Mumbai: As it prepares to absorb Corus Group Plc. in what is India’s largest overseas acquisition, the Tata group is drawing up a strategy to rebalance its portfolio to consciously bring down the share of global revenues.
While no specific targets are being set for now, the group— India’s largest private sector employer—plans to give greater emphasis to domestic operations, particularly in sunrise sectors such as retail, real estate and infrastructure.
Such thinking stems from a significant change in the composition of the group’s international revenue once the pending Corus acquisition is completed.
In 2005-06, the Tata group’s $6.7 billion (Rs29,480 crore) international revenue was just about 30% of overall sales. This will more than double to 63.5%, giving it an unusually high international flavour.
Group chairman Ratan Tata had earlier set a target of 30-35% of the group’s turnover coming from international operations but the proposed acquisition of Corus has added $19.8 billion of international sales to the group’s revenues of $21.9 billion.
In an interview with Mint, Tata Sons executive director Alan Rosling, chief architect of the group’s internationalization plan, said: “I don’t think the target of 35% (of international revenues) has any relevance now. We want to have a balance between domestic and international business and growth.”
Rosling added: “We have a number of high-potential growth businesses (in India) that over time may even this (share of overseas revenues) out.”
Rosling listed the domestic business that will help the group rebalance its portfolio: retail, property/infrastructure, the small-car project of Tata Motors, greenfield steel plants being built by Tata Steel which will quadruple its existing capacity and an aggressive push to expand Tata Sky, the direct-to-home satellite television business in which the group plans to invest almost Rs3,000 crore over a five-year period.
As part of its renewed focus on Indian businesses, the group is already targeting the airport infrastructure business in a 51%-owned joint venture with Singapore’s Changi Airports International.
The venture aims to bid for rights to manage and modernize metro airports in cities such as Kolkata and Chennai, as well as 35 other non-metro airports that the Union government wants to develop in partnership with the private sector.
The group, which has 96 operating companies spread across 54 countries and six continents, has, however, not set a new target of domestic to international revenues.
Rosling says the new target depends on how business develops—for instance, how many airport development contracts its joint venture with Changi will manage to secure.
Telecom is another area where the Tatas are becoming more ambitious.
The group brought in a new CEO from Vodafone Japan, Darryl Green, to turn around and grow Tata Teleservices, India’s No. 2 CDMA technology-based mobile services provider. Some time back, it also exited Idea Cellular, its joint venture with the AV Birla group, so that it can focus on the Teleservices operations which trails CDMA leader Reliance. The Tata group accounts for a whopping 2.8% of India’s gross domestic product.
And “when the Indian economy is growing at over 9% and set to emerge as a trillion-dollar economy, no industrial house can overlook the domestic market,” says an analyst who tracks the group stocks, and didn’t want to be named.