Tatas plan Rs 1.2-lakh-cr investments in India

Unperturbed by a series of scams hitting India Inc in the recent past, salt-to-software conglomerate Tata Group has reaffirmed its India commitment, lining up mega investments in the domestic power and steel sectors.

The group will be investing up to a whopping Rs 1.2 lakh crore ($27 billion) in the next five years across sectors in the domestic market with an aim to double its current revenues to Rs 6.64 lakh crore ($150 billion) by then.

The current turnover of the group is nearly $68 billion, up from about $8 billion 10 years ago. In 2009-10, about 57 per cent of its revenues of $67.4 billion came from domestic operations.

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The Tata Group, which has over 90 operating companies, will put in half of the planned investment in the power sector, while the other significant portions will be in the steel and automobile sectors.

In an interview to news agency PTI, Tata Industries managing director Kishor A Chaukar said, "We have become a significant player globally in each of the sectors that we are present in.

In the next five years, the pace of growth of the group will continue... The current investment assessment for the next five years is around Rs 1.1 lakh crore to Rs 1.2 lakh crore."

Tata Industries is one of the investment arms of Tata Group.

When asked about the expected revenue of the group after the investment is made, Chaukar said, "It will be more than double in less than five years. I think it will be around $140 billion to $150 billion."

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Just to put the numbers in perspective, in 2010, US multinational conglomerate General Electric Company (GE) had made $104.6 billion in revenues.

On a trailing 12 months basis, US energy giant Exxon Mobil had a $342.6-billion turnover in December 2010, while Toyota Motor Corporation, the global automaker, had revenues of a little over $228 billion in FY2010. British-Australian mining giant Rio Tinto Group clocked $56.5 billion in the same period.

RIL Group, India's largest private sector enterprise, is also a diversified group with an annual revenue in excess of $44 billion.

RIL chairman Mukesh Ambani in his last AGM speech had said his aim was to make RIL a $80-billion powerhouse by 2020 through its ongoing diversification drives into power, shale gas and financial services.

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Even Aditya Birla Group, currently a $30-billion corporation, has ambitious plans to grow the empire with a target of $65 billion in group turnover by 2015.

Chaukar said Tata Group's investment war chest had been planned essentially for the Indian market. Other than the cash guzzling power and steel space, significant investments would go into the auto, telecommunications and chemicals sectors.

The Mumbai headquartered conglomerate has already invested about Rs 70,000 crore (Rs 700 billion) in the last three years.

This funding for capex will be a mix of internal accruals and debt.

"We are generating a considerable amount of internal accruals and at the same time also reducing current debt, which will enable us to raise (more) debt.

For this investment, the debt and equity ratio will be around 2:1," said Chaukar.

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Power alone will take up the lion's share. Elaborating on the sector roadmap, Chaukar said, "The major sector will probably be the power as we are constructing an Ultra Mega Power Project in Gujarat and it requires quite a substantial amount.

About half of the planned investment, that is Rs 50,000 crore-Rs 60,000 crore (Rs500-600 billion), will be by Tata Power in the next five years."

The other significant investment will be in the steel sector, for which the group has earmarked an investment of Rs 35,000 crore (Rs 350 billion), over and above Rs 15,000 crore (Rs 150 billion) to Rs 16,000 crore (Rs 160 billion) that has already been invested, he said.

Tata's India investment plans are also interesting, considering the group has internationalised its businesses in markets as diverse as the US, China, UK, Indonesia and South Africa.

The group has operations in more than 80 countries across six continents, and its companies export products and services to 85 countries.