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Western expertise fuels Indian's largest car-maker.

Western expertise fuels Indian's largest car-maker

What could be more British than a cup of Tetley’s Tea at the Crowne Plaza Hotel in London-St James’s? Well, practically anything, really. Both brands are owned by the giant Tata Group, one of India’s largest companies, whose annual revenues of almost €30 billion represent more than 3 per cent of the country’s gross domestic product.

The Tata Group has almost 100 operating companies in sectors ranging from communication systems to chemicals, engineering to energy and agriculture to aviation. It has 289,000 employees working in more than 80 countries across six continents. In Britain, the Tata Group employs some 4,000 people in 18 businesses, but when the company’s £1 billion deal to buy Jaguar and Land Rover is sealed, Tata will have another 13,500 UK employees.

Tata Motors is among the group’s best-known divisions. Set up in 1945, it is India’s largest automobile company. A manufacturer of commercial, passenger and utility vehicles, it has a common manufacturing facility with Fiat in western India and distributes Fiat-branded cars throughout the country. Tata Cummins manufactures high-horsepower engines used in the company’s range of commercial vehicles, while Hispano Carrocera is a reputed Spanish bus manufacturing company in which Tata Motors has a 21 per cent stake.

Leahy et al. (Financial Times, 11 Jan 2008) explore the attraction of tie-ups with the west to companies like Tata Motors. While not all have been successful, the company is now drawing on the expertise of leading international design and styling houses such as the Institute of Development in Automotive Engineering and Stile Bertoni in Italy. The Tata Motors European Technical Centre is a UK-based 100 per cent subsidiary engaged in design engineering and product development.

Tata Motors now has more than 1,400 engineers and scientists in six research and development centres in India, South Korea, Spain and the UK. The company is developing environment-friendly electric and hybrid cars as well as vehicles that can run on alternative fuels.

Johnson (Financial Times, 25 January 2008) illustrates how Indian manufacturing prowess has grown, by drawing attention to the unveiling in January of the £1,200 Nano, reputed to be the world’s least expensive car. Four years in development and design, it incorporates light-weight materials and an electronic engine-management system to maximize fuel efficiency from its 623cc engine. Tata claims that, in terms of overall pollutants, it causes less environmental damage than two-wheelers being manufactured in India today. Ratan Tata, chairman of Tata Sons and Tata Motors, boasts the Nano to be a safe, affordable, all-weather form of transport for the Indian family.

If, as Ratan Tata dreams, the average Indian family upgrades from a scooter to a car, it will be one of the most obvious external manifestations of the growing wealth of ordinary people throughout Asia. Laurence (In the Black, Feb 2008) examines the opportunities this could bring for Australian financial planners.

The article gives brief details of the financial-planning and regulatory environments in various Asian countries, warns that Asian investors are more accustomed to investment advice than holistic financial planning, but expects this to change over time.