Tata group leads the way in Indian glory

Tata group leads the way in Indian glory

The Tata group certainly is interested in British assets. After buying Tetley GB Ltd tea in 2000 and former British Steel Corp., now known as Corus Group Plc. last year, the $74 billion (Rs2.93 trillion) Indian conglomerate now has its sights on another two UK targets—the iconic car brands, Jaguar and Land Rover, and the investment bank Close Brothers Group Plc. The best explanation: Tata has a tradition of defying its former colonial masters.

The Tata group is different from the other Indian family conglomerates, which have recently burst on to the international stage. Unlike Lakshmi Mittal, who emerged victorious in the 2006 battle for steel maker Arcelor SA, Tata’s chairman Ratan Tata does not believe in hostile takeovers. Further, despite Tata’s market capitalization, none of the Tata clan feature among India’s top billionaires, unlike Reliance’s Ambani brothers or the Ruias behind the Essar group.

The relative modesty springs in part from Tata’s philanthropic aims. Tata group is mostly owned by charitable trusts, rather than individuals. In turn, these hold a controlling stake in Tata Sons Ltd, a vehicle carrying major equity stakes in each of the Tata’s 27 listed companies, worth roughly $36 billion—half of the total group.

Tata’s latest UK initiatives look slightly odd. Upmarket luxury cars such as Jaguar and Land Rover don’t obviously fit in Tata Motors Ltd, which is famed for its £1,250 (Rs1 lakh) “People’s Car," due to hit the market next year. The goal is to give millions of India’s poor their first, safe family car.

US-based Ford Motor Co. is poised to name Tata Motors as the preferred bidder for the Jaguar and Land Rover brands.

Tata’s interest in Close Brothers makes even less sense. While Tata has a financial arm worth just $540 million, it has no experience in investment banking. At least in automotives, Tata could help revive iconic struggling brands with its low cost manufacturing advantage. It’s less clear what it could add to a UK bank. Tata has 27 publicly listed companies with a combined market capitalisation of $74 billion. The Tata group generated $29 billion revenues in 2006-2007, equivalent to 3.2% of India’s national gross domestic product.

Yet, Tata would get something from these acquisitions. As the company puts it, in the 1800s, Tata first made its mark by “beat[ing] its colonial masters " during a period “when passive despair engendered by colonial rule was at its peak." If Tata wins Jaguar, it will be the first time an Indian group has taken over a big Western car company. Tata may not be full of India’s richest, but its catalogue of British targets suggests it includes some of its proudest.