Tata aiming to take African business to the next level

25th September 2015

By: Leandi Kolver

Creamer Media Deputy Editor


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Multinational company Tata is looking to take its business on the African continent to the next level.

Tata Sons business development and public affairs head Madhu Kannan told journalists that, while the group had worked on the continent for almost 40 years, “the game right now is to see if we can build scale”.

“We have been there for a long time, but the question is: How can we take it to the next level?” he told a media delegation visiting the Tata operations in India.

To achieve this, the group would leverage its current businesses in African countries in a more structured manner, Kannan said, noting that the company had decided on this prioritisation strategy about a year ago.

“Africa is a big market, with a lot of good services that can be sold into the market. The continent is still in the early stages of development and there are a lot of services that we are able to successfully provide in markets like India that can be applicable there,” he said.

Kannan said the company would initially focus on three regions to grow its business on the continent.

These were Southern Africa, with a focus on South Africa; East Africa, and, in particular, Kenya and Ethiopia; and West Africa, where the company would focus on Nigeria and Ghana, besides others.

When asked about the country selection, he explained that the company would look to work more broadly on the continent; however, prioritisation was necessary to kick-start the process.

“I can’t afford to be in 50 countries at once,” he said, adding that different Tata operating companies would focus on different regions.

Further, Kannan said the group had identified three broad sectors that offered “interesting opportunities” for the group in Africa, namely automotive, trading and infrastructure.

The company would also keep the consumer space in mind; however, the focus on this sector would not receive the same amount of intense focus.

In South Africa, Tata was currently working with State-owned power utility Eskom to provide testing, inspection and certification services for the Medupi and Kusile power station projects.

Tata Consulting Engineers (TCE) MD JP Haran explained that Tata, unfortunately, could not contribute much to the Medupi project as it had entered the process too late.
“Technical improvements are possible and TCE would be happy to work with Eskom on their future and existing projects.”

He also noted that, at Kusile, TCE became involved at an earlier stage and might be able to do more.

“We are confident that we will be relevant to the project and we will not be more costly than other resources,” he said, adding that the group had gained experience on similar projects in India and believed that it could, therefore, replicate those successes in South Africa.

Meanwhile, Tata Projects MD Vinayak Deshpande told the media delegation that Tata Projects was investigating methods of refurbishing old power stations, from which South Africa could potentially benefit.

“We are looking at how we can provide those services and recommission those old power stations to enable them to provide more power,” he said.

Deshpande said Tata Projects had done an initial scoping study to determine what would be required.

Currently, it was expected that a cross-company group, comprising Tata Projects, Tata Power and TCE, would provide these refurbishment services for clients such as Eskom.

Deshpande added that, while these services would be separate to those already supplied to Eskom by Tata Projects, the company would look to leverage its existing relationship with the power utility to enter the refurbishment market.

Meanwhile, Tata Power was involved in Phase 2 of the Renewable Energy Independent Power Producer Procurement Programme, under which it was developing the Amakhala Emoyeni and Tsitsikamma Community wind farm projects in the Eastern Cape.

The project s would produce a combined 235 MW of power and were being developed in partnership with mining major Exxaro.

Tata Power MD Anil Sardana said that he had just returned from a visit from South Africa during which he inspected those projects and reported that they continued to run ahead of schedule.

Now these projects were now in the advanced stages of development and we “are looking forward to the timely connection [of these projects to the national grid] by Eskom.”

He also stated that Tata could have completed the construction of the wind farms in a period of eight to ten months; however, construction was instead done over a period of two years as Eskom could not commit to connecting the projects before March 2016.

Meanwhile, Tata Motors was planning to introduce its Bolt hatchback and sedan passenger vehicles to the South African market this year.

The vehicles were launched in India in February and were also available in Nepal.

Tata Motors passenger vehicle business unit programme planning and project management senior VP Girish Wagh said the Bolt hatchback was unique, as its design offered a higher seating point and enhanced interior.

Features included an advanced touchscreen with SMS readout, Bluetooth connectivity and USB connectivity for navigation, he noted.

The vehicles, which would be exported to South Africa fully assembled, sold for about $7 000 in India.

Wagh said only a manual transmission version of the Bolt vehicles would initially be exported to South Africa.

Tata Motors sold a manual-automatic version of the vehicle, the Tata Zest, in India, and would also consider exporting these vehicles to South Africa should there be demand.

Although Tata Motors did not have immediate plans to manufacture passenger vehicles in South Africa, it would explore the possibility of establishing a passenger vehicle manufacturing plant in the country, depending on the volume uptake of its vehicles.

However, Tata Motors, through Tata Motors South Africa (TMSA), already had an established truck assembly plant in Rosslyn, near Pretoria, with plans to start exporting the vehicles produced there to neighbouring countries in Africa.

Addressing the African media delegation in India, Tata Motors commercial vehicles executive director Ravi Pisharody said TMSA’s Rosslyn truck plant, in Pretoria, currently only used about 55% to 60% of its capacity.

“[Therefore], there is room to start exporting,” he said, explaining, however, that the company would look at expanding the facility, which was opened in 2011, only when it was operating at full capacity.

This was not expected to occur within the next two to three years.

In the meantime, the company would add new vehicles to those currently being assembled at the plant.

The Rosslyn plant currently produced trucks of 3.5 t gross vehicle mass and above, which translated into participation in the medium, heavy and extra-heavy commercial vehicle segments.

Pisharody said the assembly of the new Tata Prima range of heavy-duty trucks would start within the next 12 months.

The company would also look to start the manu- facture of commercial vehicles in the 7 t to 11 t category in South Africa.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor



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