The Tata Group's
African odyssey began in the 1970s, when Tata Zambia was set
up. It began exporting Telco (now Tata Motors) trucks and
buses to Zambia. "It was a huge business opportunity,
apart from which we were adding value to the country,"
says Syamal Gupta, a director with Tata Sons and Chairman
of Tata International, the principal export arm of the Group.
From a single product in 1977 — the 1210 range —
Tata Zambia now sells the 1615, 713 and 407 trucks as well
as the 713 and 1316 buses. In the early years of Zambian President
Kenneth Kaunda, most of the large companies were public sector
companies and they were its main customers. Over the years,
its clientele has expanded to include the government, retail
consumers as well as organisations in the trading, mining,
transport, hotel and construction business. Today, Tata is
the market leader in Zambia in the medium commercial vehicles
(MCV) segment, and its LPT 1615 model has a significant presence
in this market.
It was far from smooth sailing for Tata Zambia in its early
days. The teething troubles, as Tata Zambia chief executive
and director R. Bala recounts, were enormous. He says: "Tata
is now a well-known name in Zambia and its neighbouring
countries, but we had big problems in the beginning. No
one believed us when we said the Tatas made trucks, steel
and cement. It was a struggle to gain acceptance as a serious
contender that produced quality products. Things have changed;
today, when a Tata employee meets people in the government
or from the business community, we are treated with respect."
J. H. Mutale, Tata Zambia's general manager for vehicle
sales, says the Tatas were considered "fly-by-night
operators" in the days before they established their
credentials. "Every time we responded to a bid or tender,
we were rejected," he recalls. "There was never
a valid reason or explanation." No longer does the
distrust sully the air. In 2004-05, Tata Motors supplied
282 vehicles to the Zambian government, including pick-ups,
trucks and buses.
Some of the Tatas' past problems can be attributed to Zambia's
economic condition. In the late 1970s, the country was buffeted
by a steadily deepening financial crisis. The economy had
more than its share of adverse developments to contend with
and the resulting political unrest did not help.
There were a large number of sick public sector companies
that needed succour and the government decided to offer
the management of some of these enterprises to private-sector
entities. That's when the Tatas began operating Luangwa
Industries, a bicycle manufacturing entity. Tata Zambia
ran the company from 1987 to 1997 before it was acquired
in totality. This is now the bicycle division of Tata Zambia,
manufacturing the 'Eagle' roadster and sports bicycles.
Sudhir Arora, the general manager of the bicycles and trading
divisions of Tata Zambia, sounds upbeat about the prospects
for the bicycles business. "The Eagle brand was introduced
last year in Malawi, which is a large market for bicycles,
and we have received a positive response," he says.
"In 2004-05, we hope to touch 25,000 bicycles for $1.2
million." The company wants to increase institutional
sales from the current 15 per cent to 40 per cent. To counter
competition from cheap Chinese and Indian-imported bicycles,
a new brand of coloured bicycles called Speedy, with a lower
price tag, has been introduced in Malawi. The bicycle has
been sourced by Tata International from India and will be
test marketed in Zambia later this year.
Another Tata Zambia enterprise with a promising future
is the Taj Pamodzi hotel, managed by the Taj Group from
1990 to 1996, when Tata Zambia bought a 70-per cent stake
in the hotel. It is now a public limited company with the
balance shares of 30 per cent held by the Zambian public
and institutions. The Taj Group continues to manage the
hotel.
It was in the 1980s that Tata Zambia ventured beyond trucks
to hotels, mining manufacture and agriculture. Its textile
division, Townap Textiles, was based in Livingstone and
made shirts, suits, bed-sheets, towels and other fabrics.
The agricultural division, MATCO, set up in 1982, distributed
Swaraj tractors from India, and other agricultural and irrigation
equipment. Another company, called Tata Farms and Foods
was established in 1989. This grew field crops such as maize
and wheat, vegetables and roses on a 500-hectare plot at
Ngwerere, near Lusaka. These found an export market in Holland
and the UK. Since the produce is auctioned in the European
market, the farm has now been leased out on a monthly-rental
basis to people familiar with the auction process.
Mining is the mainstay of the Zambian economy and Tata
Zambia taps this industry by supplying a number of mining
products. These include valves, bearings, rubber linings,
graphite electrodes (used in cobalt processing) and seals.
Steel, mainly plates, is supplied to the local market and
tyres are sourced from MRF in India.
In 2001, the businesses of Tata Zambia were restructured.
At that time, the Zambian economy was changing: incentives
were scrapped, licences were abolished, companies were privatised
and foreign exchange controls were withdrawn. In such a
scenario, Tata Zambia needed to be more competitive. As
a result, Townap Textiles, Luangwa Industries and MATCO
were merged with Tata Zambia, and an overseas branch was
set up in Malawi.
Tata Zambia has four business areas. The vehicles division
looks after the sales of vehicles (pick-ups, trucks and
buses) and spare parts, workshops and the training centre.
General trading deals with bicycles, steel, tyres, water-treatment
chemicals, pipes, roofing, steel sheets, electrical supplies,
school furniture and miscellaneous projects. The mining
division provides products to the mining industry, and the
investments and property division looks after the Taj Pamodzi
and other properties.
Tata Zambia has contributed significantly to expanding
the Tata Group's business activities in other African countries,
such as Zimbabwe, Tanzania, Namibia, Uganda, Mozambique,
Malawi, Ghana and South Africa.
"Many Tata companies have been able to come to Zambia
because of the infrastructure we have created here,"
says Mr Bala. Tata Zambia does liaison work for Tata companies
on all business activities that involve interfacing with
the government, the copper mines industry and organisations
such as the Zambia Electric Supply Company. A few Tata companies
are exploring the possibilities of expanding their reach
in Zambia in the areas of IT, hotels and power.
On a recent visit to Zambia at the invitation of Zambian
President HE Levy Patrick Mwanawasa, Group Chairman Ratan
Tata said: "The Tata Group has had an emotional tie
with Zambia over the years. Our beginnings in Africa began
with Zambia. The reason we are here is to touch and feel
and look at how we can make a meaningful investment —
to fulfil the emotion that some of us have had with Zambia,
be a part of the Zambian economy and be involved in its
development. In the next few months, we will send teams
to explore future business opportunities.
"My statements have been made with all sincerity.
Our enterprises must add value to your country and make
business sense. Our future thrust will be in IT and communications,
hotels, power, basic chemicals and mining related to our
steel business. Also in tea, food products and tourism."
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