MUMBAI: The Tata Group has identified aerospace, automobiles, electronic systems and renewable energy as the key drivers for the group’s manufacturing push. Of these, defence and aerospace are the two most important areas identified by chairman Cyrus Mistry and significant investments will be made in these areas.
“When Sikorsky Aircraft Corp, one of the world’s premier aircraft manufacturers and part of the US-headquartered United Technologies Group, decided to relocate the fuselage manufacturing facility for its S-92 helicopter out of Japan, it selected India as the place to produce this crucial sub-assembly component. Tata Advanced Systems Ltd (TASL), Sikorsky’s joint venture partner, set up a greenfield facility in Hyderabad for this purpose.” Mistry said in an internal communication to employees ahead of the scheduled annual general meetings of around 100 group companies.
Tata Group expects its defence and aerospace business to increase its revenue by 7.5% to Rs 2,650 crore in 2016-17.
The group’s focus on manufacturing comes at a time when the Modi government is encouraging companies to make in India, and the conglomerate is staring at a closure of its UK steel business.
“There are excellent opportunities for growth in nearly every industry in India, in the traditional ones such as steel, cement and textiles and in the sunrise sectors of information technology, defence, aerospace, automobiles, electronics and more. The opportunities, if addressed well, could enable India to become a global hub for manufacturing,” Mistry said.
“Manufacturing has been a significant part of the chairman’s vision,” said a senior group official who is also involved in devising the strategy.
The strategic allocation runs parallel to the group’s recent initiatives in the digital platform, which are seeing investments of about Rs 1,000 crore.
Most of Tata Group’s operating companies are involved in defence and aerospace — Tata Advanced Materials, Tata Motors, Tata Power Strategic Engineering Division, TAL Manufacturing Solutions, Tata Technologies, TCS, Tata Steel and Tata Elxsi. While Tata Advanced Systems has an order book of ` 4,400 crore, Tata Motors has an order book of Rs 900 crore.
An earlier Tata brand study had estimated that defence has the potential to contribute 15% to Tata Motors’s revenue from the current 3%, which has been rising recently due to strong commercial vehicle sales in India and robust demand for luxury cars under its Jaguar Land Rover umbrella.
Automobiles is another growth area that the group is looking at. “India is expected to emerge as the world’s third-largest automotive market by 2016, accounting for more than 5% of the global vehicle sales,” said Mistry, adding, similar opportunities exist in electronic systems design and in renewable energy, as well.