Quantitative Aptitude Test 44

Once the dust over the succession issue settled, the conglomerates new chief came into his own. His primary focus was the improvement of the operational efficiencies of several of the groups manufacturing companies and reiterating the very conglomerate nature of the entity. The main beneficiaries of the focus on operations were Tisco and Telco (Tata Engineering and Locomotive Co.). The former soon emerged as one of the lowest cost steel makers in the world. The two companies were also renamed Tisco as Tata Steel and Telco as Tata Motors. Simultaneously, Tata convinced group companies to pay royalty to Tata Sons for the direct or indirect use of the Tata brand name. He also moved towards increasing the promoters shareholding in key group firms. Until then, the promoting firms held minority stakes in most group companies, making them vulnerable to takeovers. The group also exited businesses such as cement, textiles and cosmetics even as it increased its focus on others such as software, and entered telecommunications, finance and retail.

These divestments and investments helped the Tata group shake off the slightly fusty image it had built up in the 1980s and make it fit for purpose in the modern world, according to Witzel. Indeed, today, the Tata groups most profitable company is information technology firm Tata Consultancy Services Ltd (TCS), which boasts around $10 billion (around Rs.54,700 crore) in revenue and serves customers around the world. I think the creation of the corporate brand was quite important. The Tata corporate brand is one of the worlds most valuable global brands because it harnesses the power of the whole group and creates a strong image in the minds of the stakeholders, Witzel added. Tata himself sees the re establishment of the group identity as one of his achievements. In the interview that was posted on the groups website, he said one of his most satisfying moments as chairman was the welding of the organization together in a more cohesive way than it had been in the past, that it was able to identify itself more as a group. And, even as some of these efforts to establish himself, improve the operational effectiveness of some companies, and reiterate a group identity were bearing fruit, Tata went out and made a big ticket global acquisition the Tetley group in 2000.

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