Tata Sons, the holding company for the Tata group, is working on building a centralised rural business platform that can be leveraged for the entire group’s benefit instead of each company looking at it separately.
The group already has companies such as Rallis, Tata Chemicals, Tata Steel, Tata Motors and Tata Tele Services which have strong presence in rural markets.
Besides, it has got a huge network of supply chain and channel partners across the country. Also there are companies such as Tata Capital and Titan which are making inroads into the rural markets.
The group is now working on leveraging these individual strengths using the available data and best practices in its ecosystem for better use. This will be further bolstered with collaborated efforts in marketing to get the best results.
“In a group like Tata there is always immense scope of synergy. An important leg of the Tata group’s strategy is to harness these synergies to maximise the performance of companies,” said a Tata Sons spokesperson in an emailed response to the queries sent.
“This entails groupwide initiatives on various strengths, including rural marketing in India, through greater sharing of best practices, investment in joint development of capabilities and future technologies,” he said.
When Ratan Tata became chairman in the early 1990s he faced the problem of group companies not talking to each other. After he eased out powerful chieftains like Russi Mody, Ajit Kerkar and Darbari Seth, a group identity was forged. But collaboration still did not happen. Then he setup Tata Group Innovation Forum which set up InnoClusters – groups of companies that could work together in different areas. Mistry is taking this legacy ahead with pushing the culture of collaboration further in the group.
As per a study by global consultancy firm Accenture released last year, since 2000, per capita gross domestic product has grown faster in rural areas at 6.2% CAGR than in urban centres at 4.7% as rural incomes are growing and consumers are buying discretionary goods and lifestyle products including mobile phones, television sets and two wheelers.
Between 2009 and 2012, spending in rural India reached $ 69 billion, significantly higher than the $ 55 billion spent by the urban population. This has made corporates including Tata group companies rush for this market.
“We are looking at rural finances as our key growth strategy. So, we have created a separate business vertical for that,” said Praveen Kadle, managing director and chief executive officer at non-banking finance company Tata Capital in a recent interview.
Cyrus Mistry’s investment plan named vision 2025 lays focus on four clusters including consumer & retail, defence & aerospace, financial service besides retail and infrastructure. Barring defence & aerospace, all the other three verticals have potential to grow in the rural markets.
This initiative is expected to be driven by the newly created group executive committee (GEC) which works under the aegis of the board of Tata Sons. The GEC includes Harish Bhat, former managing director of Tata Global Beverages and group strategy head Nirmalaya Kumar.
Other members of the GEC are Madhu Kannan, head, business development; N S Rajan, chief human resources officer; Mukund Govind Rajan, brand custodian and chief ethics officer.