The Tata Group
WORKING PAPER: 06-03
Mar. 2006
The Tata Group after the JRD Period: Management and Ownership Structure by Ram Kumar Kakani & Tejas Joshi XLRI, Jamshedpur 831001, India E-Mail: kakani@xlri.ac.in
Last updated in Feb. 2008
Electronic copy available at: http://ssrn.com/abstract=889394
XLRI Working Paper: 06-03
2
The Tata Group after the JRD Period: Management and Ownership Structure1
Ram Kumar Kakani & Tejas Joshi E-Mail: kakani@xlri.ac.in
Abstract
Complex ownership structures are a common phenomenon across Asian business groups. There has been a large amount of international work focusing on the various aspects of ownership structures and strategies adopted by international business groups. In the Indian literature, we found little work, especially with respect to case studies. In this paper, we use public information of a well known business group (the Tatas) passing through a major restructuring and document the development of ownership structure. The country’s second-largest conglomerate, the Tata group, with year 2005 revenue of over Rs. 80,000 crores (US$ 20 billion) and core interests ranging from steel, cars and telecommunications to software consulting, hotels and consumer goods, ¬has come a long way since JRD Tata passed the leadership mantle to Ratan Tata, in 1991. We examine the interrelation of ownership structure, corporate strategy, and external forces for one of the largest conglomerate from India. In all Tata group affiliates, control is enhanced through pyramidal structures, and cross-holdings among affiliates. This case study on the oldest business empire also explores the rationale behind these moves and examines the tensions and complementarities between stronger ownership ties among group affiliates. While bridging ties among group affiliates does benefit the new leadership in creating a more cohesive business group yet the findings hold enough water to conclude that these moves are contradictory to the interests of the
Mar. 2006
The Tata Group after the JRD Period: Management and Ownership Structure by Ram Kumar Kakani & Tejas Joshi XLRI, Jamshedpur 831001, India E-Mail: kakani@xlri.ac.in
Last updated in Feb. 2008
Electronic copy available at: http://ssrn.com/abstract=889394
XLRI Working Paper: 06-03
2
The Tata Group after the JRD Period: Management and Ownership Structure1
Ram Kumar Kakani & Tejas Joshi E-Mail: kakani@xlri.ac.in
Abstract
Complex ownership structures are a common phenomenon across Asian business groups. There has been a large amount of international work focusing on the various aspects of ownership structures and strategies adopted by international business groups. In the Indian literature, we found little work, especially with respect to case studies. In this paper, we use public information of a well known business group (the Tatas) passing through a major restructuring and document the development of ownership structure. The country’s second-largest conglomerate, the Tata group, with year 2005 revenue of over Rs. 80,000 crores (US$ 20 billion) and core interests ranging from steel, cars and telecommunications to software consulting, hotels and consumer goods, ¬has come a long way since JRD Tata passed the leadership mantle to Ratan Tata, in 1991. We examine the interrelation of ownership structure, corporate strategy, and external forces for one of the largest conglomerate from India. In all Tata group affiliates, control is enhanced through pyramidal structures, and cross-holdings among affiliates. This case study on the oldest business empire also explores the rationale behind these moves and examines the tensions and complementarities between stronger ownership ties among group affiliates. While bridging ties among group affiliates does benefit the new leadership in creating a more cohesive business group yet the findings hold enough water to conclude that these moves are contradictory to the interests of the
References: Khanna, Tarun and K Palepu, 1998, Harvard Case: “House of Tata, 1995: The Next Generation”, Harvard Business School Khanna, Tarun and K