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The House of Tatas has retained its position as India’s leading brand in valuation firm Brand Finance’s annual study of the country’s top 100 names. But the 150-year-old group’s brand value has fallen four per cent to $13.1 billion in 2017 over 2016, according to findings shared exclusively by the UK-based valuation firm with Business Standard. The firm, however, says the drop is not a result of the boardroom battle the diversified conglomerate witnessed in the last few months, which saw erstwhile chairman Cyrus Mistry ousted in October last year.
“There has been intense speculation as to whether brand value has fallen due to Tata’s boardroom drama,” David Haigh, CEO, Brand Finance said. “In our view this is emphatically not the case. Tata’s brand strength index score in fact improved significantly this year and its rating was upgraded from A+ to AA+,” he said.
Haigh says the brand value drop seen this year, while not being positive for the group, is lower than the decline of nearly 11 per cent seen between 2015 and 2016. In 2015, Tata’s brand value was pegged at $15.3 billion, which fell to $13.7 billion in 2016. But a comparison of Tata’s brand value based on Brand Finance figures released over the years shows that the group’s 2017 valuation number is the lowest in five years, which some experts say, points to the impact of the boardroom battle on the brand.
The battle saw Mistry and the Tata group trading allegations and counter-allegations in public with the matter finally dragged to court. The national company law tribunal, however, dismissed last month a petition filed by minority shareholders of Tata Sons linked to Mistry, which alleged that the Tata group holding company had committed acts of oppression and mismanagement against their and public interest.
Haigh says the drop in Tata brand value this year is due to challenges faced by the salt-to-software group in multiple industries. “Operating conditions in these industries are challenging for all participants. In this context the slight decline can be seen as a stabilisation in challenging times,” Haigh said. “We expect Tata to return to brand value growth soon as the new chairman settles in and attempts to streamline operations,” he said.
In fact, the four per cent and nearly 11 per cent decline witnessed by the Tata brand in the last five years is not the only one seen by the group in that period. The sharpest fall was in 2014, when the Tata brand value eroded 19 per cent to touch $14.7 billion versus $18.1 billion in 2013. Back then, this drop in brand value was ascribed to the many challenges the group faced in industries such as steel and telecom.
At an overall level, the biggest improvement, Haigh says, is in the ranking of Indigo Airlines, which is up from 95 to 62. “India’s biggest airline recently announced the addition of 35 new routes and increasing frequency on existing ones,” he said, contributing to a 96 per cent increase in brand value from $2.4 billion to $4.7 billion in a year.
Tata-owned Taj Hotels, however, fell 14 places to 93 this year, Haig said, pointing to the competitive pressures the industry is facing. Another big loser was Micromax, which dropped 38 places to 95 in the 2017 Top 100 India list. Its value has eroded 39 per cent to $2.8 billion now versus $4.6 billion last year. The company has spent most of the past year fighting back the challenge of the Chinese brands in the Indian marketplace.
Some of the other gainers besides Indigo Airlines is ITC, says Haigh, with a brand strength index score of 86. It has moved two places to 27 this year versus 25 last year, Haigh says. Mahindra, on the other hand, he says, has re-entered the top ten this year, after posting healthy growth in its flagship automotive division and strengthening its presence in SAARC countries.
