Tatas line up $224 mn for S Africa

Telecom, luxury hotels, commercial vehicle assembly and soluble coffee are target areas.

The Tata group proposes to invest $224 million (approximately Rs 1,000 crore) in South Africa over the next three years.

The investment will be in telecom, luxury hotels and in a soluble coffee plant and a commercial vehicle assembly plant. As part of this expansion, the group's holding company in the continent, Tata Africa, plans to set up subsidiaries in Kenya and Nigeria as well.

Tata Africa imports and distributes vehicles, steel products, chemicals, mining consumables and other engineering items. In its capacity as the investment arm of the Tatas in Africa, the company identifies projects for group companies and assists them with due-diligence and feasibility studies.

It has also helped companies such as Tata Motors reengineer products for local requirements and specifications.

Tata Africa posted a revenue of over $210 million from its operations in various countries, including Zambia, Zimbabwe, Mozambique, Ghana, Uganda, Tanazania, Malawi, South Africa and Senegal. Its revenue is likely to go up to $250 million by March 2007.

The company's Managing Director Raman Dhawan said the Kenyan and Nigerian subsidiaries would focus on the vehicle and software development business to begin with. "Tata Africa has identified four potential businesses, namely telecom, hospitality, mining and smelting and information technology," he added.

He also said Tata Africa was developing a soluble coffee plant in Uganda in partnership with Tata Coffee and the Ugandan government. "The estimated investment for the project is around $12 million," Dhawan pointed out.

The project may induct a partner at a later stage. The brand of the instant coffee has not been finalised.

Tata Africa was formed in 1994 as a holding company in South Africa for all group ventures in the continent. A profitable company with a net profit of $25 million and 750 employees, Tata Africa has played a key role in the group's large presence in South Africa.

The group has invested over $100 million in the region so far.

"Commercial vehicles and more recently passenger vehicles have been the thrust area across markets. Tata Africa has successfully developed country-centric businesses in addition to distribution, marketing and after sales support for the vehicles," said Dhawan.

(The correspondent's visit was sponsored by the Tata group)