Tuesday, April 16, 2024


Tata Group: How to Build a Company by Buying a Bankrupt Butter Churn

Время на чтение 6 мин.

At the end of April, the Indian company Tata Motors announced its own platform for an electric car. The concept, called AVINYA, was developed by the Tata Passenger Electric Mobility division, the first sales will start in 2025, and by 2026 it is planned to introduce as many as 10 models. To do this, the company has invested about two billion dollars in development and is going to start producing its own batteries and semiconductors. And it all started with steam locomotives…

21 Thousand Rupees and a Bankrupt Butter Churn

In modern India, the surname Tata is almost synonymous with the word industry, and the founder of the Tata Group, Jamsheji Tata, is considered the father of Indian industry. Tata Group is the largest Indian industrial conglomerate founded in 1868. It has divisions in 150 countries, employs 800,000 people, and capitalization in 2021 reached $242 billion.

One hundred and fifty years ago, nothing foreshadowed the emergence of such a huge company. Jamsheji Tata’s father, Nusservanji Tata, was a Parsi by origin, that is, he belonged to a small group of people who professed Zoroastrianism. Fleeing persecution in Iran, many Parsis moved to neighboring India and subsequently greatly influenced the economy and politics of their new homeland. Nusservanji moved to the city of Gujarat in western India and, contrary to family tradition, became not a priest, but a businessman. He founded his trading company in Bombay (modern Mumbai).

Jamsheji received a Western education at Elphinstone College and then went to work for his father’s company. In 1868, the founder of the Tata Group set off on a free voyage. With an initial capital of 21,000 rupees (about $52 million in today’s money), he buys a failed butter factory in Chinchpokli, a southern suburb of Bombay.

Jamsheji was not interested in butter production, so he rebuilt the butter churn into a cotton mill. In 1871, he sells it profitably and does something unexpected for many: he buys a plot in the godforsaken city of Nagpur. Jamsheji predicted a quick end: Bombay was a city with a developed infrastructure and good transport links. It seemed that it would be logical to organize production in it. However, Jamsheji understood that high competition would not allow him to develop a new enterprise in a large city. But in Nagpur there was cheap land and a complete absence of rivals. The result was Empress Mill in 1877. The new enterprise, in the absence of competitors, had no problems with sales, and on cheap land, the railway companies were willing to lay new tracks. Nagpur grew rapidly — and the well-being of Jamsheji Tata also grew.

Having created and developed the textile industry, Tata began to move towards the following goals: he wanted to create a steel industry, establish an electrical company and a higher educational institution. Although he failed to implement these ideas, Jamsheji Tata laid a solid foundation for successors. Now Tata Steel is the most profitable business of the Tata Group, the largest in Asia and the fifth steel producer in the world. Tata Power is the largest private energy company in India. And the Indian Institute of Science (also known as the Tata Institute) is one of the most prestigious educational and research institutions in India.

Is That the… Choo Choo?

The Tata Motors division was founded in 1945 by Jehanjir Tata, Jamsheji Tata’s cousin-nephew. At first, the company produced only locomotives for the Indian railways, but already in 1954 it signed a cooperation agreement with Daimler-Benz and produced its first commercial vehicle, soon becoming a leader in this part of the Indian market. Tata Motors entered the passenger segment in 1988 with the introduction of the Tata Mobile medium pickup truck. In 1991, the three-door Tata Sierra based on this platform was released, and a year later, the Tata Estate station wagon. Further, the line developed in the direction of SUVs: the five-door Tata Sumo and the middle class Tata Safari appeared.

With such a wide range, Tata Motors not only took a leading position, but also began to buy assets abroad. When South Korean Daewoo began to have serious financial problems, Tata bought the company, forming a division of Tata Daewoo, currently the second largest South Korean manufacturer of commercial vehicles.

Tata Motors also owns premium British manufacturer Jaguar Land Rover, which it bought from Ford in 2008.

Development towards cars with alternative propulsion systems Tata Motors began back in 2008. Then the British division of the company bought more than half of the developer of technologies for electric vehicles Miljøbil Grenland / Innovasjon of Norway. The company planned to enter the European market with an electric version of the Tata Indica minicar. An electric version of the Tata Ace truck was also being prepared.

In September 2010, for the Commonwealth Games in Delhi, Tata Motors manufactured buses with hybrid power liquefied natural gas station – the first eco-friendly public transport in the Indian capital.

However, serious steps in the niche of electric vehicles were made only in December 2019. Then Tata Motors rolled out an electric version of the Nexon SUV. It is equipped with a lithium-ion battery with a capacity of 30.2 kilowatts, providing a range of 312 kilometers on a single charge. Fast charging technology allows you to charge from zero to eighty percent in an hour. In addition to the SUV, Tata now offers electric versions of the Tigor sedan, the Altroz ​​compact and the Ace mini-truck.

With the new electric vehicle platform, the company is set to take the green transport niche with confidence, at least in India, and possibly in Asia and the world. At least the industrial giant has enough resources for this.

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