News: Tatas to miss global growth goal

(DNA 30/12/2006) Mumbai - With Corus still hanging fire, Tata Group's internationalization in 2006 falls well short of its acquisition binge of 2005. Under the circumstances, it will be a tough act for the Tatas to maintain the targeted 35% growth in revenues from international business. Unless of course, revenues from global acquisitions of 2005 can be ramped up substantially.

But in terms of size of a single acquisition, the $677 million it spent to pick up 30% stake in Glaceau, this calendar, is the biggest-ever by the group, an indication of the Tatas' increasing aggression in the global M&A playfield.

In the acquisition party of 2005, the Tata Group picked up 11 companies across the globe, spending some $7.75 billion. This spend, however, does not include Taco's buyout of Wundsch Weidinger, Germany and Tata Tea's Good Earth which were for undisclosed amounts.

Compared with this, 2006 has been sedate for the group during which it bought out seven companies, spending $1.08 billion. This is excluding Tata Interactive's acquisition of Tertia EduSoft of Switzerland and Tata Tea's buys of Jemca of Czechoslovakia and Joekels of South Africa for undisclosed sums.

Needless to point out, had Corus happened for the Tatas, for anything between $9-10 billion, the Tatas' global party of 2006 would have been bigger than it had been the year earlier.

In 2005-06, the Tatas were well on course with revenues from international businesses growing 36% to $6.3 billion from $4.6 billion on total group revenues which was up to $ 22 billion from $18 billion in 2004-05.

According to Alan Rosling, executive director, Tata Sons, while no targets for revenues from international business has been set for the group since such can be "overpowering", contributions to international revenues from global businesses like auto, steel and information technology will fall in percentage terms as recent global acquisitions in hotels, chemicals and tea start to chip in more and more to the kitty.

Aggregate spends on global acquisition spree may have sobered but in terms of ticket size of single buyout, 2006 has been seminal for the Tatas, indicative of the group's growing appetite for things bigger. In the $7.75 billion put up for globalisation in 2005, the biggest ticket was $239 million buyout of Teleglobe International Holdings by VSNL.

Compared with this, of total $1.08 billion acquisition in 2006, the biggest has been Glaceau by Tata Tea and Tata Sons for $677 million.

Hence, the $9.2 billion bid for Corus is well in tune with the "bigger is better" corporate growth mantra of Tata Sons. Insiders in the group said that Corus or no Corus, the Tatas are not about to move away from its newfound aggression in the global arena.