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India’s Tata earmarks $35B for expansion

James Crabtree
Cyrus Mistry, Chairman of TATA Group.
Virendra Singh Gosain | Hindustan Times | Getty Images

India's Tata Group, the country's largest conglomerate by revenue, has outlined plans to invest $35 billion over the next 3 years for expansion into new areas such as retail and defense.

Cyrus Mistry, last year took over as chairman of Tata, whose more than 100 companies have combined revenues of about $100 billion, but has since kept a low public profile and struggled to articulate a strategy for the group's future direction.

But in an internal meeting Mr Mistry on Tuesday outlined a plan called Vision 2025 that will see Tata push into new markets as it aims to become one of the world's top 25 businesses by market capitalization over the next decade.

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Mr Mistry said that by 2025 Tata – which manufactures products ranging from salt to wrist watches – would be "amongst the 25 most admired corporate and employer brands globally, with a market capitalization comparable with the 25 most valuable companies in the world".

Tata confirmed that Mr Mistry planned to establish four new business "clusters" – defense and aerospace, retail, infrastructure and finance – to increase growth at the group, whose largest existing divisions by revenue focus on IT outsourcing, steel and cars.

The approach aim to bring together existing operations in areas such as retail, where Tata already operates numerous businesses, but could also involve the "creation of new companies", Tata said.

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Tata's focus on both defense and infrastructure signals an attempt to capitalize on planned changes by newly-elected Prime Minister Narendra Modi, whose government is set to liberalize investment rules for defense industries while also increasing investment in areas such as roads, ports and power.

Under previous chairman Ratan Tata, Tata Group undertook a rapid period of international expansion, becoming India's most global company with a series of eye-catching acquisitions picking up western companies such as British luxury carmaker Jaguar Land Rover and Anglo-Dutch steelmaker Corus.

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About two-thirds of the group's revenues now come from its international operations, but in recent years it has struggled both to improve performance at a number of its flagship divisions, and to launch new high-growth businesses.

In particular, Mr Mistry spent much of his first year in charge attempting to stem losses at Tata Steel's lossmaking European operations, while also dealing with problems at the group's ailing Indian car making and mobile telecoms businesses.

Although analysts say these efforts have had mixed results, Mr Mistry has been aided by success of both IT division Tata Consultancy Services and carmaker JLR.

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Both TCS and JLR posted strong global revenue and profit growth during the past financial year, helping to mask much less impressive figures at many of the group's other companies.

Although Tata tends to be viewed as an industrial conglomerate, TCS's market capitalization of Rs.5 trillion ($83 billion) now accounts for about 60 per cent of the total value all of listed Tata group entities, as well as making it India's most valuable company.