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Special Columns
Arindam Chaudhuri, Editor-in-Chief, 4Ps B&M Chief Consulting Editor's Desk
Rajita Chaudhuri
K.K.Srivastava Guest Column
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arrival of the cynosure
Steel, Motors, Chemicals, Consultancy Services, Power, Teleservices, Housing... add any of these (and more) to the ‘Tata’ brand name, and it mirrors trust!
Issue Date - 23/09/2010
Three years back, whenever Ratan Tata spoke about his Nano dream, you would have heard people classify the star-gazer’s project, a quixotic pipe-dream. It seemed an impossible peak to conquer. Then the slowdown marred 2008 occured. It was a time when the world weathered the worst phase that macroeconomics had to offer since World War II. To make matters worse, repayment problems (to both creditors & suppliers) became the impedimenta for the group’s two flagship brands – Tata Steel & Tata Motors. The situation had worsened to such an extent that Tata had to seek financial help (amounting to £1 billion) from the UK government to save the Jaguar-Land Rover (JLR) brands. Ratan Tata’s inorganic aspitations had started looking more like an ignis fatuus. The Tata brand was under threat. But amidst this turmoil, a shrinking global economy, Ratan Tata stood tall. He showed no fear. When UK’s most renowned agency Brand Finance came out with its annual valuation of the world’s top 100 brands in 2009, it showed how the second half of 2008 had played havoc on the best of global brands; some of them had lost almost 60% of their value in a matter of a year. In all, the top 100 had lost 24% of their value (y-o-y). Tata, the only Indian brand that made the list, had only lost a lesser 16% and had actually moved up the ranking, with a brand value of $9.92 billion. A year later, it is still India’s most valuable brand on Brand finance’s list, having appreciated by 13% (y-o-y) to touch $11.21 billion. The ICMR-4Ps B&M ranking proves the same.

The past year has seen brand Tata grow in leaps, be it either the deliveries of the much-awaited Nano (which boosted Tata Motors’ equity by making it the second-largest seller of passenger vehicles in the Indian market) or the inorganic moves of Tata, which finally started showing promise during 2009. Of course, many buy the fact that it is the calculative Tata management’s inorganic strategies have made a huge contribution to building the goodwill that won this brand the 2010 Most Valuable brand crown. [It was #2 last year.] Says Prof. Alison Richard, Vice-Chancellor, University of Cambridge (UK), “In going global, various details are important to note, like the right time to venture and the choice of target. I think the Tatas do this sort of homework very well, which help its brand appreciate in value. For instance, when they acquired Daewoo, it was a loss-making company, but had the potential to make inroads for Tata into markets like Korea. And that’s exactly what has happened.”

So what are the key forces that gave the brand the desired torque? Recent quarters have seen a revival in the financials of Tata Steel’s Corus subsidiary, with the company reporting a consolidated bottomline of `1,825 crore in Q2, FY2010 – a happier tale than the loss of `2,209 crore that it posted in Q2, FY2009. The reason for this is obvious. With the revival of European market’s economic engine (fuelled by the automotive, construction, engineering and aerospace businesses), Tata Steel’s UK entity is finally up and running. All this, after a painstaking integration process, lasting three years. The company has even managed to lighten its interest liabilities by 32% (y-o-y) to Rs.597 crore as of date.

The story with the $2.3 billion JLR buy is no different. In fact, when the deal happened in early 2008, it was viewed as more of a bailout desperation for Ford Motor Co. than an asset purchase for Tata Motors. The initial pebbels on the path took time to clear. But it happened. After just under three years, the two brands have staged a rhapsodic comeback. For the Rs.570 billion-valued Tata Motors, which earned huge criticism two years back for the purchase of the iconic brands, JLR contributed to a profit before tax (PBT) of `1,590.25 crore for Q2, FY2010. How much is that? 70% of the PBT of India’s second-largest auto giant! With auto retailing taking off in Europe, thanks to the scrappage deals that the government offered through last year, the passing away of the recessionary clouds worked magic for the two high-end car brands.

Taking a more panoramic view of the many brands, the fact that Tata brand is the #1 on our list should actually as a no surprise. Tata is not one brand, but a power punch collection of many valuable brands like Tata Tea (the #1 tea company in terms of annual revenues), the Rs.1.71 trillion-valued TCS (#1 in terms of exports by Asian companies), Tata Steel (the now-deserving world’s sixth-largest steel maker), Tata Chemicals (India’s #1 and world’s #2 manufacturer of soda ash), Titan (world’s fifth largest watch manufacturer), Taj group of hotels (#1 5-star chain of luxury hotels in India), Tata Power (India’s largest private sector power utility) and many more. And what binds these valuable brands closely? Ratan Tata’s leadership, as Logie Naidoo, Dty. Mayor of Durban (S. Africa), tells 4Ps B&M, “I think the Tata group is amongst the rarest of Indian conglomerates which knows where and when to invest. We think that Ratan Tata has adopted great strategies in past.” In two decades, Ratan Tata has inculcated a global outlook into all the leaders under him and the internal practices of the organisation, along with a touch of humanity, which ensures that the brand is held in high regards by both the masses and those across industries. Says Satish Sohoni, COO, Tata Chemicals to 4Ps B&M, “We at Tata have always paid attention towards maintaining a global standard in whatever we do, whether it concerns our employees or our work culuture.” To this, Joydeep Roy, Chief Distribution Officer, Tata AIG Life Insurance, adds, “It has always been our endeavour to introduce global best practices and products to suit the needs of the Indian customer and such a policy help our brand go global.” Talking about the CSR acts that help build greater equity for the brand, Ram Balasubramaniam, President, Tata International, tells 4Ps B&M, “The Tatas follow the policy of improving the quality of life of the people wherever they go, and we learnt this from our Chairman Ratan Tata.” Lt. Gen. (Retd.) S. S. Mehta, Dir. General of CII, however is of the opinion that the spirit of social consciousness has been there in the Tata family for over a century now. “During its history of over 100 years, the Tatas have established an enviable record of values, ethics and CSR,” says he.

Whether it be about social contribution or capitalistic intentions. Whether you hear Ratan Tata jumping with joy at the 5 lakh plus production target of the Nano this year, or about the fact that the only brand in the world, which appears twice in the 2010 Global Fortune 500 list is the Tata brand (Tata Steel ranked at #410 and Tata Motors at #442), the words which will always describe the Tata brand are reliability and trust – two words which guarantee any brand’s longevity, whether an upturn or a downturn.
Steven Philip Warner and Angshuman Paul           
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