Raman Dhawan credits
the Tata expansion into Africa to the Group's spirit of adventure.
The managing director of Tata Africa Holdings in South Africa
is less forthcoming about his own spirit of endeavour in taking
the Tata business forward in the continent, but his has been
a seminal and critical contribution to the task.
Dhawan has been with the Tata Group for over 25 years, most
of them in Africa. As principal executive of the Group in
the continent, he is responsible for coordinating all the
activities and operations of Tata companies in Africa. That
makes him a vital element in the decision-making process that
has seen the Group spread its wings — on the growth front,
on diversification and on fresh investments — in what
was to it a relatively unknown geography.
He speaks here with Christabelle Noronha on the Tata expedition
to Africa, the increasing presence of the Group in the region,
and the challenges of doing business in a unique environment.
What is the role and responsibility
of Tata South Africa?
Tata Africa Holdings is an operational company that conducts
business like any other Tata enterprise. It imports and
distributes vehicles, steel products, chemicals, mining
consumables and other engineering items. In its capacity
as the investment arm of the Tatas in Africa, it identifies
projects for Group companies and assists them with due-diligence
procedures and feasibility studies. It has also helped companies
such as Tata Motors reengineer products to local requirements
and specifications. Thus, Tata Africa Holdings is not merely
a liaison arm of the Group but is involved in conducting
business and day-to-day operations.
We interact and interface with Group companies from a position
of strength. It is an acknowledged fact that over the years
we have been adding value to each of their ventures in Africa.
When we started our operations in Africa, first in Zambia
and in 1994 in South Africa, Syamal Gupta [the managing
director of Tata International] had a clear vision of spreading
our activities to other countries in the African continent.
Until then, we were a one-office, one-country enterprise.
Mr Gupta had the foresight and the vision and we worked
complementarily to each other. We moved with confidence,
which was the key to creating this entity. We are now developing
four major hubs in East Africa, Central Africa, South Africa
and West Africa.
How large are the Tata Group's
African operations in terms of revenue?
It was in the mid-1970s, in the true spirit of adventure,
that the Tata Group decided to venture into the southern
African region. Our operations in Africa first found opportunity
in Zambia in 1977, when we started Tata Zambia. Since then,
our operations have extended to Zimbabwe, Tanzania, Namibia,
Uganda, Mozambique, Malawi, Ghana and South Africa. Our
focus during the next couple of years will be to extend
our operations to include western Africa and the francophone
countries.
Our thrust in terms of our product offerings will be on
automobiles, steel, chemicals, information technology, telecommunications,
hotels and consumer products. Our combined turnover from
our African operations is over Rs 500 crore and our profit
before tax is about Rs 25 crore.
What is the nature of the Tata
investment in Africa thus far, and what is its future investment
plans?
Tata International has until date made an investment of
Rs 6.6 crore in setting up various companies in Africa.
These companies, in turn, have over a period of two decades
ploughed back their profits and the net worth of these companies
today is in excess of Rs 100 crore ($25 million). Future
investments will be in telecommunications, power and in
the setting up of a ferrochrome smelter. In keeping with
the Group's overall business strategy of operating in certain
business sectors, we will also be exploring business opportunities
that fit into the overall Tata plans.
We have recently finalised a brand campaign with active
help and cooperation from the Group Corporate Affairs Department
and this will run for a year. Some research is being done
and the brand-building exercise will start from around June.
It will involve media and public relations as well as sponsorship
of events and advertising. Our target audience will be the
opinion and decision makers in the top 500 African companies
as well as governments. We have decided to align ourselves
with South Africa's marketing strategy (for every rand that
we spend, we should get a return of two). In March next
year, an outside agency will track the impact of our campaign.
What has been the Tata impact
in Africa in terms of local job generation?
Our companies in Africa employ over 700 locals; additionally,
we have also created indirect employment opportunities for
over three times that number.
What are the challenges that
companies encounter when doing business in Africa?
The business challenges primarily relate to being able to
offer goods and services that are globally competitive,
not only in terms of price but also on quality, delivery
times and value for money. Since most of the products we
sell in the African market are sourced from our manufacturing
plants in India, building confidence in our customers is
of paramount importance. Over the past couple of years,
Tata Africa has created brand awareness and confidence in
our customers, and this has stood us in good stead.
As regards issues of language, most people in Africa speak
English, except those in the Portuguese- and French-speaking
regions. Our teams in Mozambique have picked up the Portuguese
language, so that does not seem to be an issue any longer.
Our people mix and socialise with the local population,
which means the cultural divide becomes less apparent.
The manner in which one interacts with the government and
the manner of doing business is different from that in India.
There is a lot of dependence on manpower; while we have
been able to develop skilled manpower, most of the training
and learning happens on the job and through hands-on experience.
This is very different from the situation in India, where
you have skilled and qualified people. On the personal front,
children's education is a challenge, as one needs to learn
the local language as one of the subjects.
You've been working in Africa
for some time now. What have been your personal challenges?
In the beginning, the perception of India and Indians was
that we were petty shopkeepers and traders. In one country,
we were not being given tender documents because it was
felt that against Japanese competition our vehicles would
not stand a chance. We requested them to allow us to quote,
if only to allow them to negotiate better prices with the
Japanese. The result was that they were able to get the
price down from $30,000 to $20,000 on an order for 200 vehicles.
The next tender, this one for 400 vehicles, was awarded
to us.
Our biggest challenge has been to build trust, and that
is what we have managed to do. By creating awareness not
just of Tata products but also the products of other quality
Indian manufacturers, we have managed to change the perception
of Africans regarding the 'Made in India' tag.
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