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Tatas' common branding paying

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Tatas' common branding paying

The Tata group, which started a common branding strategy for all companies in its fold in the 1990s, has seen the share of brand-driven segment increase in both sales turnover and profit after tax.

From 22 per cent of sales turnover in 1992-93, the share of the brand-driven segment has gone up to 41 per cent in 2002-03. During this period, the brand-driven segment's share of profit after tax increased from 24 per cent to 48 per cent. Sales went up from about Rs 15,000 crore to Rs 52,134 crore, a compounded annual growth rate of 13.2 per cent; and profit after tax from Rs 724 crore to Rs 3,893 crore, a compounded annual growth rate of 18.3 per cent.

Along with this growth, the Tata group's business has also undergone a transformation. In 1992-93, 54 per cent of the group's business was from what it calls the traditional sector (steel, engineering and chemicals), 4 per cent from new technology and 42 per cent from others.

This had changed so much that in 2002-03, the traditional sector accounted for 35 per cent, new technology (information technology and telecommunications) 23 per cent and others 42 per cent.

"The pie has become very much more balanced," the Tata Sons' Executive Director, Mr R. Gopalakrishnan, said at an interaction with journalists here today.

By 2010-11, the contribution of the new technology sector will be much bigger, he said.

Coinciding with this change, the Tata group - encompassing companies in steel manufacturing, chemicals, engineering, information technology and telecommunications, services, energy and consumer products - has also changed the profile of its employees.

In 1992-93, as much as 90 per cent of its 3,10,000 employees could be classified as "bargainable workers" and the rest "knowledge workers".

In 2002-03, of the 2,20,000 employees, the "knowledge workers" accounted for more than 30 per cent.

"In a human way, Tatas have managed to change the profile," Mr Gopalakrishnan said, during the course of his presentation on "Transformation of the Tatas."

The objectives of the transformation were to increase ownership - there is not a single company in the group where the Tatas hold less than 26 per cent — promote the brand, restructure portfolio and improve shareholder returns. The group had invested Rs 2,700 crore in consolidation since 1991.

The transformation had resulted in a stronger group identity, greater interaction among companies, common defined standards and increased focus on business strategies. This year the group is marking three events — the 100th death anniversary of its founder, Jamsetji Tata, and the birth centenaries of JRD Tata and Naval Tata.

Mr Gopalakrishnan said the attributes that made the Tata group different and unique were that it was probably the oldest company in India still with the original promoters, it had institutionalised entrepreneurship and had retained its youthfulness despite being around for more than a 100 years.

The new thrust areas for the group would be telecom - operational consolidation of group telecom services and support infrastructure in leased/owned networks - and information technology - IT-enabled/BPO services and design and application development.

The group's focus would be: increase competitiveness, value creating acquisitions, non-cyclical new businesses, domestic dominance and broaden horizon beyond India.

Mr Gopalakrishnan said the Tata badge would go into more countries, but did not provide details.

He told a questioner that TCS, the group's information technology company, and other IT companies in the fold earned substantial revenues in the domestic market.

Mr Gopalakrishnan said the group had, over the years, got out of some businesses and entered new ones. This strategy would continue as the group constantly reviewed the performance of the various companies. One of the secrets of the group's youthfulness, he said, was that its portfolio mirrored the expectations of the stock market.

Brand Tata — the leader

The Tata brand, according to an internal survey, continues to lead over four or five other brands.

The exercise, being done independently by A.C. Nielsen, a market research firm, for the Tata group has been going on for more than three years and is conducted every six months.

According to Mr R. Gopalakrishnan, Executive Director, Tata Sons, the Tata brand has increased its lead over the next closest brand. However, he declined to reveal the other brands.

He told reporters that each survey covered about 2,500 to 3,000 people in 10 segments, including employees, lenders, government, shareholders and media.

One set of questions covered what the person thought of Tata as a brand and the other set dealt with economic issues, he said.


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