Tata Group Cos to Work as ‘One’ to Grow Food Con­sumer Biz

Tata Chem, Tata Global Bev­er­ages & Star Bazaar step up col­lab­o­ra­tion to achieve scale

The Economic Times - - Companies -

Megha Man­davia & Kala Vi­jayragha­van

Mum­bai: Tata Chem­i­cals, Tata Global Bev­er­ages and Star Bazaar have stepped up col­lab­o­ra­tion in the food con­sumer space as mul­ti­ple Tata group com­pa­nies ex­plore op­por­tu­ni­ties to work to­gether as a clus­ter, a strat­egy sug­gested by Tata Sons' new chair­man N Chan­drasekaran.

Chan­drasekaran, pop­u­larly known as Chan­dra, is look­ing to re­struc­ture the loosely-held con­glom­er­ate into tighter clus­ters based on in­dus­tries they op­er­ate in to achieve scale and cut costs. His fo­cus is to cre­ate a few strong in­dus­try lead­ers rather than have many small com­pa­nies that are un­able to achieve scale. Tata Chem­i­cals' con­sumer busi­nesses in­clude salt, pulses and wa­ter pu­ri­fiers, while Tata Global Bev­er­ages sells tea, cof­fee and pack­aged drink­ing wa­ter. Star Bazaar is Tata Group's hy­per­mar­ket chain.

“Chan­dra has again and again re­peated that scale may lie at the in­ter­sec­tion of two com­pa­nies, may lie when two com­pa­nies come to­gether. This means greater col­lab­o­ra­tion, work­ing to­gether and pool­ing in re­sources to build that scale,” Tata Chem­i­cals manag­ing di­rec­tor and CEO R Mukun­dan told ET.

Tata Chem­i­cals, which is a di­ver­si­fied com­pany, wants half the busi­ness to come from non-com­modi­tised busi­nesses by 2020 against 25% at present. It is no longer a com­mod­ity busi­ness op­er­at­ing in reg­u­lated mar­kets but runs va­ri­ety of busi­nesses rang­ing from soda ash, edi­ble salt, fer­tilis­ers, ma­rine chem­i­cals, pulses, spices and now nu­tri­tional in­gre­di­ents and nano ma­te­ri­als.

"Ev­ery leader brings in his own per­sonal style and that re­flects in how a com­pany re­acts to the mar­ket place. His fo­cus on cus­tomer, ac­count­abil­ity and per­for­mance is ex­tremely im­por­tant. We have to be bold and have to be re­ally in­spir­ing to pro­vide scale," Mukun­dan said.

He said Chan­drasekaran's idea of 'One Tata' is al­ready mak­ing an im­pact on the mind­set of em­ploy­ees, who are usu­ally the main bar­ri­ers to col­lab­o­ra­tion be­tween com­pa­nies. "This whole work­ing to­gether is go­ing to con­stantly in­crease. We are both con­sumer fac­ing arm, we both learn from each other. We are ex­tremely strong in whole­sale, Tata Global Bev­er­ages is ex­tremely strong in re­tail. We have com­ple­men­tary skills," said Mukun­dan. "We are be­gin­ning this jour­ney. You will see more of this com­ing out in due course. At the end of the day, we are one group. That is the em­pha­sis by Chan­dra."

Tata Chem­i­cals al­ready works on some projects with Tata Global Bev­er­ages -- nu­tri­tion and nour­ish­ment, build­ing pes­ti­cide-free tea and cof­fee plan­ta­tions and ru­ral dis­tri-

bu­tion. In the past, it had col­lab­o­rated with TCS, Ti­tan to cre­ate its wa­ter pu­ri­fier prod­uct -- Tata Swach. It also sells its fresh pro­duce through Star Bazaar. "There’s a ter­rific mo­men­tum to col­lab­o­rate and work to­gether to­day be­cause we know we have to suc­ceed in the mar­ket­place. It is not a com­pe­ti­tion be­tween me and an­other com­pany but a com­pe­ti­tion be­tween Tata and oth­ers to sat­isfy the cus­tomer."

Tata Chem­i­cals is over­haul­ing its or­gan­i­sa­tional cul­ture by wind­ing down its old bu­reau­cratic and hi­er­ar­chi­cal struc­ture as it bets on fu­ture rev­enues from its younger con­sumer, branded agri and nu­tri­tional so­lu­tions busi­ness.

"Tata Group com­pa­nies have built very strong con­sumer brands in some of the busi­nesses, be­sides be­ing an over­all re­spected and well-known brand across the coun­try. The Tata Group's con­sumer pres­ence is low in our view, and we be­lieve it can lever­age these strong brands (and also the large dis­tri­bu­tion net­work) to pro­pel its con­sumer pres­ence," said Credit Suisse in a re­port in July.

The Tata Group should har- ness the uni­fy­ing Tata iden­tity across its di­verse busi­nesses to ce­ment its lead­er­ship cre­den­tials, Chan­drasekaran said in his first town­hall with Tata's top lead­ers in April. He had stressed on the fact that man­age­ment needs to cut through ver­ti­cals to col­lab­o­rate with their coun­ter­parts to ben­e­fit from the con­glom­er­ate's scale. “When we built this de­sign of 'One Tata', it ob­vi­ously makes sense to work to­gether. This whole idea can be re­freshed ev­ery time. In terms of di­rec­tion, One Tata in­cludes not just op­er­at­ing com­pa­nies but also Tata Sons and Tata Trusts,” said Mukun­dan.

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