The making of an Indian Multinational

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Ratan Naval Tata and his Rs 1-lakh car Nano managed to grab all the attention from the international media, at the recently concluded Geneva Motor Show. Not surprising though, since the car promises to be the cheapest ever produced, and if Tata decides to keep yet another of his promise, it would make its way to European markets, albeit in the garb of a high-end model. That would mark the entry of a 100% Indian product into the European market!

The world is also keenly watching the developments on the Ford front—where Tata is close to clinching marquee brands Jaguar and Land Rover.

Last year, Tata Steel walked away with UK’s steel major Corus Plc in a $12-billion deal, after a tough bidding war with Brazil’s CSN. Tata has been setting up ventures in Mozambique and other regions to feed Corus plants.

Group company INCAT, a global professional services firm bought by Tata Technologies in 2005, is another example. The US-headquartered company serves American and German customers, has big back offices in Pune and Thailand. Tata leather is another case in point. The design for it is in done in Florence, Italy. The leather is made at Indore in India, shoes from this leather are manufactured in Chennai, Madhya Pradesh and China and are sold to Europeans. The different functions across the value chain are done in different places.

For a group with estimated gross revenues of $50 billion this year, this ‘internationalisation’ is expected to result in half the revenues coming in from the overseas markets. This is a significant growth from 2005-06, when only 30% of the total group revenues of $22 billion came from global business. This is also a dramatic change from five years ago, when the company sold 80% of its products in India. Even the 20% it sold overseas, were just exports, be it in steel or automobiles or software.

According to Alan Rosling, executive director, Tata Sons, the term ‘internationalisation’ has two dimensions. The first is the percentage of revenues coming in from overseas, and in the case of the Tatas, it would depend on individual group companies.