Finally, Tata Group gets it

While reading about the innovation gyans from his highness, the great Narayan Murthy, a question cropped up, which Indian company or industrial group has really tried to address the Indian market differently. While always in the news, Reliance and Birla groups, with friends in powerful positions continue to corner scarce resources like coal, gas, aluminium, etc.,  I must commend the Tata Group which has been quietly developing and launching  products for the Indian middle class.

Over the last year they have launched  products in automobile, hospitality and finally mobile, that has challenged the status quo in their respective industries. In automobiles they have launched the world’s cheapest car, Tata Nano, which has broken the rules of the game. Their launch price of US$2500 was half that of the next expensive car. Talking to an engineer, who was part of the design team, my question to him, how did you do it ? His answer, the car Industry has always enjoyed good margins, we have only sacrificed margins to make it affordable. Lets us look at the hotel industry next.

Five years ago in the Whitefield suburbs of Bangalore, a hotel called Tata IndiOne was launched. The room was available for Rs 999 a night, with buffet breakfast available for Rs 50. This was a no frills hotel with must have basics well done. Clean sheets, spotless bathrooms, wireless internet, Lcd TV, etc.  What you did not get was room service delivering coffee or snacks in the middle of the night, no spa, no swimming pool, no gym, stuff you anyway never used on a business trip. This model has been scaled out across India under the brand Ginger serving over 22 cities. The model is a commercial success with occupancy rates,  the highest, of any hotel group in India and the return per square foot better than any 5-star hotel in India. This has not only disrupted the expensive hotels but also ensured that the hotels at the same price point improve their infrastructure and services. A positive social impact for sure.

Most recently they made a unique foray in mobile telecommunications via Tata DoComo by launching a GSM service with per second billing, something most consumers wanted but no telco dared to offer, because it would have cannibalized ARPU (average revenue per user) by more than 20%. Lot of consumers were being taken for a ride with overloaded networks and dropped calls. Even a 5 second call with Hello yelled on both sides and no success in sustaining a conversation yielded one Rupee. A call that was 2 minutes and 5 seconds was charged for 3 minutes. Telcos and TRAI (of course in deep slumber) allowed this to happen for a number of years till the Tatas came and changed the rules of the game. The bad news is that all their capacity and available SIM cards are sold out and we have to wait for more.

I always rated  Tata organizations to be as lethargic as the government of India. However they seem to be one of the few industrial houses in India that still cares for the middle class citizen. A group with ethical standards that are an exception not the rule in India. Lets pray, they keep walking and for the time being No Tata please.

1 thought on “Finally, Tata Group gets it”

  1. Dear Shrikant,
    In addition to three initiatives by Tatas listed in blog, Tata’s new Housing project at Bhoisar near Mumbai deserves to be commended.
    G T Gokhale

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