Tata: the Indian empire that bought up the UK

As the ink dries on the government’s £500 million bailout of the Port Talbot steelworks, few within the trade union movement will be praising its Indian owners, Tata. For, as part of last week’s “rescue” deal part-funded by the British taxpayer, some 2,800 will lose their jobs at sites in south Wales.
Yes, some of the longest serving will be receiving up to £100,000 in severance pay, and even younger workers will receive a minimum of £20,000 each. Jonathan Reynolds, the secretary of state for business and trade, claimed he had won major concessions over the deal for Port Talbot workers — but, in reality, the deal he secured was little better than the previous one agreed by his Conservative Party predecessors.
Replacing Port Talbot’s two dirty, coke-burning blast furnaces with a cleaner electric arc furnace making “green steel” — a move that will rip the heart out of a community steeped in more than a century of steelmaking — would, on the face of it, seem at odds with the values of Jamsetji Tata, the company’s Victorian-era founder.
A renowned philanthropist and anglophile, he was such a regular visitor to Britain on fact-finding missions to its cotton mills that when he died in 1904, while travelling in Germany, his body was returned for burial in Brookwood Cemetery, Woking, where it still lies in a mausoleum.
He used British industrial know-how to build what was to become India’s biggest conglomerate, starting in textiles and then moving to hotels, energy and, eventually, steel.
But while he focused on India, his 20th and 21st-century successors were to expand his empire in the UK, where — little known to most British people — Tata Group is now one of the biggest private-sector employers.
From management consultancy to Land Rover and Jaguar cars, Tetley tea to industrial chemicals, Tata companies employ more than 60,000 people and generate in excess of £24 billion in revenues in the UK.
They are among the biggest investors in UK manufacturing. The group has invested billions of pounds reviving Jaguar Land Rover since buying the unloved business from Ford in 2008. Under Tata’s ownership, JLR has reasonably claimed to spend more on research and development in the UK car industry than any other manufacturer. It is currently investing heavily to develop electric and hybrid versions of its models.
The Tata empire had already launched into these islands before its entry into British carmaking when its Tata Tea division — the second-biggest Indian teamaker after Unilever’s Hindustan Lever — bought Tetley for £271 million. The takeover was a moment of Indian national pride, as it was the first time an Indian tea company had bought a global brand.
It moved into UK chemicals six years later, buying Cheshire-based Brunner Mond, one of Europe’s biggest producers of soda ash, sodium bicarbonate and calcium chloride.
A year later, Tata entered the UK steel industry, winning a takeover battle for the FTSE 100 steelmaker Corus by paying £4.3 billion for the business, the rump of which was the former national champion, British Steel.
It later split off part of the operation, including the Scunthorpe Steelworks and the British Steel brand. Now owned by China’s Jingye Group, British Steel is going through an almost identical process of moving to an electric arc furnace with job losses and government aid.
The Tata group now has 26 publicly listed companies around the world, with a combined market capitalisation of more than $365 billion (£280 billion), with Britain being its biggest market outside India.
The size of its operations in the UK have led to suspicions that the company holds the upper hand in its negotiations with the government.
It is a charge the company refutes, saying that each of its UK entities are standalone operations, none of which is majority-owned by Tata Group.
TV Narendran, Tata Steel managing director, said: “Tata Motors is a listed company 35 per cent owned by Tata. Tata Steel is 33 per cent owned by Tata Group … [Tata Steel] is an independent listed company, so we have to operate within the confines of what we are expected to do as a listed company, with independent directors and independent shareholders.”
But even some company insiders are sceptical about management’s protests that the various arms of the Tata empire are not used as leverage in negotiations with the likes of Reynolds. “They’ll say they aren’t linked,” said one. “But, unofficially, there is a natural crossover.”
This perhaps explains Reynolds’ reluctance to create too much friction with Tata. The group’s inward investment is such that it requires a certain realpolitik from ministers.
Take Agratas, Tata’s electric-vehicle battery arm. In February, it decided to pick Somerset over Spain for the site of a new £4 billion gigafactory. It is an important investment in Britain’s drive to be part of the green automotive shift that will create 9,000 jobs in the UK.
The UK’s public sector is heavily reliant on Tata Consultancy Services, a $150 billion IT outsourcing and advisory business with shares listed in New York and Mumbai.
TCS, which competes with Accenture and AWS in the top ranks of UK IT consultants, has won 44 government contracts from Westminster worth £2.4 billion since 2012, according to data provider Tussell.
The biggest of these is a £1.5 billion deal to administer the National Employment Savings Trust (Nest), the defined-contribution pension scheme, for the next ten years.
For all of its investments — and taxpayer help — in the UK, Tata Steel’s Narendran seems to sit on the fence in judging whether Britain is a good place to do business.
“Well, yes and no,” he said. “Yes, because it’s an easy place to work in — the government is supportive, we have had a good relationship over the years. The Tata Group is significantly invested in the UK through Jaguar Land Rover, TCS, Tata Chemicals, Tetley and Tata Steel.
“No, simply because the market is a mature market.”
Indian-born Alok Sama, former president of the Japanese investment giant SoftBank, advised on the flotation of Tata’s Indian Hotels business when he was an investment banker at Morgan Stanley. He said Tata still had a paternalistic approach towards business. “It is not controlled by crazy rich capitalists or a wacky princeling,” he said. “Tata Sons [the holding company for the group] is owned and controlled by philanthropic trusts, and this permeates their attitude toward all stakeholders.”
And, he added: “Tata’s stewardship of iconic British assets has been stellar. As a British Asian, I loved owning my Jaguar sedan. But I always called it ‘my Tata’ rather than ‘my Jaguar’. I think that says something about the brand.”