MERCREDI 18 SEPTEMBRE 2013 EDITION 147 | CAPITAL
ASHUTOSH TYAGI, SENIOR VICE-PRESIDENT, TATA CAPITAL LTD, INDIA
“Financial Services Companies can’t miss out on banking” They were in banking operations before nationalisation and now want to be back for historical reasons. Is this worth the dough? Already in the financial services sector, not being in banking is a huge handicap as far as competitiveness is concerned. For Vice-President Ashutosh Tyagi, success is also a matter of culture ▼ HERRSHA LUTCHMAN-BOODHUN ❚ You said during your presentation
that by next year Tata will be in the banking sector. What motivates you to do so? Banking is a wonderful business in India. We were involved in banking operations before banking nationalisation happened in India in 1969. So, firstly we want to go back to banking for historical reasons. And since we are a financial services company, if you are not into banking, then you are missing out a large piece of the entire services spaces. Currently we are a non-banking financial company, and we do most of the things a bank can do, which is allowed as per the law. Obviously our costs of capital is pretty high, which does not allow us to be as competitive as the guys who have a banking license, and take banking deposits. Having such a license would enable us to do all these. Banking, by nature of a business, works on trust. Tata Group as such has been able to evolve due to the goodwill of the people, be it the customers or other stakeholders. We believe that in banking, we will set up that goodwill and trust factor which will be brought immediately into our business. ❚ It was an added value to Africa
when Tata Group, which is one of the biggest groups in India, decided to be present on the continent. Over the years, with the development of the financial sector, in what ways has Africa been an added value to the Group? India has always been culturally and socially close to Africa. And that is reflected even in the top management's view about opportunities in Africa. It's been with a lot of warm feelings that we always felt we should be taking our businesses to Africa. It did not necessarily start with that thing, in the sense that, when we started in 1997, it was for the distribution of commercial vehicles through the set up of Tata Zambia. We created a holding company between 1993-1994. Since then, lots of other companies of our Group have gone into Africa. At the end of the day, a business looks at opportunities, and how best it can tap into those. Our companies have been decently successful in doing that. Another thing is that Tata Group is generally a steady player
wherever it operates. We have not done some big mega acquisitions. It's been a slow and steady progress in almost all our businesses in Africa. In terms of what we have got from Africa, I can say that there are now human resources who are heading our Africa operations, and who originate from Africa. These resources are available to the rest of the Group in the sense of adding value to our other companies. What we have been hearing during the last two days is that there is extremely good talent and people resources which exist in the continent. We are able to get access to this. However, I cannot point out one specific added-value simply because of our set up in Africa, but I am sure that must be the case. Like in our fertilizer plants I know for sure that, due to the acquisition of a UK-based company, we got access to lakes in Kenya. Getting an access to that provides an adds-on, an element to the business fundamentals of Tata Chemical. We have a joint-venture on phosphoric acid in Morocco. This acid is from natural resources, and is found only in that part of the world. That fills in a particular element in the value chain for the fertilizer plants' of Tata Chemical. Taking all these into consideration, Africa is definitely adding value, and I am sure there are many more examples. We have seldom
or never gone into businesses only for the exploitative reasons of the typical business, which is the old way of looking at it. It's always been for a reason where we feel that we are contributing in some manner, and we are getting back also. ❚ Was being steady a deliberate strat-
egy of the Group so as not to offset existing conditions? Yes, it's for the long term. If you are there for long terms, then you move about slow and steady, rather than just barge in. ❚ And not to raise eyebrows as well?
We are not so concerned about raising eyebrows. It's just a question of personality, and part of our culture. I don't know whether you are aware of it, but we have a Code of Conduct. It is something which every person who joins Tata Group in the world has to sign on the first day. It lists down various things which are Do's and Dont's behaviour of practices, relationships, potential conflict of interest etc. We go to that extent of ensuring that ethics are core to what we do, as well as excellence in whatever we do. If I were to define the philosophy of the Group in its operations, it would be about ethics and excellence. We carry this wherever we go.
India has always been culturally and socially close to Africa. And that is reflected even in the top management's view about opportunities in Africa. It's been with a lot of warm feelings that we always felt we should be taking our businesses to Africa.
Capital Edition 147