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Ratan Tata may have cut the cord with the Tata group to fulfill his dream of promoting e-commerce ventures, but his successor Cyrus Mistry is ensuring that his legacy endures.
Some of the Tata group’s dreams will finally take off. This includes Vistara, that marks the Tatas’ re-entry into aviation as an operator, besides the commissioning of the long-awaited steel plant at Kalinganagar in Orissa and the launch of its unnamed e-commerce venture, which will be based on the marketplace model.
“The Tata group has been at the forefront of innovations and it continues to expand as new opportunities emerge,” says Jacob Mathew, managing director at homegrown investment banking firm Mape Advisory. TCS, the most valued company in the group, was born through one such initiative. While the group has been assessing opportunity in the e-commerce for some time, it fast-tracked this by appointing Ashutosh Pandey, former chief operating officer at bookstore chain Landmark as head. Sarvesh Dwivedi, who led the lifestyle division of Ebay India, was also roped in.
E-commerce platforms for the group’s retail ventures Croma and Landmark could be merged once the marketplace is launched. But the Tata group will face stiff competition from Flipkart, Amazon and Snapdeal, which have established their presence in the market.
“The group has demonstrated its focus for new-horizon businesses, be it retail or affordable housing,” says Ajay Garg, managing director at investment banking firm Equirus Capital. “So it continues to invest as new opportunities emerge, be it in aviation or e-commerce,” he says.
The group was, in fact, the pioneer in Indian aviation, but its venture Air India was privatised in 1953. Later, Ratan Tata planned a venture with Singapore Airlines that should have started in 1996. But it was caught in red tape and Ratan Tata was often vocal about the constraints he faced.
His dream partly came true with the launch of AirAsia, in which the Tata group has a 30 per cent stake. And finally the group will make a comeback as an operator with the launch of Vistara on January 9. Tata Sons hold a 51 per cent stake in the airline venture, while the rest is held by Singapore Airlines.
“Tatas’ entry will help in corporatisation of India’s airline sector,” says Kapil Kaul, chief executive for South Asia at the Centre for Asia Pacific Aviation (Capa).
“Subject to a stable policy and regulatory environment, India can see more corporate investment in the sector,” he says.
While these two businesses marks the Tata group’s expansion, the 6-million-tonne steel plant Tata Steel is building at Kalinganagar with an investment of $7 billion (Rs 38,500 crore) is targeting consolidation. The first unit of 3 million tonnes will be commissioned in early 2015. This project has been delayed after locals protested against land acquisition in 2006.
With the commissioning of this plant, Tata Steel is aiming to tap rising demand for its flat products from the automobile industry.
