India's Tata to Raise Overseas Sales to 30% of Total

March 28, 2005; Anand Krishnamoorthy writing for Bloomberg reported that the Tata Group, whose sales of cars, appliances and computer software account for 5 percent of India's annual exports, said it's investing in Australia, Bangladesh and South Africa to increase overseas income.

India's biggest group of companies by market value is aiming for overseas sales to make up 30 percent of total revenue from 20 percent now to spread its risks, said Ratan N. Tata, the group's 67-year-old chairman, in a March 21 interview in Mumbai. He didn't give a time for reaching the goal.

``We are looking at creating a presence in different'' countries, Ratan Tata said. ``I don't think we had a drive for the overseas push previously. We were focused domestically.''

The 126-year-old Tata Group, with sales of $14 billion in the year ended March 31, 2004, will put up factories, build hotels, buy mines and set up more branches abroad. The group's acquisitions since 2000, financed mostly by its own funds, include a maker of components for buses in Spain, the second- largest maker of trucks in South Korea, Tetley Group Plc of the U.K. and a steel producer in Singapore.

``The Tata Group is not alone in its push for business interests outside India,'' said Adrian Lim, who owns shares of Tata Consultancy Services Ltd. among $11 billion of assets he helps manage at Aberdeen Asset Management Asia Ltd. in Singapore. ``The Indian market holds a lot of potential, but going global provides more opportunities.''

India's Acquisitions

India's economy, the fourth-largest in Asia, expanded 8.5 percent in the year ended March 31, 2004, recovering from a slump caused by three years of drought.

Rising exports and the lowest interest rate in three decades helped the Indian rupee to strengthen 2 percent against the dollar in 12 months, the seventh-biggest gainer of 16 Asia- Pacific currencies tracked by Bloomberg. That has made overseas acquisitions cheaper for India-based companies.

Indian companies spent $7.1 billion since 2000 buying the units of foreign companies. In the same period, foreign companies invested $12.7 billion buying businesses in India, according to Bloomberg's data on mergers and acquisitions.

Reliance Industries Ltd., India's biggest private company, in July paid Germany's Hoechst AG 80 million euros ($96 million) to buy Trevira GmbH, a maker of polyester fibers.

Dr. Reddy's Laboratories Ltd., India's second-biggest drug maker, paid $11 million in May 2004 to buy Trigenesis Therapeutics Inc., a U.S.-based company working on skin-care products.

Tata's Shares Surge

Shares of Tata Consultancy, the most valuable of Tata Group's 91 companies, have risen almost 66 percent to 1,385.5 rupees since they were sold for the first time in August 2004, more than double the gain in Mumbai's key Sensex index.

Shares of Tata Motors Ltd., the group's biggest company by sales and India's largest truck maker, surged sevenfold since March 2001.

Profit of Tata Steel Ltd., the group's second-largest company by sales and India's No. 2 steel maker, tripled in the past three years, helping its stock value gain fivefold.

Tata Group's 32 publicly traded companies had a total market value of 1.4 trillion rupees ($32 billion) as at the end of last week, about 9 percent of the value of the 500 companies on Mumbai's BSE-500 index.

`Springboard'

Ratan Tata, chairman of the group since 1991, said Tata Group companies will invest mostly in so-called emerging markets such as Bangladesh because the Tata brand is better known there.

``We are looking at our international operations a little differently,'' he said in Mumbai. ``We are not looking at exports per se. We treated exports on a somewhat opportunistic basis, based on opportunities that arose.''

Tata Group plans to invest up to $2 billion to set up steel mills, fertilizer factories and power plants in Bangladesh. Tata Group wants to invest in South Africa, setting up branches in the nation to sell products to Europe and Africa.

Tata Steel will invest in mines in Australia, Brazil and Ukraine, Ratan Tata said. Tata Consultancy, India's biggest producer of computer software, already operates in 60 countries.

``A presence in more countries and businesses may help the Tata Group ride out the cyclical nature'' India's economy and gain access to technology, said Sanjay Sinha, who helps manage 24 billion rupees at UTI Asset Management Co. in Mumbai.

Tata's Buying Spree

The Tata Group's companies were involved in two of India's six largest mergers in the past five years.

Tata Steel in August paid $283 million to buy NatSteel Ltd., Singapore's largest steel producer.

Tata Motors last month paid $16 million to buy 21 percent of Spain's Hispano Carrocera SA, which makes parts for DaimlerChrysler AG's Mercedes-Benz buses. It paid $102 million last year for Daewoo Commercial Vehicle Co., South Korea's second- largest maker of heavy trucks.

Tata Tea Ltd., owner of India's biggest tea plantations, bought U.K.-based Tetley's tea business in February 2000 for 271 million pounds ($508 million) in the biggest overseas acquisition by an Indian company. The purchase, which made Tata Tea the world's second-biggest tea company, was 75 percent financed by bank loans.

Tata Group's Videsh Sanchar Nigam Ltd., which provides long- distance telephone services, in November said it will buy Tyco International Ltd.'s undersea cable network for $130 million.

Ratan Tata also said he expects the share of revenue from the group's businesses such as steel and automobiles to decline in favor of telecommunications, information technology, beverages and the hotel business.

``I think the traditional businesses would find their percentages shrinking in terms of our total,'' he said.

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