The saga of Tata Zambia, once the Tata Group's gateway to Africa, is one of winning trust and establishing credentials as much as it is about expanding business and capabilities

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."