I have known Tata since I was a child. I rode Tata buses to school, soaped myself with Tata soaps, stayed in Tata hotels and probably lived in houses supported by Tata steel. More recently both my brother and my wife worked for a Tata company. But the Tata I knew then was different than today's Tata. The global, competitive, aggressive, and ambitious Tata.
India's Tata group has become very well known in Europe recently after taking over UK's Corus and Ford's Land Rover and Jaguar businesses. It is also in talks to buy T-Systems from Deutsche Telekom in Germany. If you add to all this the excitement of the €1800 Nano car designed by Tata, you have got a credible Asian multi-national company in the world's eyes.
Many question the business sense of taking over Landrover and Jaguar given that the premium attached to these brands has a minuscule market in India, where a Hyundai Sonata is considered a luxury salon car! Others question the ability of the Tatas to control unionized European operations.
But I am bullish about their recent acquisitions and their ability to turn these into strategic wins. The foremost reason for my belief is the relative professionalism in the way Tatas conduct their business. For example, top Tata managers of the holding company, Tata Sons, are selected and groomed through the Tata Administrative Service (TAS), admission to which is based on a merit-based, competitive and through screening process. So we can be certain that folks running the acquisition show from the Tata side will be competent and highly trained.
The second reason for my bullish assessment is the value of the technology transfer from Jaguar and Landrover to Tata. About 8 years ago Tata motors rode a huge success in the "Tata SUMO", a rugged diesel-powered 4x4 that looked like a SUV but cost a lot less. The SUMO was an instant hit because it rode well on India's broken roads and because the government of India subsidizes diesel, it was highly cost effective. I still remember seeing caravans of hired SUMOs on highways during weekends and vacations.
Then Toyota came and stole the show with the Toyota "Qualis". This gem had more to offer: Toyota quality, quieter engine, superior interiors, and better fuel efficiency. Although the Qualis was priced slightly higher than the SUMO, it quickly overtook the latter. Tata had lost out because Toyota had superior technology. Lesson learn t for Tata: India had stepped out of its socialist past and now quality and technology mattered to Indian customers.
Jaguar and Landrover will fill this important gap for Tata. Another example where Tata can benefit from better technology is Tata's subcompact "Indica". I have ridden this car and can confidently state that it is noisier and bumpier than its Suzuki counterpart on Indian roads. Jaguar and Landrover technology will perfectly compliment Tata technology. A company that produces some of the cheapest steel in the world (because Tata owns iron and coal mines in India) combined with an established brand and distribution network in India will be unbeatable with the infusion of the latest technical know how from the acquisitions.