Shockwaves rippled through British industry this week after Tata Steel said it would sell its UK business, marking a sobering failure for its Indian parent after years of exuberant Britain-bound ventures. A string of deals since the turn of the millennium has seen Tata Group snap up a clutch of famous names including Tetley tea, luxury carmaker Jaguar Land Rover and steelmaker Corus.
The Indian colossus, which spans more than 100 companies in as many countries, also runs the St James' Court hotel near Buckingham Palace, while software giant Tata Consultancy Services supplies almost a third of the FTSE 100. Back home, Mumbai-based Tata's brands factor daily in the lives of Indians, with products ranging from salt to trucks to watches, helping generate more than $108 billion in sales in 2014-15. Yet the group founded under British colonial rule in 1868 has hit headwinds of late, with lacklustre performances at several companies including Tata Motors, Tata Power and Tata Steel.
At the height of Chinese steel demand in 2007, Tata paid a staggering $13.7 billion for the Anglo-Dutch steelmaker Corus Group, saddling itself with vast debt. The following year the global financial crisis brought the world economy to its knees. Eight years later, the recovery still looks patchy, and the steel industry is in crisis. A sharp slowdown in China, the world's largest consumer and producer of steel, has led to a flood of cheap exports, hurting steelmakers elsewhere.
Legendary industrialist and group founder Jamshedji Tata founded India's first modern steel plant in 1907, in a village that became the bustling company town of Jamshedpur. When India started opening up its economy to foreign investment in the 1990s, leading to increased competition, the group began acquiring assets abroad to gain clout. As it continues to expand in India's fast-growing economy and overseas, Tata says it wants to take its products to a quarter of the world's population by 2025. Some of the group's ventures have paid off, and reaped dividends for Britain. Luxury car brand Jaguar and SUV marque Land Rover, based in Coventry in central England, have undergone a renaissance in sales since Tata bought them from Ford in 2008 for $2.3 billion. JLR last year announced it was investing £600 million in manufacturing more cars in the UK. Meanwhile, Tata Consultancy Services, seen as the group's standout performer and cash cow, employs 11,000 people in the UK alone.
It has been a different story at Tata Steel, however, with one plant, Port Talbot in Wales, said to be losing £1 million a day. Yet Wyn Grant, professor of politics at Warwick University, said Tata still retains goodwill in Britain thanks to the investment it has brought.
