Tata Sons on a new growth path
Non-cyclical consumer facing businesses is where the Tata group is putting more money. Trent, Infinity Retail, Tata Capital and Tata Housing is going to receive fresh equity of about Rs 2,500 crore over three years.
The group, largely involved in manufacturing and technology, is now shifting focus to new businesses. The fact that Indian households in the mass segment are expected to reach 111 million by 2014-15, up from 75 million in 2005-06 is driving the group to focus on mass market. The group as a whole is re-engineering the offerings to suit mass markets, confirms Raju Bhinge, chief executive, Tata Strategic Management, consulting arm of the Tata group.
Earlier Tata Global Beverages, Tata Chemicals and Titan had that focus. Brotin Banerjee, managing director and chief executive officer of Tata Housing Development, points out that the affordable housing story for the middle class and upper middle income group is non cyclical and attractive to the company.
Tata Housing grew at a compounded annual rate (CAGR) of 80 per cent in the past five years, recording Rs 1,135 crore of revenue in 2012-13. The company rediscovered itself by going into low-cost housing sector. In 2012-13, the company received an equity investment of Rs. 505 crore from Tata Sons.
The company has 29 projects at 13 locations across the country, covering around 70 million sq ft of properties under various stages of development.
Another company – Tata Capital – is trying to tap burgeoning mass consumers too. The company, started in 2007, at Rs 1,300 crore equity from Tata Sons from 2010-11 to 2012-13. Majority of the funds have been used to grow businesses such as home or mortgage loans, loans against property, car loans and personal loans.
The consumer finance business is also expected to grow to Rs 15,000 crore from about Rs 5,000 crore now. The business of the company includes comprises car loans, personal loans, loans against property and shares.
Croma, run by Infiniti Retail, is consumer electronics and durable retail chain of Tata Sons. The company saw infusion of Rs 420 crore from 2010-11 to 2012-13. The retail chain has 100 stores in 16 cities and has grown to a little over Rs 3,300 crore annual turnoversin seven years.
Trent is another company that saw capital infusion from Tata Sons. The holding company infused Rs 265 crore. Westside is Trent’s flagship department store chain comprising 70 stores, of which 31 were added in last three years. In the current financial year the total number of stores has further increased to 80.
Equity, non-cyclical, roma, Tata Capital, Tata Housing, tata sons, Tata Strategic Management, trent, Westside
