This Tata forges welcome to Tesco

18 Oct,2013

 

By Suman Layak

 

Rajiv Gujral, a former honcho at the Taj group of hotels, ran into Noel Tata at Bombay House on a Saturday evening last month – he rarely gets that privilege these days. Mr Gujral recounts how Noel let on that he’s been travelling 25 days a month, and finds little time for anything else.

 

The younger half-brother of Ratan Tata – and now the only member of the top brass with that surname in the group, Noel is managing director of Tata’s trading arm Tata International. But that’s not the only hat he wears; also keeping him on his toes are the vice-chairmanship of retailing arm Trent Ltd – where Noel was managing director till three years ago – and the chairmanship of Tata Investment Corporation, a non-banking financial company that makes long-term investments.

 

FDI Hurdle.

If Noel is hard-pressed to find time to race down highways in a Tata Safari – his passion five-six years ago – it’s because he’s as busy plotting Tata International’s growth (particularly in Africa) as he is ironing out the Tatas’ partnership with British retailing giant Tesco.

 

Consider: In the first week of May 2013, Noel and Tesco CEO Philip Clarke met Union commerce minister Anand Sharma. The goal was to seek some leeway from the minister on the stiff norms set for foreign direct investment in multi-brand retail in India.

 

In India, the Tatas and Tesco have been partners since 2008 in the limited sense of partnership that was allowed in retail at that time. Tesco’s wholesale business supplies merchandise to Star Bazaar, the hypermarkets of Trent.

 

In December 2012, Mr Clarke had hurried down to Mumbai to meet Ratan Tata in the last month of his tenure as chairman of the Tata Group. Mr Clarke was also upbeat after Mr Sharma’s announcement two months before Tata’s retirement that FDI norms in multibrand retail would be relaxed.

 

A little over a year has passed since Mr Sharma’s announcement, and Tesco has yet to make its move. In fact, the norms are so stiff that no foreign retailer has made a move in multi-brand retail as yet. However, after the Walmart-Bharti split, all eyes are on the Tesco-Tata partnership.

 

In May, a week after Noel Tata and Mr Clarke met Mr Sharma, the Department of Industrial Policy and Promotion (DIPP) gave Tesco a major boost. It said that although multibrand retailers with FDI in India will have to source 30% of their products from medium and small-scale manufacturers, the norm would not apply to farm produce and dairy. Tesco had sought clarifications as it claimed that almost 85% of its offerings would be in the farm and dairy category. That was a win for the Tata-Tesco team.

 

However there are many more hurdles to go before FDI can flow into the partnership for multi-brand retail in India and sources say that Noel has been a frequent visitor to the DIPP offices in Delhi in recent times.

 

Growth of a Salesman

At Trent, where Mr Tata gave up his executive role in 2010 to move to Tata International, he is still the moving force as vice-chairman. The company has a CEO in Philip Auld who has been deputed by Tesco and there are other people running the show on deputation from Tesco.

 

“Noel Tata is a pucca retailer,” says an executive who has worked for the group when Tata used to lead Trent as managing director. “He is someone who would happily spend hours at a store, tinkering, observing and even selling. He has grown up in the retail business unlike someone moved into it at a strategic level. He immensely enjoys retailing.”

 

When the Tesco-Tata partnership was forged in 2008, while Tesco people took on the task of managing the stores and the front end, the Tatas managed the areas that needed local knowledge – real estate and property as well as warehousing and human resources. Noel continues to oversee these functions.

 

And then to live out his retail dream a little more, at Tata International Noel started footwear retailing in India through a chain named Tashi. Tata International also acquired a Portuguese footwear retailer Move-On that has a presence across Europe. However, the Tashi chain had to be closed and the company is now thinking about focusing on footwear branding and distribution instead.

 

African Safari.

Sources indicate that Mr Tata intends to take his retail business to Africa too, where Tata International is the distributor and after sales service provider for Tata Motors.

 

It also owns hotel assets in major locations like Cape Town that are managed by the Indian Hotels Company Ltd. The Africa plans are clearly keeping Mr Tata busy, too and he has been travelling frequently to that continent.

 

Noel, who was once considered a contender to succeed Ratan Tata – he is married to Aloo, sister of Tata Sons chairman Cyrus Mistry – today has a wide canvass of businesses to oversee, a chunk of it in Africa.

 

Tata International’s largest subsidiary, Tata Africa Holdings, is headquartered in South Africa and has led various Tata businesses into that continent, from luxury hotels to commercial vehicles. And then there’s the retail push back home – at least till Trent-Tesco can gets its frontend act together.

 

Source:The Economic Times

Copyright © 2013, Bennett, Coleman & Co. Ltd. All Rights Reserved

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