Tata Group Acquisitions

Hindustan Times –
With the takeover of two British automobile marquees Jaguar and Land Rover, the $28.8
billion Tata group, with 98 companies in its fold, will add another prominent entry to its
growing roster of global acquisitions.
Barely a year ago, it paid over $12 billion to acquire Anglo-Dutch steel maker Corus, in what
remains the largest buy-out deal overseas by an Indian company till date.
And going by what senior executives of Tata Sons - the holding arm of the group that has 27
listed companies - maintain, the appetite for such mega mergers and acquisitions is only
growing with each deal.
Tata Steel has made three major acquisitions worth some $13 billion in the past few years.
"A journey that began long ago is gathering pace," said chairman Ratan Tata on the overseas
foray of the group that has interests in consumer goods, chemicals, energy, services,
engineering, materials and IT systems and communications.
"From IT and tea to automobiles and steel, Tata companies are spreading their wings to find a
place in the global sun," he says.

Here's a look at some notable acquisitions by the Tata group companies overseas in the past
few years:
Tata Steel:
The company, which celebrated its centenary in August last year, wants to boost its annual
output of 8.7 million tonnes to 15 million tonnes by 2010, and take it upwards to 30 million
tonnes by 2030. More stunning moves on the mergers and acquisition front can definitely be
expected, it says.
In January 2007, the group pulled off India's biggest ever takeover of an overseas company to
buy Anglo-Dutch steel-maker Corus in a $12 billion deal that made it the combined entity the
world's fifth largest producer of the commodity.
This came just over a year after it acquired Singapore's NatSteel, which also has a presence in
Thailand, China, Malaysia, Vietnam, the Philippines and Australia followed by the
acquisition of Thailand's Millennium Steel for a $421 million.
Tata Motors:
South Korea's Daewoo Commercial Vehicle Co was acquired by the company in March 2004
for $102 million and gained, in the process, a market share of 30 percent and access to
markets where it had no prior presence.
This was followed by the acquisition of a 21 percent stake in Spanish bus maker Hispano
Carrocera for $18 million with an option to pick up the remaining stake at a later date. This
helped the company get technology to make top-end busses.
Another company in the fold - Tata Technologies, which provides automotive engineering
and design, services - bought Britain's Incat International for $53 million.
Tata Consultancy Services:
This company, which was earlier a division of Tata Sons, has been among the most
aggressive shoppers for companies overseas. It has acquired six companies in recent months,
though the net value of the deals is no more than $100 million.
In the second half of 2005, following the merger of group company Tata Infotech into its
fold, TCS acquired financial services company FNS of Australia for $26 million and then
Chile's outsourcing major Comicrom for $23 million.
TCS, which has 160 offices in 30 countries, also entered into a structured deal with the
British insurance major, the Pearl Group, which essentially called for the two entities to set
up a subsidiary with TCS as the majority partner.
Videsh Sanchar Nigam Ltd:
The Tata group acquired the former state-run, international telecom carrier a few years ago.
The company has made several overseas acquisitions since then with the aim of becoming a
top-end services provider in the industry.
Some of the acquisitions include undersea cable company Tyco of the US for $130 million,
Internet service provider Dishnet's India division for $64.28 million and international telecom
service provider Teleglobe of US for $239 million.
Tata Chemicals:
Following its acquisition of Hindustan Lever Chemicals, Tata Chemicals was on the lookout
for a steady supply of phosphoric acid for its newly acquired plant at Haldia.
It, accordingly, took over two overseas for a total value of $215 million - Indo Maroc
Phosphore of Morocco in March 2005 and Brunner Mond Group of Britain in December last
year. Morocco produces over 50 per cent of world's rock phosphate.
Tata Tea:
In 2000, Tata Tea bought British giant Tetley for a $407 million - in what was then the
largest such deal by an Indian company - and started scouting for similar deals to become a
global tea and related drinks brand.
Another acquisition has been a 33 per cent stake in South African Joekels Tea Packers for an
undisclosed amount that was announced this month. It had earlier acquired the US-based
Good Earth Corp for $32 million.
The company's other picks include Czech Republic's Jemca and 30 per cent stake in the US-
based favoured water manufacturer Glaceau for $677 million.
Indian Hotels:
This company, which runs the Taj Group of hotels, acquired several hotels abroad for $121
million in the past few years. It has set aside $100 million for future acquisitions in Europe,
the Middle East, Asia and the US.
In December 2006, it acquired W, a hotel at the Woolloomooloo Bay in Sydney, then it took
over the management of The Pierre, a luxurious landmark hotel on New York's Fifth Avenue.
India Hotels has 39 hotels in India and 18 worldwide.
Another acquisition was Campton Place Hotel in San Francisco
Tata AutoComp Systems:
This company - which makes auto components from 14 plants, three engineering centres and
three export-oriented units for clients like General Motors, Ford and Toyota - acquired W?
Weidinger of Germany for $7 million last year.
Tata Interactive Systems:
A pioneer in simulations business in India, this company too made acquired several
companies overseas - Notably Tertia Edusoft GmbH of Germany and Tertia Edusoft AG of
Switzerlandm - and is keen on more buy outs in the future.

Financial Times –
The story. Tata is India’s oldest and largest private sector business entity. Founded in 1868,
the group now consists of more than 100 companies, with a turnover of more than $70bn. It
has a wide range of interests, with companies trading in fields as diverse as steel, cars and
trucks, chemicals, IT consultancy, retailing and hotels.

The Tata group is highly decentralised, and member companies have great autonomy in terms
of strategy and operations. The main instrument for unifying the group is the Tata corporate
brand, which embodies values that are shared by all companies in the group.
However, not all the companies use the corporate brand in the same way. Many, such as Tata
Beverages and Tata Motors, use the name and logo explicitly. However, even in India some
companies in the group, such as Trent and Taj Hotels, do not use the Tata name. Taj Hotels
also has its own brand mark.
This inconsistency is seen by the Tata group as less important than adherence to the group’s
values. It was originally founded for the purpose of creating and spreading wealth in order to
strengthen the Indian nation and economy.
The challenge. Before 1991 the Tata group had few interests in the world outside India. Its
brand identity was very strongly Indian, rooted in India’s culture and history. However, Ratan
Tata, the group’s leader, believed this had to change. He felt that Tata’s future lay outside
India, and that it should aspire to become a global company.
But could a company with such a strong Indian identity succeed in establishing a global
brand? And if so, what would be the disadvantages? There were – and still are – many in
India who believed that the process of globalisation would change Tata and damage its
values, turning it into just another big company that would be concerned only with profit.
Others outside India wondered – and some still do – if western consumers in particular would
really accept the Tata brand.
Stepping out of India. Individual Tata companies began making small acquisitions outside
India in the late 1990s. The first big acquisition was that of Tetley Tea, one of Britain’s
leading tea brands, by Tata Tea (now Tata Beverages) in 2000. This acquisition went almost
unnoticed. Later acquisitions, such as those of steelmaker Corus by Tata Steel in 2007 and
Jaguar Land Rover by Tata Motors in 2008, were much more high-profile. Since 2005, there
has been a steady stream of acquisitions in Europe, Asia and North America.
The pragmatic approach. Tata’s approach to handling the new acquisitions has been
pragmatic. Conventional corporate branding theory suggests that all acquisitions should be
branded with the corporate brand name and mark. GE, for example, applies the GE brand
across the board to all new ventures and all new acquisitions.
But Tata faced different pressures, and had to respond in a different way. The group had
simultaneously to reassure its stakeholders in India that it was not about to abandon its
traditional values in favour of global growth, and to reassure stakeholders in the companies it
was acquiring outside India that their favourite brands would not be spoilt.
Varied responses. In some sectors, Tata follows conventional wisdom. In 2010, after some
hesitation, Tata Steel finally rebranded Corus as Tata Steel Europe. By common consent,
Corus was not a particularly strong brand, and few mourned its passing.
Even so, there was some worry at Tata Steel as to what impact this rebranding might have on
Corus’s reputation – and on that of Tata Steel in India, where there was concern over events
such as the mothballing of the Corus plant at Redcar in the north-east of England, with some
observers questioning whether Tata Steel was still a caring employer. Only after long thought
did the move go ahead.
In contrast, Tetley has been part of the Tata group for 10 years, yet the Tetley brand remains
independent in terms of its identity. A single discreet line on the packaging reminds
consumers they are buying a Tata product. It might be thought that tea, being Indian in origin,
could benefit from association with a celebrated Indian brand. But Tetley’s customers
resolutely see it as British, and rebranding might compromise its image and reputation in
their eyes.
The same is even more strongly the case with Jaguar and Land Rover, where Tata Motors has
bluntly rejected the suggestion of rebranding either with the Tata name. These are old and
famous brands, and Tata Motors thinks rebranding would destroy value.
Conclusions. Tata only rebrands its acquisitions when it is clear that such a rebranding will
add value. This is not what conventional wisdom suggests. But a look at the group’s
performance, even through a deep recession, suggests the pragmatic approach has worked in
this case.