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Tata Group driven by values, not valuations: Arun Maira


I hope that Tatas would be paying more emphasis on businesses like manufacturing that employ poorer people in India from the rural sectors and enable them to learn and earn and grow their skills, says Arun Maira, Author & Thought Leader, Former Member Planning Commission & Former Chairman BCG India.

You have worked very closely with the Tata Group of companies. Do you see new vigour in the group? We still are not talking about Tata Digital simply because we do not know enough about it but this is a group which is now also talking about B2B commerce?
The Tata Group has been declared a successful bidder for Air India. JRD Tata was closely associated with it and had enabled the world to see that India could also fly high. So, I would keep that point in mind. Nowadays economy is reviving everywhere and in our country too. The third thing was last year was miserable for most of the people of the country, certainly the people at the bottom of the pyramid.

JRD Tata used to say that whenever he had to take a very tough and big decision, he first thought what was good for India and then what would be good for Tatas. Sometimes, what appeared good for India did not appear as good for Tatas at that time, but it ultimately turned out to be very good for the Tatas also.



So, in that spirit I would like to make my observations. Nowadays, we have to measure businesses on the new yardstick which is not about valuations but it is about values. Tatas embody value. They do not work for stock markets but for the people and that is JRD Tata’s philosophy. My observation is that people do not really look at Tata companies through this yardstick. So, if we apply this yardstick, we can have quite a different discussion than the ones that usually happen when we talk about how well businesses are doing. So, I would say Tatas are driven by values and not valuations. I have many good things to say about the Tatas.

Obviously the valuation stock price becomes a reflection of what the business on ground is and you have been a part of the Tata’s administrative services for 25 years. Let us talk about the value that they are adding.
Stock markets are at the highest in India and everywhere they are even higher than they were before the pandemic. This is at a time, when the misery of the people around us has not yet been relieved and may take a long time to get relieved. So there is a disconnect between thinking that if you are doing the right thing for people on the ground, it is bound to result in your stock prices going up. It does not happen that way. The Tatas are doing the right thing with respect to the people of India.

They are continuing to build the manufacturing businesses. They have had a tough time in the automobile sector, which is the one I am most familiar with having worked there for 25 years and also the steel company. These are basic things which people need as well as commercial vehicles like buses. If they are produced in India, by people in India, their skills can be improved by engaging them and employing them in larger numbers. That way, they are doing what is right for India and also helping to increase the market in India for other people who then sell higher-end stuff to the Indian people as the incomes also rise. So Tata founders wanted to build industries in India for producing things for Indian people.

Looking at the other side, India should have an international air ground to make India proud but is that the most important thing at this moment? Which Indian on the ground is flying and need to fly right now? But India needs to have enterprises that give India respect as being a good Indian enterprise and Air India is very necessary for Tatas to support as they have worked hard on it and they will do an excellent job of that too.

Do you expect Tatas to expand their breadth of operations in the coming years or should they now be focussing on scale, size and only taking the existing businesses up? They are getting into retail, defence, they want to enter the semiconductor sector, they are building up a super app. Is it good to expand so much?
Tata Group is a very unusual conglomerate and conglomerates were considered to be bad. But as an investor, you would like to put your money into a diversity of stocks because you do not know how any one of them may do. So, it is good to have a diversified portfolio. It is like maybe the Tata Trust investing your money in various companies or letting your money be used by various companies to ensure that you got diversity in the stocks. They could be good portfolio managers putting money where money is going to be made and taking money out of the places where it does not seem to be made.

So I would rather not look at the conglomerate and Tata strategy should be seen through the lens of an investor in various businesses. It should be in terms of how do you grow a diversity of businesses and what is the value of having a diversity of businesses inside your management portfolio? Then comes the point of values. The Tatas have worked to glue the group around values. The internal processes within the group ensure the companies can learn from each other and learn to manage quality from each other, know how to manage and develop human resources from each other, and build customer relationships. In short. learn from each other the best practices in the Indian context and internationally as well.

Also, coming back to the point on which businesses should Tata choose to do business in and therefore build India, I think Tatas and every other organisation should be concentrating on building manufacturing businesses in India because they will enable more people who do not have access to high level education to find work.

The IT sector is for highly educated people and these people turned out to be very effective in selling their skills to people abroad at good prices. That is how

and Infosys and our IT sector grew. But that sector has not really been able to build the incomes of people within India and therefore as a citizen of India, I hope that Tatas would be paying more emphasis on businesses that employ poorer people in India from the rural sectors and enable them to learn and earn and grow their skills.



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