Steel, Motors, Chemicals, Consultancy Services, Power, Teleservices, Housing... add any of these (and more) to the ‘Tata’ brand name, and it mirrors trust!
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Tata Nano
Three years back, whenever Ratan Tata spoke about his Nano dream, you would have heard people classify the star-gazer’s project, a quixotic pipe-dream. It seemed an impossible peak to conquer. Then the slowdown marred 2008 occured. It was a time when the world weathered the worst phase that macroeconomics had to offer since World War II. To make matters worse, repayment problems (to both creditors & suppliers) became the impedimenta for the group’s two flagship brands – Tata Steel & Tata Motors. The situation had worsened to such an extent that Tata had to seek financial help (amounting to £1 billion) from the UK government to save the Jaguar-Land Rover (JLR) brands. Ratan Tata’s inorganic aspitations had started looking more like an ignis fatuus. The Tata brand was under threat. But amidst this turmoil, a shrinking global economy, Ratan Tata stood tall. He showed no fear. When UK’s most renowned agency Brand Finance came out with its annual valuation of the world’s top 100 brands in 2009, it showed how the second half of 2008 had played havoc on the best of global brands; some of them had lost almost 60% of their value in a matter of a year. In all, the top 100 had lost 24% of their value (y-o-y). Tata, the only Indian brand that made the list, had only lost a lesser 16% and had actually moved up the ranking, with a brand value of $9.92 billion. A year later, it is still India’s most valuable brand on Brand finance’s list, having appreciated by 13% (y-o-y) to touch $11.21 billion. The ICMR-4Ps B&M ranking proves the same.

The past year has seen brand Tata grow in leaps, be it either the deliveries of the much-awaited Nano (which boosted Tata Motors’ equity by making it the second-largest seller of passenger vehicles in the Indian market) or the inorganic moves of Tata, which finally started showing promise during 2009. Of course, many buy the fact that it is the calculative Tata management’s inorganic strategies have made a huge contribution to building the goodwill that won this brand the 2010 Most Valuable brand crown. [It was #2 last year.] Says Prof. Alison Richard, Vice-Chancellor, University of Cambridge (UK), “In going global, various details are important to note, like the right time to venture and the choice of target. I think the Tatas do this sort of homework very well, which help its brand appreciate in value. For instance, when they acquired Daewoo, it was a loss-making company, but had the potential to make inroads for Tata into markets like Korea. And that’s exactly what has happened.”

So what are the key forces that gave the brand the desired torque? Recent quarters have seen a revival in the financials of Tata Steel’s Corus subsidiary, with the company reporting a consolidated bottomline of `1,825 crore in Q2, FY2010 – a happier tale than the loss of `2,209 crore that it posted in Q2, FY2009. The reason for this is obvious. With the revival of European market’s economic engine (fuelled by the automotive, construction, engineering and aerospace businesses), Tata Steel’s UK entity is finally up and running. All this, after a painstaking integration process, lasting three years. The company has even managed to lighten its interest liabilities by 32% (y-o-y) to Rs.597 crore as of date.

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Source : IIPM Editorial, 2011.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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