessed May 10, 2009>
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The experience of the two world wars probably shaped the investment decision of the Tatas to invest in two of the strategic sectors, viz., Airlines and Atomic energy. In 1932, the Tatas started Tata Airlines that was later nationalized by the Government of India in 1953. Tata Airlines was renamed as Indian Airlines but the Government of India could not find a better person than JRD Tata, who had deep interest and commitment in the Airlines operations, to be the Chairman of Indian Airlines. Similarly, just before the first atomic bomb was dropped in Hiroshima in 1945, the Tatas had approved to invest in Tata Institute of Fundamental Research that was to research in mathematics and physics. Later in 1957, over 60 scientists of TIFR were taken in by Bhabha Atomic Research Centre of the Government of India.
The Tata Sons Limited has had illustrious Chairmen. The family tree of the Tatas and the chairmen during the last 140 years of its existence is shown in Exhibit 18. In addition to the past Chairmen, JRD Tata and Ratan Tata in the last 70 years of Indian industry have served as role models through their achievements and contributions to industry and society. JRD Tata had many accolades to his credit. From being the first registered pilot from India, he went on to win the Bharat Ratna, the first ever businessmen to have won this highest civilian award in India. Ratan Tata has already been showered Padma Bhusan and Padma Vibhusan awards of India. A list of the various awards and recognition of JRD Tata and Ratan Tata are listed in Exhibit 19. All these public recognitions from India and outside India indeed go into making of a great brand of Tata Sons in the India and outside.
Being in the business for about 140 years and being the pioneers in several industries in India, the companies of Tata Sons have introduced several notable management practices in their respective companies which later became standard in the Indian industry. The eight hour working per day policy introduced in 1912 was enforced as a law in 1938 as per the Indian Factories Act. Similarly, its policies on free medical aid, employee welfare, maternity benefits, retiring gratuity, etc subsequently became norms in the Indian industry. See Exhibit 20 for the employee welfare / schemes introduced by Tata Sons and later adopted as standards in India. Tata Trusts of the first two generation of the
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Tatas and the leading role played by the holding companies of Tata Sons have been very well knit to build and portray the brand of Tata Group.
Tata Sons shaping the Industrial Policies in India The Tatas had laid a strong business foundation in India by 1930 with its main business being in trading, textiles, spinning and weaving. It had also entered the business of steel, hydro-electric power, oil & soap, and insurance. See Exhibit 21-22 for the business ventures and the major milestones of Tata Sons. Operated by the various managing Agents of Britain and several business houses like the Tatas, and the Birlas, the Indian textile industry was a major force in global textile industry during the inter-war periods. During the World War-I, shortage of supplies from the British mills, many Indian textile companies made fabulous profits through exports. Through this exposure, the Indian business houses also realized the significance of investing in research and technology development.7 For example the Indian textile industry had been the major supplier of textiles to Japanese mills during 1920-1935.8
JRD Tata, the then Chairman of the Tata Sons and four other key industrialists of India like G.D. Birla, Kasturbhai Lalbhai, the textile mill owner of Ahmedabad, Sir Purushotamdas Thakurdas from Bombay and Sir Shri Ram from Delhi published a document titled “A Plan of Economic Development for India” in January 1944. The technocrats, viz., Sir Ardeshir Dalal, A.D. Shroff, and Dr. John Matthai who developed this plan were all from the Tatas. This plan came to be known as the Bombay Plan or the Tata-Birla Plan. This plan proposed a fifteen year period plan with a total investment of 100,000 million with massive investments in power, mining, roads, railways. Almost 50 % of the plan was slated for industrial development, 25% for housing and only 10% was planned for agriculture.
As the war in Europe came to an end, the Government of India under the British rule, on October 1944, invited a group of Indian industrialists and businessmen to visit England and America to visit industrial establishments and to contact leaders of industry and
7 Bagchi, A.K. (1972) The Private Investment in India 1900-1939, Cambridge University Press: New York 8 All Japan Cotton Spinners Association (1949), Cotton Statistics of Japan, 1903-1944, Osaka, Japan
7 Journal of Case Research vol:1 issue: i prominent businessmen in Britain and the Untied States. Prior to this announcement of the British Government, JRD Tata was aware of this and had communicated about it to close industrial colleagues, G.D. Birla vide letter dated 28 September, 1944. See Exhibit 23 for the content of the letter.
While the noted Indian industrialists and businessmen were to visit the west during the wartime, the war with Germany ended just before the scheduled date of departure. During this time, several leaders of the Indian freedom movement including Mahatma Gandhi and Jawaharlal Nehru were languishing in jails. On the eve of their departure, viz., May 7, 1945 Mahatma Gandhi sent a public notice to these industrialists that appeared in ‘The Bombay Chronicle’ that said9:
“All the big interests proclaim with one voice that India wants nothing less than her own elected National Government to shape her own destiny free of all control, British or other. This independence will not come for the asking. It will come only when the interests, big or small, are prepared to forgo the crumbs that fall to them from partnership with the British in the loot which British rule takes from India. Verbal protests will count for nothing so long as the partnership continues unchecked.”
“The so-called unofficial deputation which will go to England and America dare not proceed, whether for inspection or for entering into a shameful deal, so long as the moving spirits of the Congress Working Committee are being detained without any trial for the sole crime of sincerely striving for India’s independence without shedding a drop of blood save their own.”
The mission however left within a week of the surrender of Germany and after a brief exchange of letters between G.D. Birla, J.R.D. Tata and Mahatma Gandhi. The final group for the visit included J.R.D. Tata, G.D. Birla and five others. They were accompanied by nine technical advisors with as many as three advisors from the Tata Group of companies viz., Sir Jehagir Ghandy of Tata Steel, Sumant Moolgaonkar of Associated Cement Companies, and B.W. Figgins of Flying School for Tatas. When India became independent, the leading industrial houses that of the Tatas, the Birlas and others wanted to lead the industrial development in the country as per the Bombay Plan (Tata-Birla Plan). However, given the socio-economic and demographic
9 Lala, R.M. (1992), Beyond the Blue Mountain, A Life of JRD Tata, Viking, Penguin Books (India) Ltd.
8 Journal of Case Research vol:1 issue: i position of the country, the political leaders who took charge of the nation took a different view from that of the Indian industrialists. India focussed more on development of agricultural production contrary to the Tata-Birla Plan. India also adopted a socialist approach than the capitalist approach of the Tata-Birla Plan.
The shift in the direction of development of India after Independence was a huge set back to the Tata Sons and JRD Tata in particular. Nationalization of strategic industries like the Airlines and Insurance hurt the Tatas the most. JRD Tata had taken great interest to invest and develop the Tata Airways since 1932. While Tata Airways was nationalized in 1953, he continued to be chairman of the company until 1973. The biggest setback to the Tatas was the termination of the Managing Agency System on April 2, 1970. With this change, Tata Sons Limited and Tata Industries, both Managing Agents of the Tata companies had to shed their management control to individual companies.
Despite the differences between JRD Tata’s approach to India’s development and that of Mahatma Gandhi, Jawaharlal Nehru and many others, after India got independence, JRD was consulted by the Government of India on several matters of national policy and industrial development. Many political leaders and bureaucrats often confided with him on several issues which he would then carry them over to the Prime Ministers viz., Jawaharlal Nehru, Indira Gandhi and Rajiv Gandhi. JRD would often come to know about the Government policies ahead of others. Given his own network, credibility, power and influence could organize the Indian industrialists to effectively lobby with the Government whenever required. JRD’s letter dated 14 November, 1947 to G.D. Birla is a case in point. See Exhibit 24 for the letter.
Not only did JRD Tata have easy access to several leaders of India viz., Gandhi, Nehru, Vallabhai Patel, J.P. Narayan, Morarji Desai and many others but also the directors of the Tata Sons have been highly networked with the policy makers and bureaucrats all through the history of independent India. The Chairmen and the Directors of Tata Sons have shaped several policies of the country by being part of various committees and panels formed by the Government. The association of current board of directors of Tata
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Sons viz., Ratan Tata, J.J. Irani Syamal Gupta, Ishant Hussain and Arun Kumar with several key panels and committees of the Government suggest the power of influence that the Tatas on the policy making in India.
The Chairmen and Directors of the Tata Group of companies have always been part of key institutions, committees, and panels of the Government of India that carve out key policies for Indian industry, commerce and trade. Today, Ratan Tata is the Chairman of the Government of India’s Investment Commission and Member of Prime Minister’s Council on Trade and Industry among many other associations with the policy makers. J.J. Irani has been the Chairman of the expert committee set up by the Government of India to draft the new Companies Act, was nominated on the expert committee set up by the Government for recommending a roadmap for the coal sector in India, and has been a member of Working Groups for the sixth, seventh and eighth national Five Year Plans of India among holding other influential positions. See Exhibit 25 for details association of the current directors of Tata Sons.
Several Tata employees have served the Government, the public sector enterprises, and the politicians over the years since Independence. In the early years of Independence, JRD was requested to be the Chairman of Hindustan Aeronautics Limited that he politely declined. JRD nevertheless served in the board of several government institutions like Indian Airlines, Bhabha Atomic Research Centre, etc. In 1950, Harekrishna Mahtab, Union Minister of Industry requested JRD to spare some of his professionals to manage the public sector enterprises. In 1971, N.A. Palkhivala, Legal Advisor and senior director of the Tatas served as the lawyer of Indira Gandhi to present her case of election to the Lower House in the Supreme Court. Though in 1975, after Indira Gandhi declared emergency, he refused to take up the case. In 1981, Indira Gandhi appointed Sumant Mulgaonkar from TELCO (now Tata Motors) as the Managing Director of Maruti Udyog Limited that successfully produced the low cost peoples’ car in India fulfilling the dream of Sanjay Gandhi, the son of Indira Gandhi. In June 2003, P. Chidambaram, who earlier served as the Finance Minister and then served as the Finance Minster and Home Minster in the Government of India during 2004-09, was the lawyer to represent the case of a
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Tata Teleservices company in the court of law.10 A glimpse of major policies relating to the various industries of Tata Sons is given Exhibit 26. Given the traditional stronghold of the Tatas with the government, legislators, policy makers, bureaucrats, lawyers, and industry bigwigs, how much would the Tata Sons have influenced and shaped these policies and regulations?
The power of the Tatas in shaping the policies of the country have often kept the Tatas in the good books of the policy makers and bureaucrats and have given them easy access to them all through the post independent period. In the 1945, T.T. Krishnamachari, the Minister of Industries quickly approved the Tatas proposal to enter into road transport and ensured that the secretaries do everything available to the Tatas. Similarly, in 1948, the Tatas got very quick approval for Air India International. In the eighties with Rajiv Gandhi as the Prime Minister, the Tatas got approvals for many of its proposals. In 1990, Tata Chemical got a contract of INR 3000 crores petrochemical project.11
Building the Tata Brand Traditionally, the key function of Tata Sons Limited has been to retain the trade name and build the Tata brand that could be used by all the companies in the group. Tata Sons has indeed developed a great brand over the years. Once Ratan Tata took over the chairmanship of the Tata Sons, he undertook a massive Brand building exercise of the Tata Group of companies; the cost of the exercise was however raised from the different companies of the group. Contributions varied from 0.10% to 0.25% of net income of each of the group companies of Tata Sons.
The Tata brand has been built over hundred years. The first two generations lead by Jamshetji Nusserwanji Tata and his two sons Sir Dorabji Tata and Sir Ratan Tata set up trusts for various development causes. Although most of their donations and contributions went towards building institutions in Bombay and Pune, they did nevertheless contribute to the society at large. Subsequently, JRD Tata served as the
10 http://www.thehindubusinessline.com/bline/2003/06/19/stories/2003061902540300.htm
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Chairman of Tata Sons for over five decades. Being a leading industrial house of the country, the Tatas played their role in the struggle for independence and in the planning and development of the Indian economy. As JRD Tata continued as the Chairman of Tata Sons under the leadership of about five different Prime Minister, their ministers and bureaucrats of the country and was well networked with them, he could wield a strong influence on the key decision makers of the country.
The management practices and the employee welfare practices that Tata Sons introduced in their group companies over the years further increased the visibility of the Tatas and the created a strong goodwill among its employees and the public at large. Ratan Tata, the current chairman of Tata Sons under the pressure of competition and fear of losing control of individual companies in the group undertook a massive advertisement of the group and restructured the management and ownership of group companies to give a new lease of life to the Tata Brand.
By virtue of their being in trade, commerce and industry in India and their being the first in most business ventures since 1868 give the Tatas a positive image of a company synonymous with nation building. The work of the charitable trusts of the Tatas, contributions of chairmen and directors of Tata Sons towards the industrial development of the nation, goodwill of the employees and the general public over the years, aided with extensive advertisement of the Tatas has lead to the creation of a very high brand value of the Tatas. The positive image, trust and goodwill of the company make the Tata brand very powerful.
Further, the complex shareholding patterns of Tata sons, management reporting mechanisms, and strong business-industry-government network with a well managed corporate image of the Tatas make it difficult to understand the strategy of the Tata Sons. Would it therefore be wise to un-bundle the many aspects of brand building, shareholding structure and its networks to understand the mechanics of Tata Sons in achieving the gigantic growth and profit in the post liberalization period of India?
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With the opening up of the economy, rise of other business houses and intense competition in the economy and the market have lead Ratan Tata to adopt certain practices that might not gel with the image of the group that people in general carried about the Tatas. However, with the large scale campaign for Tata Brand that Ratan Tata conceived around 1985, the brand image of the Tatas has been bolstered to envelop the good image of the Tatas around every company in the group irrespective of the way they operate. The figure below provides a pictorial representation of how the image of individual company is portrayed through the traditional image of the Tatas.
J.N. Tata Trust, Dorabji Tata Trust, & Ratan Tata Trust
BRAND OF TATA SONS
S
a s C
r e l T L
o e T
t C e
S t o T a t L S
a M T a
t T T a a
t a T
T
Process and Methods of Growth in a Fast Changing Environment The case of Tata Sons presents an intriguing story of the management processes and methods that Tata Sons adopted to grow in a fast changing socio-economic-political- cultural environment of a developing country. This section shall discuss issues of corporate and management restructuring, financial restructuring and resource reallocation, and raising capital, resources and capabilities.
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Corporate and Management Restructuring The Tatas have been the pioneers in India on policies of labour management. While the paternalistic approach the Tata companies were in vogue in the Japanese textile mills in the early twentieth century, the Tatas have been the most innovative in India industry with regard to labour management. The wide international exposure that the Tatas have had by virtue of being in business since 1868 gave them the opportunity to adopt the best labour management practices in India.
As early as 1949, the Tatas invited the Society of Jesus to establish the Xavier Labour Relation Institute (XLRI) in Jamshedpur to train professionals on labour relations. The American Jesuits set up the management school as there was no such management school in India. XLRI has been the top business school in India on industrial relations and personal management. Tata were the first to introduce several labour welfare schemes that later became standards in the Indian industry. Exhibit 20 provides a list of labour welfare schemes introduced by the Tatas. As a result of these innovative practices, the labour force in the group companies of the Tatas have been the most loyal of all labour groups and they contributed well to the efficiency and growth of their respective companies.
With the removal of the Managing Agency System in 1970, individual companies got the legal right to operate more freely and some of the Managing Directors who were encouraged to operate freely under JRD Tata began to exercise their control on the companies. Probably, the labour had also begun to be more independent and was influenced by outside labour unions. Under the changed circumstances, the labour also associated more with their respective Managing Directors than with the Directors of Tata Sons. However, the way Ratan Tata, the newly appointed Chairman of Telco (now, Tata Motors) dealt with Krishnan Pushparajan Nair, general secretary of the Telco Kamgar Sanghatana (TKS) showed the hard hitting nature behind the soft exterior of Ratan Tata. It also showed the power of the Tatas to silence erring labour leaders and solve major labour problems.
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Nair, the son of trade union leader, after working in Philips for some time, had joined Telco as a miller in September 1976. In March 1988, he was suspended for alleged threatening to murder a security guard and sacked a few months later. On being sacked, Nair used the unresolved wage agreement to organize the labour in Telco, Pune factory to go on tool down strike. As the local authorities took Nair into preventive custody, the second shift workers hijacked buses which were to take them to the plant at Pimpri, Pune.
The Chief Minister of Maharastra, Sharad Pawar was brought in to mediate with Nair and his supporters. However, the fight between Telco management and its labour belonging to TKS intensified. On the one hand, Ratan Tata went to the local people and the media to create a public opinion and also signed a three year retrospective agreement with TKS’s rival, the Telco Employees Union (TEC), offering a wage hike of INR 585 and lumpsum arrears of INR 7000. On the other hand, Nair announced indefinite fast at the Shaniwarwada fort. Dutta Samant, the well known labour leader rushed to Pune to express his support to the TKS members. The Janata Dal leaders, Sambhajirao Kakade, George Fernandes and Madhu Dandavate also showed their support to Nair. Meanwhile, Sharad Pawar, the Chief Minister of Maharastra was increasingly worried about the strike’s political repercussion.
On September 29, 1988, 2.30 AM, the State Reserve Police and Pune city police launched Operation Crackdown. Eighty buses with police force stopped outside the Shaniwarwada fort’s quadrangle and cordoned off the fort, stormed inside and rounded up the striking workers. The workers were evacuated from the fort and taken to different jails. Nair was charged with attempting to commit suicide and defying prohibitory orders and was released on bail the next day and the strike had come to an end12.
JRD conceived and instituted the Tata Administrative Service in the 1950s to groom the top management of the various group companies of the Tatas. Indeed, JRD was very successful in attracting and retaining the best people through this process. JRD would spot the talent, especially among the senior executives and let them operate freely.
12 Piramal, Gita. 1996. Business Maharajas, Penguin Books India (P) Ltd. Pg. 380-386
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Indeed, Tatas had the advantage of having several industry luminaries during the chairmanship of JRD. Tata directors such as Ardeshir Dalal, Sir Homi Modi, FE Dinshaw, AD Shroff and John Mathai were business legends. This set of directors made way to another powerful group comprising of Sumant Moolgaonkar, Russi Mody, Darbari Seth, Nani Palkhivala, FC Kohli and Ajit Kerkar.
Restructuring of top management began with Ratan Tata taking over the Chairmanship of Tata Industries Limited from JRD Tata in October 1981. It was a small company but was one of the two holding companies of the Tatas along with the Tata Sons Limited. While taking care of his ailing mother in New York, Ratan Tata wrote out a new agenda called the ‘1983 Tata Strategic Plan,’ for the group companies. The proposed plan of Ratan Tata was not accepted well by some of the senior influential directors who had built their respective empires since the scrapping of Managing Agency System in 1970 and each company had more independence.
Ratan Tata was appointed the Deputy Chairman of Telco on January 31, 1985 and on March 19, 1991, JRD indicated to Ratan Tata to take over the reins of control of the Tata Group of companies. On March 25, 1991, the board of Tata Sons Limited appointed Ratan Tata as the Chairman of Tata Sons Limited. Ratan systematically brought in the changes that he had planned out in his ‘1983 Tata Strategic Plan’ document. It appears that with the change of guard at the top, several changes in the top management of the group companies were brought about to be able to execute the growth plans of Ratan Tata.
Ratan Tata followed up with the issue of Tisco’s (now Tata Steel) acceptance of the Tata Sons retirement policy. Under this policy, the top management had to retire. Mody crossed seventy five on January 17, 1993 and Ratan prepared enough support of the Board of Tata Sons to adopt the retirement plan on March 11, 1993. Subsequently, the board approved removing Russy Modi from the position of Managing Director of Tisco
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on April 11, 199313. With this the illustrious career of Russi Mody, once a blue eyed boy of JRD came to an end.
In 1997, Ajit Kerkar, a legend in the Indian hotel industry and who turned a single loss making property, the Taj Mahal Hotel to a respected international chain was removed from office after levelling serious charges of misdemeanour and irregularities of violating the Foreign Exchange Regulation Act, 1973. He was charged for parking USD 4.91 million paid by Singapore Airlines in the Taj group’s Hong Kong subsidiary for three years instead of immediately repatriating to India. The members of Board of Directors including Ratan Tata claimed to have no knowledge about this issue and hence Kerkar was held solely responsible for this offence by the Tatas. While RBI seemed to agree with the version of Ratan Tata but the Directorate of Revenue Intelligence (DRI) was not convinced that the Board of Directors of Indian Hotels were not aware of this at all, especially, since Indian Hotels was greatly expanding to foreign markets during this period and the board must have been actively involved in the operations of Indian Hotels during this time14.
The most recent firing of top management from the company of the Tata Sons has been Dilip Pendse, Managing Director of Tata Finance Limited (TFL). Pendse another stalwart of the Tata companies was accused of running losses to the tune of nearly INR 500 crores. The entire blame for TFL losses was on Pendse and he was charged with several cases by the Tatas. The Board of Directors of TFL again claimed that they were not aware of the developments in TFL. This argument that the Board of TFL was unaware seemed improbable to many because by this time one of the directors of Tatas, J E Talaulicer was under investigation for insider trading. Further, when the A. F. Fergusson report did not endorse either the innocence or ignorance of other Tata directors, the Tatas rejected the report of A F Fergusson who it had employed to audit the matter. Surprisingly, A F Fergusson sacked its senior partner Y M Kale15 following the rejection of the report by the Tatas. Has there been more such throw outs of the key professionals
13 Piramal, Gita. 1996. Business Maharajas, Penguin Books India (P) Ltd. Pg. 386-392 14 http://www.indianexpress.com/ie/daily/20010203/sucheta.htm
17 Journal of Case Research vol:1 issue: i who had immensely contributed to the growth of Tata Sons. From the above cases of accusation and firing of senior directors, how do we explain the age old great management practices of Tata Sons in its pursuit of control of group companies and their management?
Financial Restructuring & Resource Reallocation With the abolition of the Managing Agency system on April 2, 1970, a great phase of nearly 100 years was over for the Tata. Nationalization of key industries that the Tatas had pioneered, development focussed on agriculture and state run enterprises contrary to the proposed Tata-Birla (Bombay) plan demoralized Tata Sons Chairman, JRD Tata. The group slowly became mere confederation with loose control from the Tatas. JRD’s persuasive skills and a paternalistic attitude kept the group together despite dissent from some quarters of the group. As against the approach of Jawaharlal Nehru, JRD spoke vociferously for free enterprise; some of his lieutenants like A.D. Shroff also spoke strongly in favour of free economy. Shroff also set up the Forum for Free Enterprise, as voice of the private sector against Nehruvian socialism.
When Ratan Tata was appointed as the Chairman of Tata Industries Limited (TIL), he found himself handicapped to even propose a group plan and group strategy as many of the larger companies of the group seemed to be independent of the Tata Sons and Tata Industries, the two holding companies in the group. The holding companies had very little shareholding in the group companies and rightly so, the individual companies like Tisco (now Tata Steel) and Telco (now Tata Motors) could afford to disagree or disobey the norms proposed by the Tata Sons. Ratan Tata did feel that the Tata Sons cannot impose on the group companies without significant financial shareholdings in them.
The winds of liberalization had begun to blow around 1978 and did speed up after 1985 by Rajiv Gandhi, the then Prime Minister. Ratan Tata took opportunity of the changed circumstances to begin the financial restructuring process. He began by seeking royalty commission to the tune of INR 300 million from the group companies that used the Tata name. He subsequently raised INR 3000 million for Tata Sons by asking the group
18 Journal of Case Research vol:1 issue: i companies to subscribe to the rights issue of Tata Sons. In effect, this move increased the shareholding of Tata Sons in the group companies. Tata Sons then used this capital to invest in some group companies for expansion or acquisition or to invest in some high technology industries, like TCS, Tata Communication, Tata Teleservices. Tata Sons sold some shares of TCS that is largely held by the Tatas to raise capital for Tata Steel and in the process further raised its shareholding in Tata Steel.
The rights issue of Tata Sons crystallized the consolidation process started by Ratan Tata. After the rights issue, Tata Sons Limited (TSL) share in Tisco (Tata Steel) increased from 2.5% in 1995 to 8.5% in 1996 and then by 2005, it increased to 19.8%. In Tata Motors, TSL’s share increased from 1.8% in 1995 to 2.7% in 1996 and then by 2008, it increased to 21.9%. In the same manner, TSL’s share price increased from 5.6% in 1995 to 6.3% in 1996 and then increased to 28.7% in 2008.
Before 1995, the holding companies of the Tata, viz., Tata Sons Limited (TSL) and Tata Industries Limited (TIL) has small shareholding in the group companies ranging from 0.01% to 15%. However, a substantial financial restructuring of the group companies took place after 1995. By the year 2000, TSL had 14.17% share in Tata Motors and 19.86% share in Tata Steel. Similarly, TIL had also increased its share in the financial companies it held. By the year 2008, TSL increased its share in Tata Motors to 22.36% and in Tata Steel to 19.8%. The Tatas tried to hold most of their group companies through TSL. The shareholding structure of TSL and TIL and the crossholding of the listed group companies for the year 2000 and for the year 2005 are shown in Exhibit 27 - 28. 16 TSL has also increased its shareholding in its subsidiary companies around the world. See Exhibit 29-30 for the extent of Tata Son’s interest in the subsidiaries and its quoted and unquoted investments in the stock market.
Raising Capital, Resources & Capabilities Ratan Tata led the team of Tata Sons to undertake the crucial part of raising capital, resources and capabilities for the holding company and the group companies. There were
16 Kakani, Ram Kumar & Joshi, Tejas. 2006. Cross holding strategy to increase control: case of the Tata Group, Working paper, 06-03, XLRI Jamshedpur.
19 Journal of Case Research vol:1 issue: i three ways of generating capital and assets, viz., internal sources that is from the group companies, the capital market or from the public and purchase of valuable public assets and capabilities from the Government of India at throw away price. Tata Sons adopted all the three methods to acquire capital, resources, and capabilities in the fast changing developing economy with several institutional deficiencies.
From Group Companies As per the mandate of Tata Sons, it were to retain the trade mark of the Tatas and get license fees from the group companies to use the brand name of the Tatas. The commissions that Tata Sons received prior to 1995 was a small amount and hence it did very little reserves to engage in large brand building exercise and to give all the group companies a group identity that had faded over the years with the abolition of the Managing Agency system in 1970. Tata Sons estimated that it would need about INR 300 million per annum for publicizing the Tata Brand. Ratan Tata sought 0.10% to 0.25% of net income of each group company for the Tata Brand Equity scheme17. Despite resentment from various quarters, the board of directors from various group companies passed a resolution to contribute to the Tata Brand Equity scheme. Many argued if Tata Sons was asserting more than that of an ordinary shareholder.
From seeking contributions from the group companies for a massive advertisement campaign for the group companies of Tata Sons, Ratan Tata went on to ask the group companies to subscribe to the rights issues and preference shares of Tata Sons Ltd. On September 1995, Tata Sons Ltd invited subscriptions to INR 300 crores (3000 million) rights issue from the group companies at a premium. The various charitable trusts of the Tata Sons Ltd were to sell their rights to the group companies18. There were several objectionable remarks to both these means of capital generation. Through this process, the Tata Sons not only raised substantial amount of capital but also set in motion to raise its own shareholding in the group companies such that it could legally assert itself on the
17 Fee Structure of scheme: right to use the Tata name in both company banner and products: 0.25%, right to use the Tata name in either the company banner or products - 0.15%, right to be perceived as a Tata company: 0.10% 18 As per Charitable Trust Act and Income tax Act, charitable trusts were not permitted to invest in shares of private companies, http://www.capindia.org/helpguide_1.htm.
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group companies. This policy of Tata Sons was strongly resented by many; as the individual companies had to divert their valuable cash to buy the rights issues of Tata Sons that was a small company with ordinary shares of the group companies. It was also argued that the shares were overvalued and that the shareholders of Tata Sons gained at the expense of the shareholders of the group companies19.
From Individuals and Institutions through the Stock Market With the onset of economic liberalization, the general public especially the small retail investors have been encouraged to invest in the stock market. The fourteen group companies of the Tata Sons Ltd. have had a market capitalization (number of share*share price) of INR 211907 crores in 2008 and has been the third largest group after the PSU of Government of India, Reliance Industries Limited. Among the group companies of Tata Sons, TCS, Tata Steel, Tata Power, Tata Motors, Tata Teleservices, Tata Tea, and Tata Investment Corporation have amassed the maximum capital from the general public and the public and private institutions. In 2008, the market capitalization of a few group companies is shown in brackets: TCS (INR 80239 crores), Tata Steel (INR 47175 crores), Tata Power (INR 23096 crores) and Tata Motors (INR 15769 crores). The details of market capitalization of different group companies are shown in Exhibits 5-14
The financial handling of ACC is yet another episode of how Tata Sons used the stock market to generate capital from a business that it wanted to divest. In her news report Sucheta Dalal20 writes ‘In 1995 the Tatas with 11 per cent in ACC allowed it to be called a professional-run company. It then issues rights shares at a whooping INR 3900 premium –ACC's face value was then Rs 100 per share -- which devolved largely on financial institutions. In 1998 they had increased their holding by two per cent, called it a Tata company and attempted to give themselves preferential shares at a discount to the market price so as to raise the Tata holding to 17.8 per cent.’ The financial institutions refused to accept this. Subsequently, the Tatas sold 7.2 % of its holding to Gujurat Ambuja at INR 390 per share as compared to INR 110 per share, the price at which they
19 http://www.expressindia.com/news/fe/daily/19970716/19755013.html
21 Journal of Case Research vol:1 issue: i wanted the FIIs to issue preference share to them. Although, SEBI, backed by the Attorney General ruled that the acquisition of Tata stake in ACC was not a case of takeover21, it was a breach of trust with the retail investors as the stakes were sold without it being offered in the open market.
Acquisition of Public Assets and Capabilities at cheap price The policy of disinvestment of government owned public sector enterprises (PSE) has been a good tool for private companies to acquire the public assets at very cheap price. While the purpose of disinvestment was to revive and make the loss making PSE efficient, the government undertook to sell some of the best placed profit making companies like VSNL, IPCL, CMC, etc. The Tatas did not loose opportunity to get its share of the public assets. It acquired 51 % of CMC and 45% of VSNL, a profit making, Navratna PSE. JRD Tata would have been most happy to be at this moment as he had faught tooth and nail about 50 years ago, when Tata Airlines was nationalized in 1953. He had also accused the government for not having paid appropriate compensation for Tata Airlines.
In December 2001, the Tatas took over 51% shareholdings of the Computer Maintenance Corporation (CMC), a state run public sector enterprise (PSE) that enjoyed a dominant position an IT infrastructure solutions provider. Tata Sons emerged as the sole bidder to claim CMC and paid only INR 152 crores22 to acquire this strategic asset to strengthen its own firm TCS. Through the backing of the Government, CMC had developed a strong partnership with Microsoft, IBM, Cisco, HP, Sun Microsystems and Oracle. Again a state run enterprise, CMC had a strong and large client base of the public sector enterprises (PSEs) of the country that form the largest pool of companies in India. Indian Railways, ONGC, GAIL, IOC were some of CMC’s long standing clients.23 Tata Sons soon leveraged these capabilities to its IT firm, TCS, where Tata Sons alone has 74.81% shareholding in 2008. Interestingly, the profit after tax of TCS has increased from INR 1.54 crores in 2001 to INR 4508 crores in 2008(see Exhibit 7).
21 http://www.indianexpress.com/ie/daily/20010128/dalal.htm,
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Tata Sons acquired 25% of VSNL by offering only INR 1439 crores to the government. Tata Sons acquired another 20% from the open market. In all, Tata Sons paid just about INR 2500 crores to get a controlling stake of VSNL and its assets and cash reserves. VSNL was a rich organization. Its monopoly in international long distance (ILD) voice and internet was the biggest advantage to Tata Sons. VSNL possessed prime real estate worth about INR 1200 crores. One of the major assets was a stockpile of INR 5182 crores which was considerable even after disbursement of the special dividends. Further, the Government of India made a provision that the government owned MTNL and BSNL would have to use VSNL as their ILD carrier for two years after the disinvestment. VSNL would also get a free license to provide NLD and a nationwide ISP license24.
Soon after the VSNL acquisition, Tata Sons ensured that VSNL invest INR 1200 crores in Tata Teleservices Limited, new company floated by the Tata Sons where Tata group were to put INR 2,552 crores. Many observers argued that this move of the Tatas was clear stripping of cash reserves of the erstwhile profit making company25. Further, the valuation of assets of the PSEs including CMC and VSNL that were divested is another issue to understand how efficiency of private firms has been built. The controversies over VSNL disinvestment died down with the interventions from Pramod Mahajan and L K Advani of the Bharatiya Janata Party, who was then in power at the centre but the issues remain alive to see the process of growth of private firms. Indeed ever since, Tata Sons acquired 45% of VSNL, the performance of VSNL has been going down. From profit after tax of INR 1407 crores in 2001, the profit of VSNL (now Tata Communication) has come down to INR 304 crores in 2008. While the assets of most firms have gone up, the assets of VSNL has also come in post disinvestment period. See Exhibit 9 for the financial figures of VSNL (now Tata Communication Ltd) before and after the disinvestment. In the above context, how do we explain the argument of the Government that disinvestment would improve efficiency of PSE?
24 Jain, Rekha & Venkataraman Krishnan. Privatization of Videsh Sanchar Nigam Limited http://www.iimahd.ernet.in/ctps/pdf/VSNL%20Privatization%20Rekha%20Krishnan.pdf and Naib, Sudhir. 2004. Disinvestment in India, Policies, Procedures, Practices, Sage Publication. New Delhi. 25 http://www.hinduonnet.com/2002/06/11/stories/2002061101842000.htm
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Arising out of these resource and capacity build up at home, Tata Sons Limited (TSL) had a run on mergers and acquisition since 2001. See Exhibit 31 for a detailed list of its mergers and acquisition. See also Exhibit 32 for the various international projects that it has undertaken.
Has Growth been at the cost of Principles? Tata Sons has remained to be a leading holding company in India. It has grown massively during the last about 20 years and has emerged as the leading multinational from India that many Indians have been proud about. The ideals of Tata Trust, involvement of the Tatas in the industrial development and the promotion of a Tata brand of values, ethics and excellence in business help the general observers to miss the various growth issues and how the Tatas have ignored at different points of time in history that is possibly against the principles of a Trust based organization. The most contentious of the issues is the issue of land acquisition for industrial growth.
In the early years, the Tata Sons started the salt works in Mithapur in 1939, a business on which Tata Chemicals was built. Tatas acquired land from the local Waghirs, which probably was objected by some local people. The British Government then in power stepped in and forcibly acquired land for the Tatas so that their salt works could be established. Not able to fight the British Government, a local whose land had been forcibly acquired and was paid some compensation, wanted the blood of the General Manager of the Mithapur Works as revenge. The Tatas tactfully managed him by recruiting him as the body guard of the General Manager26.
In recent years, the Tatas have been in the news for land acquisitions across Orissa, West Bengal, and Jharkhand for their steel and car projects. B. Muthuraman, Managing Director of Tata Steel signed an agreement with the Government of Orissa on November 17, 2004 to set up a 6 million ton per annum integrated steel plant in Orissa and it was allotted 2000 acres of land in Kalinganagar, Jajpur district. Soon after signing the Memorandum with the Government of Orissa, Tata Steel established the JN Tata
26 Lala, R.M. (1992), Beyond the Blue Mountain, A Life of JRD Tata, Viking, Penguin Books (India) Ltd. Pg. 253
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Technical Education Centre at Gopalpur in 2005 to improve the employability of the youth of Orissa27.
The local tribals whose land had been acquired by the Government had been opposed to the land acquisition and the compensation thereof. Despite the prohibitory orders of the district collector to Tata Steel to enter the tensed zone, reportedly a team of Tata agents, who identified themselves from Eco-Design came to the site and started provocative surveys in the area and commenced blasting activities on January 2, 2006. The local inhabitants gushed to the site to resist the activities of the agents and fight between the local people and the agents began. The police force soon joined the troubled area and the fight resulted in killing of twelve protestors from among the local inhabitants28. Subsequently, the Government of Orissa announced compensation to the twelve bereaved families and the matter was closed. Tata Steel seemed to have begun its work in the allotted area. Interestingly, the Land Acquisition Bill 2007 states ‘public purpose’ to include several types of public facilities including mining.
The land acquisition row of the Tatas for its small car manufacturing facility in Singur, Nandigram, West Bengal is another chapter of Tata Sons that reveals its modus operandi of land acquisition, growth objectives and commitment to people. Tata Motors Vice President (Finance), R.S. Thakur signed the agreement for 90 year land lease of 650 acres (out of a total of 997 acres) with West Bengal Industrial Development Corporation, Managing Director Debasis Som and West Bengal Industry Secretary Sabyasachi Sen. The cost of lease was INR1000 crores for 997 acres, which was to be paid over a period of 45 years. For the first 5 years, Tata Motors had to pay INR 1 crore per annum; in next 10 years, it had to pay INR 10 crores and in the next 30 years, it was to pay INR 20 crores per annum. Many questioned whether so much of land was required for the small car plant project of the Tata. Some also questioned whether alternate location could be provided instead of fertile land of Singur that produced three crops a year and sustained
27 http://www.tatasteel.com/company/investments_kalinganagar.asp
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the livelihood of 10,000 people29. As the matter was taken to the Kolkata High Court; the court’s verdict was that the land was acquired for ‘public purpose’ as per the Land Acquisition Bill 2007.
Subsequently, the Tatas pulled out of West Bengal and bargained with other states for land and incentives before finally choosing to set up the small car factory in Gujurat. Here the question arises how the Tata Sons in both the states, Orissa and West Bengal was successful in engaging the political parties and state machinery to deal with the protestors of land acquisition and then quietly move on with its pursuits of business.
It is also interesting to see the timing of the Tata Trust to contribute to West Bengal. During the Tata Sons engagement with West Bengal in the recent years for the small car project and for real estate development by the Tata group associate Shapoorji, the Dorabji Tata Trust committed to commission the Tata Medical Centre in Kolkata in 200930.
The agreement between the Government of Chhattisgarh and the Tatas in June 2005, for setting up a steel plant in Bastar, atrocities against those who opposed the land acquisition in Bastar have also been reported. Tata Steel is to acquire over 2000 acres of tribal land belonging to 10 villages in Lohandiguda block near the Chitrakot waterfall on Indravati river. Both local leaders and activists have been humiliated and threatened by the local goons and the police. One non tribal activist was slapped, not allowed to stay in any hotel and hounded out of Bastar when he came to speak on behalf of the protestors. The collector of Dantewara district has even called a meeting of all political parties except the CPI, journalist, business leaders and others to reiterate that opposition to the Tata project will not be tolerated31. These cases of land acquisition where the Tatas have used the official machinery to get past the resistance of the local people raise the issues of the ethical nature of big businesses.
29 http://www.europe-solidaire.org/spip.php?article9170
30 http://www.tata.com/ourcommitment/sub_index.aspx?sectid=Mw/mP8IlwTE=
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In 1997, the Tata Sons were suspected to be supporting the banned organization, United Liberation Front of Asom (ULFA) in order to protect its tea gardens in Assam and help the tea supplies to its group company, Tata Tea. Tata Tea’s involvement with the banned outfit was revealed when police found a visiting card of a senior Tata executive from a hardcore ULFA militant when arrested in Mumbai along with Pranati Deka, ULFA’s cultural secretary. They were nabbed by police in the Mumbai Airport when the two were returning to Kolkata with Pranti Deka’s newborn baby. Pranti Deka had gone to Mumbai to dliver her baby in the upmarket Jaslok Hospital at the expense of the tea company.32
Dogra, General Manager of the North Indian Plantation Division of Tata Tea was arrested for aiding and abetting unlawful activities of the banned outfit, ULFA and knowingly conniving with those waging war against the state. Another Tata executive Dr. Brajen Gogoi, who was also reported to be personally involved in the entire process, was charged for working with the terror group. As the news about the arrest broke out, senior executives of the Tatas contacted the Home Minister, Government of India but since the Home Ministry did not have the report, Ratan Tata sought appointment with the home secretary, K Padmanabhaiah. The Home Secretary obliged and contacted the Director- General of Police to ascertain details regarding the alleged funding.33 Interestingly, although Deka and her associate were arrested on August 23, 1997 and shifted to Guwahati on August 31, the police did not submit any report to the Union Ministry regarding Deka after her arrest.
Dr. Gogoi another accused in the case was an employee of Tata Tea since 1975 and was well known to the ULFA chief Paresh Barua who considered Gogoi as his elder brother. Gogoi arrived from a study trip to Harvard, USA on September 6 and checked into a guest house. However, sensing the police interrogation, Gogoi disappeared. During the meeting on September 15 of Ratan Tata with P. Mahanta, the then Chief Minister of Assam, when the Chief Secretary, V.S. Jafa insisted that Gogoi was in Chicago, both had no answer. Tata tea had also obtained anticipatory bail for Gogoi from the Mumbai High
32 http://www.rediff.com/money/sep/15tata.htm
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Court on September 16, 1997.34 From the above reports, it is rather difficult to assume that Ratan Tata and the Tata Sons were not party to any unethical practices. From the above dealings of the Tatas on land acquisition or involving with goons and terror groups, how do we situate the ethical brand value of the Tata Sons as has been projected and sold?
34 http://www.india-today.com/itoday/20101997/cov.html
28 Journal of Case Research vol:1 issue: i Questions for discussion:
1. How did the company evolve through the Tata Trust and the Managing Agency System? 2. How did the company influence and direct the economic policy and management practices in India? 3. How has the brand of the Tatas been built? 4. How has the company/group performed in the domestic markets? 5. How has the company/group performed in the foreign markets? 6. Is there a necessity to de-link the Tata Brand from the business behaviour of the Tata enterprises? 7. How did the company move from being a Managing Agent to corporate entity with high share in its holding companies? 8. What has been the process of growth in Tata Sons? 9. How were the corporate and management restructuring carried out? 10. How has the group raised capital and resources in the home country? 11. How has the company restructured its finance and resource reallocation? 12. How have the group exploited the various factor endowments of business operations in the home country to grow? 13. How has the characteristic of the domestic market supported the growth of the firm? 14. How have the various industry policies and incentive structure (LPG policies) of the Government of India been formulated that advance the growth objectives of the group? 15. How did the group acquire state run public enterprises like VSNL and CMC from the Government of India? 16. How has the group developed its large subsidiary and associate network and how does it leverage on this network? 17. How has the company engaged in advancing the free market economy and privatization policies in the country?
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Exhibit 1 TATA SONS ( All figures are in INR crores)
Forex Year Sales Assets PBDITA PAT earnings 1990 83.9 97.62 22.44 7.11 44.56 1991 88.27 127.22 24.13 8.93 49.43 1992 129.1 164.19 40.43 17.39 83.61 1993 183.06 233.72 59.01 27.19 181.54 1994 244.64 367.58 90.45 43.58 132.27 1995 392.06 622.68 159.12 92.6 0 1996 561.54 1316.5 241.95 124.56 0 1997 767.46 1559.11 305.15 141.85 614.2 1998 1139.81 1933.63 467.78 273.63 967.41 1999 1733.13 2713.87 863.15 553.21 1542.65 2000 2132.84 3680.41 982.7 662.54 1888.91 2001 3103.18 4912.25 1158.1 713.66 2914.02 2002 4152.26 7028.61 1429.59 863.29 3880.74 2003 4949.64 8808.65 1368.93 816.84 4569.18 2004 5912.08 10822.83 1870.18 1291.96 5547.74 2005 118.49 11209.66 3700.6 3273.61 9.54 2006 157.35 12385.36 1812.78 1612.31 9.26 2007 215.65 17247.87 3943.97 3335.94 13.43 2008 288.65 28168.55 4632.26 3779.8 62.2 Source: CMIE Database, 2008
Exhibit 2 Subsidiary Companies of Tata Sons Ltd.
Computational Research Laboratories Ltd. TRIF Real Estate & Development Pvt. Ltd. Concept Marketing & Advertising Ltd. TRIF Realty Projects Pvt. Ltd. e-Next Financials Pvt Ltd. TRIF Trivandrum Projects Pvt. Ltd. Edwart Investments Ltd. TRIL Airport Development Pvt. Ltd. Edwart Investments Pvt. Ltd (Mauritius) TRIL Construction Ltd. Infiniti Retail Ltd. TRIL Developers Ltd. Panatone Finvest Ltd. Tata Consultancy Services Ltd. Tata AIG, Zug Tata America International Corporation Ltd Tata AIG Life Insurance Co. Ltd. (Joint Venture) CMC Ltd. Tata AIG General Insurance Co. Ltd. (Joint CMC Americas Inc. Venture) Tata Asset Management (Mauritius) Ltd Aponline Ltd. Tata Asset Management Ltd WTI Advanced Technology Ltd. Tata Business Support Pvt. Ltd. TCS Asia Pacific Pte. Ltd. Tata Capital Ltd. Tata Consultancy Services, Malaysia SDN BHD
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Tata Capital Markets Ltd. Tata Consultancy Services, Japan Ltd. Continued... TRIF Investments Management Ltd. Tata Information Technology (Shanghai) Co. Ltd. Tata International AG, Zug TCS Iberoamerica SA Tata Internet Services Ltd. TCS Solution Centre S.A. Tata Ltd. (London) TCS Argentina S.A. Tata Pension Management Ltd. TCS DO Brasil Desenvolvimento De Servicos LTDA Tata Investment Co. Ltd. TCS DE Mexico, SA DE CV Tata Petrodyne Ltd. TCS Inversiones Chile Tata Securities Ltd. TCS De Espansa SA Tata Sky Ltd. (Joint Venture) TCS Deutschland GMBH Tata Teleservices (Maharshtra) Ltd. Tata Teleservices Ltd. TCS, Netherlands BV Tata Trustee Co. Pvt. Ltd. TCS DO Brasil LTDA TCE Consulting Engineers Ltd. TCS, Chile, S.A Tata Housing Development Company Ltd. TCS, Sverige, A.B. Wireless-TT Infoservices Ltd. TCS, Belgium S.A. Tata Realty and Infrastructure Ltd. TCS Italia SRL
Associates: 1. Exegenix Research Inc. 2. Firstech Solutions Co. Limited 3. Global Information Services Limited 4. Hemisphere Properties India Limited 5. Miracle Entertainment Private Limited 6. Niskalp Energy Limited 7. Rockbourne Holdings B. V. 8. Tata Elxsi Limited 9. Tata Enterprises(Overseas) AG 10. Tata Industries Limited 11. Tata International Limited 12. Tata vInvestment Corporation Limited(Upto 12.02.08) 13. Tata Motors Limited 14. Tata Precesion Indfustries(pte) Ltd. 15. Tata Steel Limited 16. Tata Trustee Company Pvt. Limited(Upto 12.02.08) 17. The Associated Building Company Limited 18. The Tata Power Company Limited 19. Titan International Investments Limited B. V. 20. Titan International Marketing Limited
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21. TKM Overseas Transport Limited, London 22. Trent Limited 23. Vantech Investments Limited 24. Videsh Sanchar Nigam Limited 25. Voltas Limited 26. Tata Chemical Limited 27. Tata T/ea Limited 28. Technopolis Knowledge Park Limited 29. Rentalbazaar(India) Limited 30. Casa Décor Pvt. Ltd.
Investing Parties: 1. Sir Dorabji Tata Trust 2. Sir Ratan Tata Trust
Source: Ninetieth Annual Report 2007-2008
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Exhibit 3 Comparative study of key financial figures of the TATA firms ( Figures are in INR crore) Sales PAT Assets Dec- Dec- Dec- Dec- Dec- Dec- Dec- Company Name 90 Dec-00 08 90 00 Dec-08 90 00 08 American Express Services India Ltd. 0 -0.8 13.27 Avaya Globalconnect Ltd. 25.49 180.28 573.07 1.62 -5.26 17.21 30.16 189.77 404.33 E 2 E Serwiz Solutions Ltd. 167.34 5.06 83.56 Emerson Network Power (India) Pvt. Ltd. 127.87 10.4 82.42 Honeywell Automation India Ltd. 276.54 19.28 179.69 I D B I Homefinance Ltd. 0 0 -0.11 29.87 0.5 2792.2 Infomedia 18 Ltd. 19.75 99.62 146.31 -0.56 10.5 -9.66 24.2 128.52 215.7
Itel Industries Ltd. Mcgraw-Hill Education (India) Ltd. N Y K Line (India) Ltd. T H D C Ltd. 11.73 65.39 0.53 1.37 32.3 186.68 T R F Ltd. 36.66 130.15 371.18 0.72 4.94 42.17 47.2 127.89 395.43 T S R Darashaw Ltd. 0.01 2.84 26.03 Tata Advanced Materials Ltd. 3.15 26.82 -7.92 -6.07 24.28 97.94 Tata Asset Mgmt. Ltd. 1.71 28.22 119.91 Tata Auto Plastic Systems Ltd. 42.68 -2.86 94.91
Tata Autocomp Systems Ltd. Tata B P Solar (India) Ltd. 921.79 29 967.15 Tata Bluescope Steel Ltd. Tata Capital Ltd. 0 0 0.27 9.21 17.05 4337.1 Tata Capital Markets Ltd. 0 0.04 6.07 Tata Ceramics Ltd. 6.64 30.11 -6.79 0.27 60.87 36.07 Tata Chemicals Ltd. 266.15 1519.42 4223.4 40.74 117.29 949.18 761.82 3457.6 7542.7 Tata Coffee Ltd. 23.91 215.72 304.55 1.59 29.34 24.68 32.62 188.51 664.95 Tata Communications Ltd. 317.7 7003.69 3301.7 56.88 840.27 304.46 626.06 8087.6 9776.6
Tata Construction & Projects Ltd. 34.04 23.65 -2.89 0.77 48.77 35.27
33 Journal of Case Research vol:1 issue: i
Tata Consultancy Services Ltd. 18538 4508.76 14736 Tata Cummins Ltd. 1757.2 118.57 809.82 Tata Elxsi Ltd. 124.2 401.53 6.71 52.67 79.42 261.42 Tata Ficosa Automotive Systems Ltd. Tata Finance Ltd. [Merged] 0 56.78 3614.8 Tata Finance Merchant Bankers Ltd. 0 0.21 5.56 Tata Hydro-Electric Power Supply Co. Ltd. [Merged] 168.19 564.79 16.49 98.45 224.33 1450.8 Tata Industries Ltd. 14.72 4.26 1118.4
Tata Infotech Ltd. [Merged] 39.12 421.38 5.14 12.2 33.17 255.09 Tata International Ltd. 254.56 1651.23 3.52 5.22 149.33 1017.5 Tata Internet Services Ltd. 17.7 10.04 40.61 Tata Investment Corpn. Ltd. 0 0 37.21 185.85 276.52 911.58 Tata Klockner Indl. Plants Ltd. Tata Korf Engg. Services Ltd. 0.11 10.93 0.07 0.87 6.78 15.1 Tata Metaliks Ltd. 93.76 1185.5 3 69.63 67.61 592 Tata Metals & Strips Ltd. [Merged] 46.84 5.14 31.14 Tata Motors Finance Ltd. 0 44.77 6643.8
Tata Motors Insurance Services Ltd. Tata Motors Ltd. 1905.9 8616.21 32435 102.54 71.2 2028.92 1554.7 8997.7 26152 Tata Oil Mills Co. Ltd. [Merged] 335.33 5.36 160.51 Tata Petrodyne Ltd. 47.5 171.8 -37.08 54.71 88 414.11 Tata Pigments Ltd. 2.25 17.05 0.07 1.46 1.9 11.86 Tata Power Co. Ltd. 419.64 1403.89 5920.5 40.95 238.64 869.9 556.56 3680.7 13076 Tata Power Trdg. Co. Ltd. Tata Precision Inds. India Ltd. Tata Projects Ltd. 12.43 172.17 1344 0.53 9.05 43.24 27.37 166.7 1201.5
Tata Refractories Ltd. 83.78 260.69 584.51 2.01 5.33 21.66 46.1 181.8 470.03 Tata Ryerson Ltd. 18.22 1280 -1.74 39.61 85.51 509.15 Tata S S L Ltd. [Merged] 210.96 654.57 14.91 3.65 121.64 446.59 Tata Securities Ltd. 0 0 14.05 0.51 434.79 42.38
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Tata Services Ltd. 25.19 59.02 0 0.03 35.87 46.72 Tata Sky Ltd. 608.98 -863.7 537.08 Tata Sons Ltd. 88.27 2132.84 288.65 8.93 662.54 3779.8 127.22 3680.4 28169 Tata Sponge Iron Ltd. 14.63 123.65 515.85 3.52 9.37 95.53 37.98 109.46 503.33 Tata Steel Ltd. 2066.5 6156.28 22189 141.58 422.59 4687.03 3036.6 12143 55161
Tata Tea Ltd. 260.68 913.65 1136.5 41.49 124.56 312.86 272.75 1352.7 3104.8 Tata Technodyne Ltd. [Merged] Tata Technologies Ltd. 65.7 277.53 3.85 28.41 31.62 400.65 - Tata Teleservices (Maharashtra) Ltd. 63.82 1773.1 270.15 -125.74 1284.6 3443.9 Tata Teleservices Ltd. 5332.8 -1826.5 12663 Tata Tetley Ltd. 31.72 -0.19 23.47 Tata Toyo Radiator Ltd. 15.16 384.91 -7.86 20.1 58.65 205.32 Tata Yazaki Autocomp Ltd. 290.48 -5.76 140.91 Tata-Scob Dealers Calcutta Ltd.
Tatanagar Bricks Ltd. Tatanet Services Ltd. 21.59 0.34 20.82 Taulis Pharma Ltd. Tayo Rolls Ltd. 40.82 87.32 244.84 0.69 4.68 6.35 26.22 76.01 168.92 Timken India Ltd. 167.77 15.2 158.87 V S N L Broadband Ltd. Vashisti Detergents Ltd. [Merged] 225.93 5.51 85.29 Wireless T T Info Services Ltd. 135.58 -30 1372.7
Source: Prowess ( CMIE)
35 Journal of Case Research vol:1 issue: i
Exhibit 4 TATA Steel Financial : 1931- 2008 (Figures are in INR crore)
Gross Gross Net transfer Year Capital Block Investment Revenues PAT to revenues Dividends 1931 10.47 23.41 0.3 5.73 0.19 0.19 1936 10.47 24.07 0.63 7.55 1.21 0.13 1941 10.47 29.25 1.23 17.99 3.04 0.75 2.3 1946 10.47 35.25 2.15 22.36 2.61 0.7 1.82 1951 10.47 42.76 2.81 30.23 2.49 1.01 1.5 1956 17.34 69.39 5.99 41.93 5.81 4.07 1.76 1961 38.97 185.52 8.85 87.08 5.09 0.52 4.65 1966 38.97 211.87 11.66 134.01 9.64 4.4 5.25 1971 50.01 287.86 12.21 158.51 7.42 2.15 5.27 1976 50.01 395.84 11.09 287.63 9.42 4.59 4.83 1981 62.86 550.48 14.01 520.86 26.46 17.9 8.56 1986 82.74 1115.76 144.54 1285.51 107.68 90.88 20.61 1991 229.69 2703.29 571.86 2330.86 160.13 88.79 71.34 1996 367.23 7408.46 410.94 5879.96 565.79 408.82 156.97 2001 507.97 11253.17 846.92 7810.05 553.44 335.83 217.61 2006 553.67 16470.71 4069.96 17398.98 3506.38 2685.95 820.43 2008 6203.31 20746.57 4103.19 22526.81 4687.03 3293.48 1393.55 Source: Ninety fifth annual report 2001-02, TATA Steel
Exhibit 5 Financial History of TATA Steel (Figures are in INR crore)
Invest Invest ment Forex No. of Market Year Sales Assets PBDIT PAT ments (Abroad) earnings shares+ Cap. 1989 1865.3 2060.65 322.02 134.8 234.4 0 95.3 368.98 1990 2066.5 3036.64 404.91 141.5 795.3 0 147.5 553.47 2988.18 1991 2233.4 3504.68 486.09 160.1 571.8 0 207.6 553.47 4622.34 1992 2787.2 4789.08 617.73 200.5 248.7 0 455.6 553.47 10394.41 1993 3352.1 6261.84 664.28 119.1 170 0 641 553.47 5805.69 1994 3790.9 7347.26 696.6 180.8 261.6 0 719.7 553.47 8952.55 1995 4627.4 7835.11 860.07 264.1 220.6 0 550.1 553.47 7699.8 1996 5854.1 9209.78 1245.15 565.7 410.9 0 683 553.47 7224.24 1997 6348.5 9920.87 1339.39 469.2 664.9 0 666.9 553.47 6594.48 1998 6429.2 11274.2 1172.1 322 626 0 735.9 580.47 4360.42 1999 5516 11466.4 1220.85 282.2 588.8 0 663.5 580.47 4816.25 2000 6156.2 12143.3 1432.63 422.5 821.2 0 750.4 580.47 4357.89 2001 7196.6 12555.3 1577.12 553.4 850.8 0 750.7 608.97 4083.48 2002 7595.4 12809.6 1195.51 204 912.7 1.6 599.6 608.97 4355.89 2003 9788.4 13261.5 2200.89 1012.3 1201.5 1.6 1332.1 608.97 8156.31 2004 11918 13933.9 3537.4 1746.2 2201.4 2.8 1501.3 730.58 14805.12 2005 15868 16695.6 6143.55 3474.1 2463.2 152.3 2189.8 730.58 20886.88 2006 17133 19257.4 6152.99 3506.3 4069.9 972.1 2110.1 730.58 27565.63 2007 19766 32095.7 7332.12 4222.1 6106.1 1046.2 2103.8 730.58 40525.27 2008 22189 55160.8 8841.29 4687 4103.1 1152.3 2288.6 730.59 43763.82 Source: Prowess (CMIE)
36 Journal of Case Research vol:1 issue: i
Exhibit 6 TATA Motors ( Figures are in INR crore)
Invest Invest ment Forex No. of Market Year Sales Assets PBDITA PAT ments (Abroad) earnings shares Cap. 1989 1638.51 1191.12 186.25 68.93 140.04 0 84.91 357.99 1990 1905.86 1554.73 270.83 102.54 303.48 0 105.63 358.48 1740.32 1991 2501.27 1800.53 370.44 142.05 108.58 0 134.24 361.75 2725.92 1992 3024.36 2740.36 410.8 128.14 286.04 0 252.34 361.75 4501.32 1993 2875.94 3390.11 338.06 30.04 175.18 0 312.02 361.75 3074.34 1994 3543.09 3401.16 434.42 101.34 159.09 0 379.23 376.25 6623.53 1995 5511.46 4262.67 762.15 318.95 342.83 0 582.98 376.25 7737.78 1996 7636.46 6109.91 1091.38 505.82 660.9 0 642.93 382.83 10860.51 1997 9768.32 8599.67 1500.14 762.36 826.57 0 675.27 383.07 9244.91 1998 7026.5 8940.32 1048.02 294.66 837.11 0 633.88 385.17 4937.91 1999 6317.89 10235.8 927.89 97.85 1029.38 0 532.02 385.27 5630.81 2000 8616.21 8997.68 1040.64 71.2 1203.66 3.1 611.02 385.37 3141.18 2001 7912.36 8892.26 484.55 -500.34 1405.03 3.1 725.31 385.38 2077.92 2002 8641.81 8126.01 787.42 -53.73 1189.92 0 621.02 385.46 4216.17 2003 10607.7 8294.13 1097.63 300.11 1271.8 4.38 477.46 385.51 7842.19 2004 15208.7 10192.6 1770.65 810.34 3081.44 257.42 1016.64 385.51 15766.55 2005 20217.4 13849.2 2155.71 1236.95 2912.06 255.47 1497.85 385.61 17880.06 2006 23439.4 16192.1 2707.99 1528.88 2015.15 256.15 2384.81 385.61 31418.36 2007 31000.7 19575 3362.32 1913.46 2477 267.76 2714.68 449.83 28950.72 2008 32434.8 26151.5 3512.44 4910.27 301.62 2844.12 449.83 18858.67 Source: Prowess (CMIE)
Exhibit 7 Financial history of TATA Consultancy Services (Figures are in INR crore)
Year Sales Assets PBDITA PAT Invest Invest Forex No. of Market. ment ment earnings Shares Cap. (Abroad)
2002 0 215.44 1.54 1.54 37.81 0 0 978.61 2003 0.25 266.11 1.88 1.02 37.91 0 0 978.61 2004 2.05 657.89 17.7 15.17 426.4 0 0 978.61 54533.03 2005 8054.57 4752.8 2255.8 1831.42 1408.71 529.37 7485.25 978.61 65844.53 2006 11239.3 7430.2 3374.25 2716.87 1963.52 897.44 10127.08 978.61 93944.58 2007 14944.6 10714.9 4520.11 3757.29 3252.09 1643.23 13785.08 978.61 112572.9 2008 18537.5 14736.1 5855.16 4508.76 4509.38 1633.86 16776.48 978.61 77060.92 Source: Prowess ( CMIE)
37 Journal of Case Research vol:1 issue: i
Exhibit 8 TATA Power (Figures are in INR crore)
Year Sales Assets PBDITA PAT Forex Investment No. of Market earning Shares Cap.
1989 378.1 486.24 51.43 22.68 0 12.33 197.89 1990 419.64 556.56 76.73 40.95 0 17.27 197.89 178.7 1991 474.09 655.85 79.12 34.83 0.32 29.27 197.89 338.36 1992 554.79 963.4 98.55 26.48 2.02 44.97 197.89 369.73 1993 759.31 1262.28 160.21 67.27 1.89 56.07 197.89 824.8 1994 951.08 1642.22 216.04 95.97 0.73 163.81 197.89 1578.61 1995 1060.9 2177.55 298.99 119.51 14.5 495.15 197.89 1330.52 1996 1170.8 2320.22 505.61 223 0.77 573.22 197.89 1621.4 1997 1192.5 2451.9 401.83 117.93 0.05 614.54 197.89 1422.48 1998 1206.4 3022.83 426.91 164.64 40.1 1072.73 197.89 1159.91 1999 1159.7 3307.56 439.62 166.34 34.55 1208.16 197.89 919.33 2000 1403.9 3680.7 536.13 238.64 53.11 1389.31 197.89 927.44 2001 3379.5 7680.43 1026.97 399.7 79.61 1582.93 197.89 2418.37 2002 3797.8 8484.8 1341.48 508.23 132.69 2276.12 207.79 2231.76 2003 4279.8 8688.23 1475.31 536.42 67.82 2451.83 217.39 3292.51 2004 4216.1 8000.49 1367.3 526.85 48.59 2728.83 220.71 6426.3 2005 3973.1 9347.87 1270.38 551 74.04 3502.92 220.78 7965.73 2006 4560 9678.18 1184.07 610.64 82.88 3412.17 221.38 10326.82 2007 4704.9 11493.3 1258.72 696.8 104.31 3570.15 221.38 15840.42 2008 5920.5 13075.7 1529.73 869.9 18.82 4630.09 221.42 24103.45 Source: Prowess ( CMIE)
Exhibit 9 Tata Communications ( Figures are in INR crores)
Invest- Investment Forex No. of Market Year Sales PBDITA PAT Assets ments (Abroad) earnings shares CAP. 1990 317.7 132.43 56.88 626.06 4.89 0 122.91 285 1991 376.11 177.82 78.58 631.04 19.76 0 129.32 285 1992 598.23 277.91 104.14 904.08 0.41 0 175.44 285 0 1993 734.92 309.02 112.38 1335.08 0.41 0 300.4 285 0 1994 2911.05 382.42 176.1 2131.86 0.41 0 1625.89 285 0 1995 3560.48 617.37 303.07 2194.7 3.45 0 2120.12 285 5205.26 1996 4432.32 757 409.56 3178.96 125.26 0 2888.96 285 8825.36 1997 5209.27 888.8 504.74 5195.32 313.77 0 3397.7 285 8860.36 1998 6142.29 1465.64 967.92 6713.89 375.95 0 4022.53 285 7460.68 1999 6857.94 1994.28 1324.95 8828.43 574.5 0 4737.62 285 10298.4 2000 7003.69 1572.39 840.27 8087.55 115.82 101.44 4817.11 285 2001 7299.42 2683.86 1778.83 10069.3 110.65 101.45 4867.3 285 8167.79 2002 6509.98 2227.7 1407.05 7640.14 366.29 357.09 4177.96 285 4173.09 2003 4540.28 1404.35 780.07 7643.82 655.87 375.43 2849.95 285 3067.12 2004 3168.05 716.18 377.66 6876.68 2094.11 344.58 1477.71 285 5008.95 2005 3303.04 1298.02 756.18 7683.89 1223.21 54.66 1951.89 285 8172.36 2006 3791.17 1047.9 479.54 8227.53 2499.34 317.66 1712.01 285 11565.9 2007 3757.32 1110.87 468.56 8615.61 2680.85 414.65 1759.12 285 13364.1 2008 3301.73 790.89 304.46 9776.59 2325.28 417.11 1035.27 285 13537 Source: Prowess (CMIE) 38 Journal of Case Research vol:1 issue: i
Exhibit 10 TATA Chemicals (Figures are in INR crore)
Invest- Investment Forex No. Of Market Year Sales Assets PBDITA PAT ments (Abroad) earnings shares Cap 1989 256.83 576.95 103.37 35.79 227.64 0 4.04 180.63 1990 266.15 761.82 121.95 40.74 296.62 0 4.78 215.11 636.91 1991 299.43 1055.61 131.6 44.45 407.4 0 1.93 215.11 596.59 1992 348.42 1106.33 165.87 59.75 351.96 0 4.08 215.11 1535.28 1993 414.75 1674.76 188.86 74.95 377.78 0 9.68 215.11 2601.47 1994 504.38 2401.07 365.52 276.58 295.16 0 9.2 215.11 5048.7 1995 770.17 2808.18 561.89 286.65 269.74 0 3.68 215.11 3998.01 1996 1515.37 3168.58 769.53 392.31 350.88 0 14.95 215.11 3939.56 1997 1598.52 3363.93 660.39 249.96 259.12 0 23.72 215.11 2984.08 1998 1643.53 3442.56 681.5 288.63 258.15 0 19.98 215.11 2178.4 1999 1461.96 3527.33 549.31 181.67 262.58 0 2.05 215.11 1270.62 2000 1519.42 3457.58 473.54 117.29 208.44 0 5.46 215.11 2001 1470.89 3510.5 495.76 164.95 428.22 0 22.1 215.11 763.58 2002 1397.14 3501.06 461.57 126.82 555.68 0 20.75 215.11 908.98 2003 1614.08 3181.19 521.32 196.58 569.02 0 53.18 226.65 1550.37 2004 2633.88 3765.91 553.77 220.53 626.94 0 64.25 233.96 2623.46 2005 3098.97 4485.82 620.11 340.55 938.74 0 85.27 234.72 3844.77 2006 3639.58 4756.04 686.63 353.03 713.74 166.26 94.39 235.16 4974.49 2007 4124.66 4785.31 826.92 444.21 1350.28 575.02 113.42 235.16 5667.27 2008 4223.4 7542.73 1327.04 949.18 3741.4 3320.32 91.94 235.16 6608.92 Source: Prowess (CMIE) Exhibit 11 Tata Tea ( Figures are in INR crore) Invest Invest ment Forex No. of Market Year Sales Assets PBDITA PAT ments (Abroad) earnings shares Cap. 1989 223.3 203.25 58.67 36.66 53.37 0 34.31 56219857 1990 260.68 272.75 88.47 41.49 73.34 0 35.5 56219857 447.56 1991 294.33 359.28 106.13 51.57 133.82 0 34.11 56219857 688.82 1992 348.04 419.74 110.14 52.86 130.34 0 51.62 56219857 1200.27 1993 380.53 475.22 115.43 54.23 100.96 0 95.96 56219857 1914.39 1994 415.91 517.29 115.86 55.88 133.31 0 100.24 56219857 2251.26 1995 399.32 546.74 108.46 58.36 153.75 0 79.11 56219857 1583.01 1996 519.69 644.58 106.05 46.08 181.58 0 111.59 56219857 1306.13 1997 692.19 754.95 131.34 58.61 184.3 0 225.29 56219857 1630.59 1998 871.9 832.44 193.15 102.17 177.84 0 281.35 56219857 1655.35 1999 876.2 943.17 235.22 128.76 231.12 0 143.99 59029857 2257.89 2000 913.65 1352.65 220.12 124.56 629.15 0 98.05 59029857 1747.5 2001 824.44 1338.51 184.61 100.21 621.91 440.88 66.74 61839857 1116.98 2002 762.82 1422.16 141.19 71.96 738.4 506.69 91.7 61839857 956.81 2003 748.43 1471.78 150.75 70.6 748.47 506.69 133.31 61839857 1260.27 2004 777.53 1432.55 161.33 91.53 835.45 512.09 118.69 61839857 2185.74 2005 893.27 1540.2 198 128.81 865.85 501.03 129.41 61839857 3755.39 2006 971.01 1703.53 266.38 186.93 1106.83 512.09 191.62 61839857 4536.33 2007 1056.4 2723.47 413.75 306.57 2045.92 1427.95 179.83 61839857 4651.5 2008 1136.5 3104.81 459.28 312.86 2193.78 1438.91 61839857 4555.24 Source: Prowess ( CMIE) 39 Journal of Case Research vol:1 issue: i
Exhibit 12: Tata Investment Corpn. Ltd. (Figures are in INR crore) Invest Forex No. of Market Year Sales Assets PBDITA PAT ments earnings shares Cap. 1992 0 76.53 7.13 3.87 52.67 0 22973592 228.91 1993 0 92.72 11.09 6.26 82.85 0 22973592 169.17 1994 0 106.67 16.45 9.04 94.79 0 34460388 355.5 1995 0 137.41 25.77 16.92 109.09 0 34460388 263 1996 0 160.47 26.35 17.78 127.35 0 34460388 223.08 1997 0 171.43 28.38 19.81 135.87 0 34460388 198.29 1998 0 204.49 26.27 20.06 170.84 0 34460388 144.94 1999 0 216.52 28.24 22.68 188.48 0 34460388 145.8 2000 0 276.52 43.14 37.21 268.82 0.57 34460388 143.36 2001 0 287.62 45.11 41.13 273.22 0.17 34460388 131.56 2002 0 342.33 47.21 41.34 300.03 0 34460388 147.12 2003 0 359.6 52.87 45.82 316.93 0 34460388 315 2004 0 468.96 88.08 80.56 455.02 0.18 34460388 474.17 2005 0 526.35 116.85 112.38 516.52 0.04 34460388 931.1 2006 0 656.76 165.15 163.14 624.62 0.33 34460388 1378.87 2007 0 785.65 195.91 181.65 753.59 1.92 34460388 1631.86 2008 0 911.58 200.33 185.85 888.19 7.05 34460388 1589.02 Source: Prowess (CMIE)
Exhibit 13 Indian Hotels Ltd. ( Figures are in INR crore)
Invest Investment No. of Market Year Sales PBDITA PAT Assets ments ( Abroad) Shares* CAP. 1989 115.85 27.8 9.38 167 9.34 0 45.11 1990 138.25 33.49 11.53 203.6 11.19 0 45.11 1991 156.28 36.7 9.03 237.62 12.37 0 45.11 1992 203.22 58.14 21.92 273.39 13.76 0 46.41 1993 238.14 71.27 33.54 320.03 16.93 0 52.01 1994 293.72 98.14 55.18 367.69 32.54 0 54.66 1995 372.5 135.83 82.11 596.54 36.04 0 55.36 1996 524.3 241.14 140.57 948.64 142.09 0 56.66 1997 576.82 253.21 146.88 1093.34 214.8 0 58.41 1998 595.65 221.57 137.96 1164.87 218.09 0 58.41 1999 603.28 201.15 119.14 1232.23 260.35 0 586.63 2000 604.17 208.48 113.23 1563.67 338.25 87.1 586.63 2001 688.01 243.07 116.79 1759.17 422.33 113.84 602.85 2002 581.03 212.27 80.7 1923.2 541.54 114.65 602.85 2003 569.57 162.94 40.48 1926.37 575.5 114.65 602.85 2004 668.59 180.79 60.65 2626.79 608.51 125.98 602.85 2005 848.04 250.6 105.86 2609.38 610.87 125.98 723.41 2006 1116.62 381.63 183.78 2745.46 660.43 125.98 723.41 2007 1541.43 664.16 322.39 3354.63 1109.6 531.94 723.41 2008 1765.17 763.15 377.46 3796.96 1162.58 531.94 723.41
Source: Prowess ( CMIE )
40 Journal of Case Research vol:1 issue: i
Exhibit 14 Tata Teleservices Ltd. (Figures are in Rs. Cr.)
Year Sales Assets PBDITA PAT Investments
2001 84.2 767.88 -3.76 -148.05 26.68
2002 147.82 1433.28 4.3 -195.43 104.03
2003 268.07 3219.58 -72.41 -381.57 585.43
2004 794.86 6133.86 -185.13 -786.4 542.85 2005 1351.26 9177.16 -614.64 -1664.07 575.69 2006 2582.57 11518.02 -429.62 -1878.21 620.59 2007 4532.16 11423.86 -238.4 -2062.52 506.17 2008 5332.84 12662.96 260.32 -1826.51 553.17 Source: Prowess ( CMIE)
41 Journal of Case Research vol:1 issue: i
Exhibit 15 Sir Dorabji Tata Trust
Project/ Activities Location year Nature/scope Indian Institute of Science (IISc) Bangalore 1911 Donated initial fund and land for the set up the institute. Sir Ratan Tata Department of Social London 1912 Through Sir Ratan Tata’s benefaction the Sciences centre was set up at London School of Economics (LSE), London Tata Institute of Social Science Mumbai 1936 Social research & community studies/development Tata Memorial Hospital Mumbai 1941 Advanced research for cancer. Tata Institute of Fundamental Mumbai 1945 Set up under guidance of J.R.D. Tata for Research (TIFR) research in mathematics & physics International Institute of Population Mumbai 1956 Set up by United Nations, Government of Studies (IIPS) India & Sir Dorabji Tata Trust Demographic Centre for Training & Mumbai 1956 Government of India & Dorabji Tata Trust Research for study of issues related to population Atomic Energy Training School (now Mumbai 1957 Centre for Atomic energy research Bhabha Atomic Research Centre) (where most of the scientists were recruited from TIFR in the initial days) Tata Management Training Centre Pune 1964 Train employees from Tata organization (TMTC) and other organizations including PSUs. National Centre for Performing Arts Mumbai 1966 Activities of art & cultural significant Tata Theatre Mumbai Part of National Centre for Performing Arts National Institute of Advanced Mumbai 1988 Institution which would conduct advanced Studies (NAS) research in multidisciplinary areas. JRD Tata Ecotechnology Centre Chennai 1996 Set up by Sir Dorabji Tata Trust at MS Swami Nathan Research Foundation, Chennai Sir Dorabji Tata Centre for Research Bangalore 1997 Set up at IISc for advanced studies for in Tropical Disease medical research and tropical disease control Tata Agricultural and Rural Training Gujarat Training activities for the visually impaired Centre for the Blind (TACEB) people (Donation of INR 2,00,000 to National Association of the Blind) Tata Medical Centre (To be opened) Kolkata 2009 Medical Centre & Research
Source: 1. Lala R.M., “Beyond the Last Blue Mountain”; Viking Penguin Books India (P) Ltd.1992 2. www.dorabjitatatrust.org (accessed on May 7, 2009)
42 Journal of Case Research vol:1 issue: i
Exhibit 16 Tata Trusts
Sir Ratan Tata Trust
From its inception in 1919, the Sir Ratan Tata Trust (SRTT) largely made grants in Bombay. Education, health and support for allied trusts were the mainstay of institutional grant making, with a few grants also being made for the promotion of arts and heritage, women’s development, rural development, etc. Few of the early ventures of the Trust were the Sir Ratan Tata Industrial Institute, National Metallurgical Laboratory at Jamshedpur, and to the establishment of the Tata Memorial Centre. Notable grants and donations until were for: The establishment of the Tata Institute of Social Sciences (TISS). Apart from concentrating on funding the establishment of prestigious and pioneering institutions, the Trust responded to requests from individuals and institutions, on an ad-hoc basis.
JN Tata Endowment
The JN Tata Endowment was set up in 1892 by the founder of the Tata group, Jamsetji Tata, to encourage young people to take up higher studies at some of the best universities in the world. It is the first Tata benefaction in the field of education, and possibly the first of its kind in Asia. Annually, the endowment selects around 120 scholars for higher studies abroad. Over the years, several JN Tata scholars have distinguished themselves in various walks of life.The endowment awards only loan scholarships. However, the selected scholars may also qualify for a gift award.
Other Trusts sponsored by Tata Family
Trust Year of Activities Establishment Lady Tata Memorial Trust 1932 Advanced research in the diseases of the blood & leukemia research. Lady Meherbai D Tata 1932 Grants scholarships to young Indian women Education Trust graduates for pursuing higher studies abroad in the field of social work and public health. JRD Tata Trust 1944 Developmental issues, medical and educational grants. Jamsetji Tata Trust 1974 Grants are made across the five sectors of Tata Education Trust 1990 Management of Natural Resources, Tata Social Welfare Trust 1990 Livelihood, Health, Education and a range RD Tata Trust 1990 of issues covered as Social Development Initiatives. JRD & Thelma J. Tata 1991 Promoting the welfare, education, health, Trust rehabilitation and uplift of the women of India Source: http://www.dorabjitatatrust.org/allied_trust (accessed on May 9, 2009)
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Exhibit 17 Shareholders of Tata Sons
No of Shareholder shares % Holding 1 Shapoor Mistry 108 0.03 Sterling Investment Corp - Shapoorji Pallonji 2 Group 40,319 9.98 3 Cyrus Investments - Shapoorji Pallongi Group 33,925 8.39 4 Ratan Tata 3,368 0.83 5 Sir Dorabji Tata Trust 113067 27.98 6 Sir Ratan Tata Trust 95,211 23.56 7 Tata Investment Corp 326 0.08 8 Sarvajanik Seva Trust 396 0.10 9 RD Tata Trust 8,838 2.19 10 Tata Social Welfare Trust 15,076 3.73 11 Tata Education Trust 15,075 3.73 12 JRD Tata Trust 16,200 4.01 13 Tata Power 5,673 1.40 14 Tata Tea 1,755 0.43 15 Indian Hotels 4,500 1.11 16 Tata Industries 2,295 0.57 17 Tata Chemicals 10,237 2.53 18 Kalimati Investment Co. 12,375 3.06 19 Tata International Ltd 155 0.04 20 Tata Motors 12,375 3.06 21 Piloo Tata 487 0.12 22 Jimmy Tata 157 0.04 23 Farhad Choksey 157 0.04 24 Simone Tata 2,011 0.50 25 Noel Tata 2,055 0.51 26 Virendra Singh Chauhan-Chhota Udaipur 1 0.00 27 MK Tata Trust 2,421 0.60 28 Others 5,583 1.38
Total Number of Shares 404,146 100.00 Source: http://www.business-standard.com/india/storypage.php?autono=332876
44 Journal of Case Research vol:1 issue: i Exhibit 18: A Section of Tata family tree
NUSSERWANI R. TATA (husband of Jeevanbai Tata) DADABHOY TATA (brother of Jeevanbai Bhikhibai husband of Bhikhibai)
JAMSETJI NUSSERWANJI TATA RATANBAI TATA MANECKBAI TATA VIRBAIJI TATA JERBAI TATA Founder of the House of Tata Wife of Edulji Bamji Wife of Kharsedji Tata Wife of BapujiSaklatvala Wife of Dorabji Saklatvala Husband of Hiabai Daboo R.D. TATA (Ratanji DadaBhoy Tata) husband of Suzanne (Sooni) Briere
SIR DORABJI TATA Husband of Meherbai Bhaba DHUNBAI TATA SIR RATAN TATA KAEKOBAD SAKLATVALA SIR NOWROJI SAKLATVALA Husband of Navajbai Sett Husband of Sehra Bardi Husband of Goolbai Batliwala
MINOCHER TATA Husband of Piloo Dastur adopted
NAVAL H. TATA SYLLA TATA J.R.D. TATA RODABEH TATA DORAB TATA JIMMY TATA (Lady Dinshaw Petit) Husband of wife of Sir Dinshaw Petit Thelma Vicaji
Husband of Soonoo Commisariat Husband of JAMSETJI NUSSERWANJI TATA (1887-1904) Simone Dunoyer SIR DORABJI TATA (1904-1932) SIR NOWROJI SAKLATVALA (1932-1938) J.R.D. TATA (1938-1991) RATAN TATA (Since 1991) RATAN TATA Years mentioned indicate the period of JIMMY TATA NOEL TATA Championship 45
Journal of Case Research vol:1 issue: i
Exhibits 19 Fostering the brand Tata: Heights attained by Tata Chairmen
J.R.D. Tata:
Award/ Recognition Year From First solo flight* between 1930 Courtesy from Aga Khan India & England International Man of 1953 National Association of Management Foremen Padma Vibhushan 1955 Government of India
Honorary Air Commodore 1966 Indian Air Force
Tony Jannus Award 1979 The Greater tampa chamber of commerce Commander of the Legion 1982 French Government of Honour Gold Medal 1985 Federation Aeronautique Internationale Daniel Guggenheim 1988 Museum of Flight Medal Award Bharat Ratna 1992 Government of India
U.N. Population Award 1992 United Nations
Special Award 1992 International Planned Parenthood Federation Release of Postal Stamp in 1994 Government of India his memory
N.B. – *First Indian to be Awarded Pilot’s License in February, 1929
Ratan N. Tata:
Award/ Recognition Year From Padma Bhusan 2000 Government of India Padma Vibhushan 2008 Government of India Honorary doctorate in Ohio State University business administration Honorary doctorate in Asian Institute of technology Technology, Bangkok Honorary doctorate in University of Warwick science Honorary fellowship London School of Economics
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Exhibit 20 Tata Group initiations in Labour welfare
Welfare Policy/ Scheme Introduction Enforced Legal Measure by Tata group by Law Eight hour working day 1912 1948 Factories Act
Free Medical aid 1915 1948 Employees State Insurance Act
Establishment of welfare 1917 1948 Factories Act Department Formation of works 1919 1947 Industrial disputes Act committee for handling complains & grievances Leave with pay 1920 1948 Factories Act
Worker’s provident fund 1920 1952 Employees’ Provident Fund Act Scheme Workmen’s Accident 1920 1924 Workmen’s Compensation Act Compensation Scheme Technical Institution for 1921 1961 Apprentices Act Training Maternity Benefit 1928 1946 Bihar Maternity Benefit Act
Profit Sharing Bonus 1934 1965 Bonus Act
Retiring Gratuity 1937 1972 Payment of Gratuity Act
Source: Elankumaran S, Seal R. & Hshmi A.;”Transcending Transformation: Enlightening Endeavors at Tata Steel”; Journal of Business Ethics (2005) 59: 109-119
47 Journal of Case Research vol:1 issue: i Exhibit 21 Time line of TATA Group
Source: www.palgrave-journals.com/.../8400198f1.gif (as on April 14, 2009)
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Exhibit 22 Milestones by TATA Group
Foundation: 1868-1931
1868 § Jamsetji Nusserwanji Tata starts a private trading firm, laying the foundation of the Tata group.
1874 § The Central India Spinning, Weaving and Manufacturing Company was set up.
1902 § The Indian Hotels Company is incorporated to set up the Taj Mahal Palace and Tower, India's first luxury hotel, which opened in 1903.
1907 § The Tata Iron and Steel Company (now Tata Steel) is established to set up India's first iron and steel plant in Jamshedpur. The plant started production in 1912. § Sets up its first office overseas, Tata Limited in London.
1910 § The Tata Hydro-Electric Power Supply Company is set up. Andhra Valley Power Supply Company was established in 1917 and Tata Power in 1919.
1917 § Tata Oil Mills Company being established to make soaps, detergents and cooking oils. The company was sold to Hindustan Unilever in 1984.
1919 § Insurance business unit, New India Assurance was set up (nationalized in 1956).
Consolidation (1932-1989)
1932 § Tata Airlines, a division of Tata Sons is established.
1939 § Tata Chemicals is established.
1944 § Tata Sons set up its overseas office in USA.
49 Journal of Case Research vol:1 issue: i 1945 § Tata Engineering and Locomotive Company (renamed Tata Motors in 2003) is established. § Tata Industries is created for the promotion and development of hi-tech industries.
1952 § Setting up of Lakme brands of cosmetics. The company was sold to Hindustan Unilever in 1997.
1954 § India's major marketing, engineering and manufacturing organization, Voltas, is established.
1962 § Tata Finlay (now Tata Tea) is established. § Tata Exports (now Tata International) is established.
1968 § Tata Consultancy Services (TCS), India's first software services company, is established as a division of Tata Sons.
1971 § Tata Precision Industries established in Singapore, is founded to design and manufacture precision engineering products.
1984 § Tata Electric Companies commissioned first thermal power unit at Trombay.
1995 § Tata Quality Management Services institutes the JRD QV Award, modelled on the Malcolm Baldrige National Quality Value Award of the United States, laying the foundation of the Tata Business Excellence Model.
Expansion (1990 Onwards)
1996 § Tata Tele services (TTSL) is established.
1998 § Tata Indica, India's first indigenously designed and manufactured car launched by Tata Motors.
1999 § The new Tata group corporate mark and logo are launched.
2000 § Tata Tea acquires the Tetley group, UK. This is the first major acquisition of an international brand by an Indian business group.
2001 50 Journal of Case Research vol:1 issue: i § Tata AIG is set up in a joint venture between the Tata group and American International Group Inc (AIG).
2002 § Tata Sons acquires state run telecom player VSNL (renamed as Tata Communications).
2004 § Tata Motors is listed in New York Stock Exchange, the second group company to do so after VSNL. § Tata Motors acquires the heavy vehicles unit of Daewoo Motors, South Korea. § TCS goes public in July 2004 in the largest private sector initial public offering (IPO) in the Indian market, raising nearly $1.2 billion.
2005 § Tata Steel acquires Singapore-based steel company Nat Steel. § VSNL (now Tata Communications) acquired Tyco Global Network, making it one of the world's largest providers of submarine cable bandwidth. § The Taj acquires a hotel run by Starwood, Sydney (renamed Blue) and takes over management of The Pierre, NY.
2006 § Tata Sky satellite television service launched across the country. § Foundation stone for the Tata Medical Centre unveiled in Kolkata.
2007 § Tata Steel acquires the Ango-Dutch steel company ‘Corus’. § TCS inaugurates TCS China. § Computational Research Laboratories, a division of Tata Sons, develops Eka, one of the fastest supercomputers in the world and the fastest in Asia. § The Taj acquires Campton Place Hotel in San Francisco.
2008 § Tata Motors acquires the Jaguar and Land Rover brands from the Ford Motor Company. § Tata Chemicals acquires General Chemical Industrial Products Inc.
Source: http://www.tata.com/htm/Group_milestone.htm (as on April9, 2009)
51 Journal of Case Research vol:1 issue: i Exhibit 23: Letter to G.D. Birla* Bombay 28 September 1944 Dear Mr. Birla,
I was talking the order day to a highly placed friend who has just returned from England. He confirmed that our proposed visit had aroused much interest in England and then said that he had gathered the impression that it would be to our advantage to go there, if not orders in our pockets, at least with specific and clear ideas of what India would want in the way of machinery and equipment in the immediate post war period. If we were found to have come merely on an exploratory and study mission, much less attention would be given to us and the usefulness of our work would be reduced. Although we shall obviously not be in a position to negotiate large purchases or contracts on behalf of India as a whole, I think there is some force in what he said. In this connection you will have read in the papers of the formation in England, under the initiative of Sir George Schuster, of an individual group comprising fifty industries from the Midlands, to prepare for our visit. It is clear from this and other things that have appeared in the press from time to time that when we get there we shall be faced by people and interests who will have taken the trouble to organize themselves to meet us, and ready to talk business. I feel, therefore, that it is important that we should also be prepared in advance, with facts and ideas, when we meet these gentlemen….
Exhibit 24 Bombay 14 November 1947 Dear Mr. Birla,
As you may know, the Government of India have recently approved a joint scheme between themselves and Air-India, for the inauguration of an international service between India and UK. A similar scheme is under consideration in connection with the shipping industry. There are other projects which Government have in view, in some of which it would appear to be Government’s present intention to set up industrial enterprises of there own, either managed wholly by themselves or in conjunction with private interests. All this raises large questions of policy and would have a profound influence on industrial development in the country. I think it is essential, therefore, for a few of us confer together with a view to arriving, if possible, at some uniform views on the general principles involved. I am writing the same letter to Sir Sri Ram and Kasturbhai Lalbhai, and I am also verbally approaching Mr. Walchand Hirachand, Dharamsey Khatau, Krisnaraj Thakersey and Bhagwandas Mehta, the present Chairman of Millowners’ Association. As all of us, except you and Sir Sri Ram are permanently in Bombay, and as Mr. Kasturbhai visits Bombay every week, I would like, if you agree with my suggestion, to arrange an early meeting in Bombay. I shall therefore appreciate it if will let me know when it would be convenient for you to meet in Bombay. It would be advantageous if you and Sir Sri Ram could agree between you as to a suitable date. I suggest it should be towards the end of this month or beginning of December….
With kind regards, Yours sincerely, J.R.D. Tata * Chairman, Birla Group of Industries Source: Mmbro A., “Letters J.R.D. Tata”; Rupa & Co. 2004 52 Journal of Case Research vol:1 issue: i
Exhibit 25 Network of Tata Sons & Directors of Tata group Ratan Tata:
Ø Chairman of the Government of India’s Investment Commission and a Ø Member of the Prime Minister’s Council on Trade and Industry, Ø Member, National Hydrogen Energy Board Ø National Manufacturing Competitiveness Council Ø International Investment Council set up by the President of the Republic of South Africa Ø UK Prime Minister’s Business Council for Britain Ø Member of the International Advisory Council of Singapore’s Economic Development Board Ø Asia-Pacific Advisory Committee to the board of directors of the New York Stock Exchange Ø International advisory boards of the Mitsubishi Corporation, American International Group, JP Morgan Chase and Rolls Royce Ø Boards of Fiat SpA and Alcoa Ø President of the court of the Indian Institute of Science Ø Chairman of the Council of Management of the Tata Institute of Fundamental Research Ø Board of trustees of Cornell University and the University of Southern California Ø Foundation Board of the Ohio State University Ø Programme Board of the Bill & Melinda Gates Foundation's India AIDS Initiative
J.J. Irani:
Ø National president of the Confederation of Indian Industry (CII) for 1992-93 Ø Co-chairman of the Indo-British Partnership during 1993-1998 Ø Former president of the Indian Institute of Metals Ø President of the All India Management Association (AIMA) during 1988-89 Ø Chairman of the Board of Governors of the XLRI, Jamshedpur, 1993-2003 Ø Chairman of the Society and Board of Governors of the IIM, Lucknow Ø Member, Scientific Advisory Committee to the Cabinet (SAC-C), Government of India. Ø Former chairman of Expert committee; to draft the new Companies Act Ø Working groups for iron and steel for the 6th, 7th and 8th national Five-Year Plans Ø Member of the Central Advisory Board of Education (CABE). Ø President of the Asian Association of Management Organisations (2004-2007)
Syamal Gupta:
Ø Honorary consul general of Namibia in India Ø President's advisory council in Tanzania, Uganda and Ghana Ø Member of Commonwealth Business Council, London. Ø On the board of the IIM, Kozhikode and the Institute of Commonwealth Studies, London
53 Journal of Case Research vol:1 issue: i Ishaat Hussain
Ø Member, SEBI committees on insider trading and primary capital markets & CII
Arun Kumar Gandhi:
Ø Member, Securities and Exchange Board of India's takeover panel exemption committee Ø Member, Institute of Chartered Accountants of India's accounting standards board.
Exhibit 26 Business Policies those regulated Iron & Steel Industry of India
Year Policy Brief about the policy 1948 Industrial policy Resolution § State run policy & regulation for industrial development § Limited opportunity for private players in Iron & Steel industry and mineral sector; where ever the government feel cooperation of such activity is needed for National growth 1949 Mineral Concession Rules 1956- Second Five years plan § Second five years plan is eventful for Iron & Steel 1961 industry; 3 PSUs were set up. § Private players are given financial support and other incentives to increase the production. § Tata Steel has increased the production from 8 lakh tones to 15 lakhs during this period. 1956 Industrial policy Resolution § Iron & Steel industry is scheduled in A-category. Limited growth opportunity for private player § Fello-alloys & tool steels are scheduled in B- category. Private players will be allowed to enter § Coal & Ignite, Mining of iron ore, chrome ore are scheduled in A category. Solely state affair. No private players would be entertained to participate 1957 Mines & Minerals Regulation & Development Act. 1960 Mineral Concession Rules § Regulation of mining license except atomic minerals and minor minerals 1969 Monopolies and Restrictive § Participation of private players in Schedule A Trade Practices Act industries like Iron & Steel are under scrutiny of (MRTP) the state. 1970 Industrial Policy Statement § Licensing policy will be encouraged with strict follow up of the MRTP Acts. § Large business houses are allowed to participate in Metallurgical industries including fello allays, steel castings & forgings and special steels industries. 54 Journal of Case Research vol:1 issue: i 1977 Industrial Policy Statement § Growth of private players will be allowed under MRTP Act,1969 § Limited access to foreign investments (Maximum stake holding capacities up to 40%) 1980 Industrial Policy Statement § Government recognizes that , it would be desirable to allow private players to mmet the production target in consonance with national objectives. § All incentives given to industry must be performance orientated. 1982 Industrial Licensing Policy § Large industrial houses are allowed to set up industries in core sectors including iron & steel sector. § Private players and multi-nationals will also be permitted to set up units outside the core sector if the units are predominately export oriented. 1988 Mineral Conservation and Development Rule 1993 National Mineral Policy § Foreign firms can hold up to 50% of ownership § Facilitates better scope for private player to participate in post liberalized economy. 1995 Union Budget of India § Import duty rates on ferrous & non-ferrous metals will be reduced to 40%. § Other items included by the Iron & Steel sector sees heavy discount in tax structure. 2008 National Mineral Policy § Policy to attract more foreign investment in development of mining sector § Private ownership is encouraged by softening of License guideline
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Exhibit 27 TATA Group listed firms during financial year 2000
Tata Sponge Iron 4.68 39.74 Tata Iron & Steel Co. Tata Motors ltd. 46.66 9.13 Tata Metaliks Tata Elxi Ltd. 14.17 Tata Infotech. Ltd.
2.87 18.98 78.17 17.88 19.17 Tata Power Co. ltd. Tata Finance 8.69 Tata Industries 9.54 Tata Telecom
Tata construction & Tata Sons ltd. Tata SSL ltd. 2.4 Projects ltd. 87.03 11.03 1 90.73 31.75 Tata Advance Tata Investment Corp. ltd. Material ltd. 15.7
15.06 15.37 9.81
4.21 Tata Coffee ltd. 50.59 Tata Tea 7.68 Tata Chemicals Tata Honeywell 9.8
Source: Cross Holding Strategy to increase control: Case of the Tata group by Ram Kumar Kakani & Tejas Joshi
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Exhibit 28 TATA Group listed firms during financial year 2005
Tata Sponge Iron Tata Iron & Steel Co. 39.74 4.66 Tata Motors ltd. 46.66 8.61 Tata Metaliks 19.8 14.17 2.87 Tata Elxi Ltd. Tata Infotech. Ltd.
2.06 78.17 17.88 38.15 Tata Power Co. ltd. Tata Finance Tata Consultancy Tata Industries 9.54 Services 28.74 Tata construction 80.7 & Projects ltd. 12.41 Voltas 2.4 Tata Sons ltd. 23.8 Indian 14.7 12.9 Hotels 31.75 3.11 Kalimati 1.07 Investment Co. 1.66 8.74 Tata Investment Corp. ltd. Titan Industries 15.06 15.37 8 1.16
7.15 Tata Coffee ltd. 50.56 Tata Tea 7.68 Tata Chemicals 3.38
Source: Cross Holding Strategy to increase control: Case of the Tata group by Ram Kumar Kakani & Tejas Joshi
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Exhibit 29 Extent of Tata Sons Ltd’s interest in the subsidiary (Figures are in %) Tata Consultancy Services Ltd. 74.81 TCS Financial Australia Pty Ltd 74.81 APOnline Ltd. 66.58 TCS BPO Chile S.A. 74.81 C-Edge Technologies Ltd. 38.15 TCS Financial solutions Australia 74.81 CMC Ltd 38.24 Financial Network Services (Europe) Plc. 74.81 CMC Americas Inc. 74.81 TKS Services S.A. Nil Diligenta Ltd. 56.86 Quartz Software Technology SA Nil Exegenix Canada Inc. 74.81 TKS Banking Services S.A. Nil WTI Advanced Technology Ltd. 74.81 TCS France SAS 74.81 TCS Asia-Pacific Pte. Ltd. 74.81 PT Network Srevices 74.81 TCS, Japan Ltd. 74.81 Financial Network Services(Africa) Ltd. 74.81 TCS, Malaysia Sdn. Bhd. 74.81 Financial Network Services (HongKong) 74.81 Tata Information Technology(Shanghai) Ltd. 74.81 Sycrom S.A. 74.81 TCS, Belgium SA 74.81 Pentacrom S.A. Nil TCS, Netherlands B.V. 74.81 Pentacrom Services S.A. Nil TCS, Italia SRL 74.81 Custodia de Documentos 74.81 TCS Sverige AB 74.81 Financial Network Services Malaysia 74.81 TCS, Deutschland GmbH 74.81 TCS S.A. 74.81 IT Consulting Co. Nil Wireless TT Info Servoices Ltd. 45.50 Tata America International Co. 74.81 Ewart Investments Ltd. TCS Iberoamerica S.A. 74.81 Tata Housing Development Co. Ltd. 99.74 TCS, Uruguay 74.81 Concept Marketing & Advertising Ltd. 99.74 TCS DO Brasil LTDS Nil Tata Capital Ltd. 100 TCS Do Brasil S.A. 74.81 TCE Consulting Engineers Ltd. 100 TCS Espana S.A. 74.81 Tata AIG Life Insurance Co. 74 TCS, Argentina S.A. 74.06 Panatone Finvest Ltd. 60.01 TCS Inversions Chile Limitada 74.81 Tata Business process services 100 TCS Chile S.A. 74.81 Tata Asset Management Ltd. 67.91 TCS De Mexico S.A. De C.V. 74.81 Tata Teleservices Ltd. 45.50 Tata Infotech Deutschland GmbH 74.81 Tata Teleservices (Maharshtra) Ltd. 20.76 Tata Infotech(Singapore) Pte. Ltd. 74.81 Tata Internet Services Ltd. 45.50 TCS FNS Pty. Ltd. 74.81 Tata Sky Ltd. 70 Swedish Indian IT Resources AB Nil Tata Petrodyne Ltd. 100 TCS Luxemboug SA 74.81 Tata International AG 100 TCS Portugal 74.81 Tata AG, Zug 100 MP Online Ltd. 66.58 Tata Ltd., London 100 TCS, Switzerland 74.81 Infiniti Retail Ltd. 100 TCS China CO. 54.03 Computaional Research Laboratories Ltd. 100 PT TCS Indonesia 74.81 Finanacial Network Services Co. ltd. 74.81 Tata Pensoin Management Ltd. 67.91 Tata Securities Ltd. 100 Tata Asset Management (Mauritius) Ltd. 67.91 Tata Trustee Company pvt. Ltd. 100 Ewart Investment Pvt. Ltd. 100 TCS Morocco SARL AU 74.81 E-Next Financial Pvt. Ltd. 100 TCS (Africa) pte. Ltd. 74.81 Tata Capital Markets Ltd. 100 TCS South Africa 44.81 Tata Investment corporation Ltd. 56.56 TCS Financial Management LLC 74.81 Source: Ninetieth Annual Report 2007-08, Tata Sons Ltd. 58 Journal of Case Research vol:1 issue: i
Exhibit 30 Book Values of Tata Sons Ltd.; Quoted & Un-quoted investment (Figures in INR Crore)
Quoted Investment: Name of the group company 2008 2007 2006 2005 2004 2003 2002 2001 2000 1995 1990 Equity Share- Fully Paid Indian Hotels Co. Ltd. 92.27 68.50 51.52 51.52 51.52 51.52 51.52 44.01 41.68 31.06 0.86 Tata Chemical Ltd. 364.80 354.74 206.90 133.98 78.15 78.15 70.14 70.14 70.14 21.54 9.15. Tata Investment Corporation Ltd. 147.74 34.81 34.81 34.81 34.81 30.64 26.47 22.82 Tata Communication Ltd. 855.27 855.27 299.65 52.06 52.06 44.10 Tata Steel 5095.50 2621.61 1144.53 1095.75 1095.75 1095.75 1095.75 1095.58 1013.23 35.38 14.97 Tata Motors+ 1086.92 1086.92 1057.41 897.41 887.93 741.74 741.74 2.94 Tata Power Corporation Ltd. 1050.64 469.78 469.78 469.78 469.78 469.78 469.78 460.26 156.72 21.56 0.07 Tata Tea Ltd. 604.57 400.44 182.10 182.10 182.10 182.10 182.10 182.10 116.52 1.73 1.73 Convertible Preference Share- Fully Paid Tata Steel 1717.91 Subsidiary Companies Equity Shares-Fully Paid Tata Consultancy Services Ltd. 143.44 148.22 152.12 48.03 Tata Investment Corporation Ltd. 448.66 Tata TeleServices (Maharashtra) Ltd. 704.03 456.53
Un-Quoted Investment: Name of the group company 2008 2007 2006 2005 2004 2003 2002 2001 2000 1995 1990 Equity Share- Fully Paid Tata Industries Ltd. 240.39 240.39 240.39 240.39 240.39 152.09 152.09 148.76 144.49 10.05 Subsidiary Investment (Equity Share- Fully Paid) Panatone Finvest Ltd. 750.45 750.45 750.45
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Tata AIG Life Insurance Co. Ltd. 643.80 404.78 330.78 92.50 Tata Capital Ltd.* 570.03 0.03 0.03 0.03 Tata Ltd., London 652.67 0.16 0.16 0.16 0.16 0.16 Tata Realty and Infrastructure Ltd. 725.00 15.00 Tata Sky Ltd. (Joint Venture) 672.69 456.48 156.16 Tata Teleservices Ltd. 3391.35 3000.0 2948.4 1394 Preference Shares-Fully Paid Tata Capital Ltd. 16 16 16 16 Tata Realty and Infrastructure Ltd. 1,000.0
* (Formerly primal investments and Finance Ltd.) + Earlier Tata Engineering & Locomotives ltd Source: Ninetieth Annual Report 2007-08, Tata Sons Ltd.
60
Exhibit 31 Details about Merger & Acquisition activities considered by TATA group
TATA Company Year Acquired Company Country Stake acquired Value
Tata Sons - TCS 2001 Computer Maintenance India 51.23 % Corporation (CMC) Ltd 2002 Videsh Sanchar Nigam Ltd. India 100% (wholly owned) GBP 271 (VSNL) mn TCS 2004 Airline Financial support India 100% (wholly owned) Services India (AFS) 2004 Aviation Software India Development Consultancy India(ASDC) 2004 Phoenix Global Solutions India 2005 Financial Network Services Australia 2005 Pearl Group UK Structured deal 2005 Comicrom Chile 2006 Tata Infotech India Tata Tea -Tata Tea (GB) 2005 Good Earth Corporation & US 100% (wholly-owned) $31 mn FMali Herb Inc 2006 JEMCA Czech Assets: intangible and GBP11.60 Republic tangible mn 2006 Joekels Tea Packers South 33.3% GBP0.91 Africa mn Tata Tea - Tetley group 2007 V itax and Flosana Poland trademarks Indian Hotels 2002 Regent Hotel India Effective 100% INR 450cr 2005 The Pierre US Lease of the property $9 mn 2005 Starwood group (W Hotel) Sydney 100% (wholly-owned) $29 mn 2007 C ampton Place Hotel US $58 mn Tata Teleservices 2002 Hughes Telecom (India) India 50.83% INR 859cr Tata communications 2003 Gemplex USA 2004 Dishnet DSL's ISP division India 2004 Tyco Global Network US 2005 Teleglobe International US 2005 Tata Power Broadband India 2007 T ranstel Telecoms (TT) South $33 mn Africa 2008 China Enterprise China 50% equity interest Communications Limited (CEC) Tata Motors 2004 Daewoo Commercial Korea 100% (wholly-owned) $102 mn Vehicle
2005 Hispano Carrocera Spain 21% Euro12 mn 2005 Tata Finance India Merger 2008 Jaguar and Land Rover UK $2.3 bn Tata Chemicals 2004 Hind Lever Chemicals India Amalgamation 2005 Indo Maroc Phosphore S.A. Morocco Equal partner $38 mn (IMACID) Journal of Case Research vol:1 issue: i 2005 Brunner Mond UK *63.5% (Dec 2005) *Rs508 cr **36.5%(March 2006) **Rs290 cr 2008 General Chemical Industrial US 100% Products Tata Steel 2005 NatSteel Asia Pte Singapore 100%(wholly-owned) $468 mn 2006 Millenium Steel Thailand 67.11% $167 mn 2007 C orus UK 100% 2007 R awmet Industries India Rs101 cr Tata Power 2007 C oastal Gujarat Power India acquisition 2007 P T Kaltim Prima Coal and Indonesia 30% equity stake PT Arutmin Indonesia Telco Construction 2008 Serviplem SA Spain 79% Equipment Company 2008 Comoplesa Lebrero SA Spain 60% (Telcon) Tata Industries 2005 Indigene Pharmaceuticals US <30% Not disclosed Tata Tech 2005 INCAT International UK Trent 2005 Landmark India 76% $24.09 mn TACO 2005 Wündsch Weidinger Germany Euro7 mn Tata Metaliks 2006 Usha Ispat, Redi Unit India 100% (wholly-owned) Rs115 cr Tata Interactive 2006 Tertia Edusoft Gmbh Germany 90% Tertia Edusoft AG Switzer 90.38% land Tata Coffee 2006 Eight O' Clock Coffee US 100% (wholly-owned) $220 million Company TRF 2007 Y ork Transport Equipment Singapore 51% (Asia) Tata Projects Artson Engineering India Source: www.tata.com (accessed on May 8, 2009)
62 Journal of Case Research vol:1 issue: i
Exhibit 32 International Projects
Country Location Year Project Australia Bowen Basin in 2005 § Mining capacity of 58 million tonnes of Central raw coal for 14 years Queensland § Coal Project located in Queensland, Australia. § The Carborough Downs coal project is majority owned and operated by a subsidiary of AMCI Holdings Australia Pty Ltd. South Africa Richards Bay (in 2006 § A Ferro Chrome Plant is proposed at uMhlathuze Richards Bay, South Africa to produce Municipality) High Carbon Ferro Chrome, for global consumers. Mozambique Key coal 2007 § Potential to extract 720 million tonnes by exploration open-cut methods from a major coal tenements (the resource in the Benga Licence. Benga and Tete § Under the terms of agreement, Tata Steel licences) held by will pay AUD100 million (approximately Riversdale in 88.2 million USD) to acquire 35% of Mozambique Riversdale's Benga and Tete licences. § The JV comprises two licences (the Benga and Tete licenses) Ivory Coast Nimba Iron ore 2007 § Tata Steel Limited and SODEMI (state (West deposits in Ivory owned company for mineral Africa) Coast (West development) Africa) § The project will be implemented by a joint venture company, wherein Tata Steel will have a major shareholding. § The iron ore from this project will be supplied to Tata Steel Group facilities especially those located in the United Kingdom and Netherlands. Oman Uyun region in 2008 § Tata Steel Limited and the members of the the Salalah Al Bahja Group, a leading business house province of Oman Vietnam Ha Tinh 2008 § A proposed steel complex with an province estimated capacity of 4.5 million tonnes per year. § Another MOU was signed to set up a cold rolling mill in Ha Tinh province. Source: http://www.tatasteel.com/Company/new_investments.asp (as on April 6, 2010)
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