Friday, March 09, 2007

Tata, bye bye?

The BBC recently had an article on the Tatas and how they are a "model of good behaviour". Sudha Murthy has told the story of how she got a Tata job. Labour unions respected the Tatas: Naval Tata was nominated to represent India's textile industry at the ILO, and later joined the governing body. Many others have sung the praises of Tata. Indeed, it is hard to think of a firm anywhere in the world that is so pervasive and yet so respected. They were the original "don't be evil" company, long before Google. But are they losing it now?

One of the widely praised things Ratan Tata did after taking over the company was to concentrate on its core efforts, getting rid of many unimportant units of the company such as soap, electronics and so on. But I wonder how successful their forays in their "core" businesses really are, and more importantly, where it leaves their image.

Take Tata Motors, formerly Telco. The Indica won praise for its good looks when it was launched, but quickly faced disappointment for its quality. Not to worry, they launched the new, improved Indica V2. But even today the Indica is earning mixed reviews. The diesel version has proved popular, because of the lack of diesel options on the market -- but with the new Maruti Swift, the relaunched Fiat Palio, and the upcoming Hyundai Getz, that could change. In particular, a lot of Indica taxis have been sold. But this could be a mixed blessing: cars that become associated with taxis -- the Ambassador in our country, the Ford Crown Victoria in the US -- tend to lose appeal among the general public. And I've encountered taxi drivers who aren't overjoyed with the machine either: it's better than the Ambassador, but much more expensive to maintain. As for the good looks -- personally I've grown a bit tired of them (perhaps the taxis are to blame). I much prefer the Fiat Palio (designed by the same Italian firm).

Now they want to launch a small car costing Rs 1 lakh, but the proposed plant in Singur, West Bengal, is mired in trouble with locals -- precisely the sort of trouble that the Tatas have never been associated with in their history.

Take their telecom division, Tata Indicom, including what used to be VSNL. Their mobile phone service doesn't seem very popular. I don't know any users, so don't know what the service is like. The lock-in associated with CDMA is unappealing, though. I use their fixed wireless service, and I have only one complaint about the phone service -- you can't dial "special" numbers, the ones that start with 1, even though I can dial them from my Airtel mobile. But the bundled modem-based internet service, that they advertise as "high speed", is usually much slower than dial-up on a land line (or GPRS on my mobile), and is extremely expensive besides. And as for their broadband service -- I haven't used it, but the forums on the net that I've seen are extremely critical.

Recently I've been seeing advertisements for Tata Indicom Broadband that say "unlimited high-speed internet for just 50p an hour". If you look at the details, what they're offering at that price is a 64 kilobit/s connection. That is not high-speed by any definition, and this sort of deceptive advertising will not earn them goodwill. Dialup often does better than that (upto 112 kilobit/s if you're lucky). TRAI has declared that services advertised as "broadband" must be at least 256 kbit/s, but apparently it's ok to call it "high-speed" and advertise it on a "broadband" site. Meanwhile, the rest of the world has moved to much higher speeds, at far lower prices.

Last year my wife and I purchased travel insurance, for a couple of weeks, from Tata-AIG. Our reward was an incessant flow of marketing calls, despite repeated requests, polite and rude, on the phone and by email, to take us off their list. By contrast, my car insurance company -- HDFC-Chubb -- has never called me except to remind me about renewal, which has been quick and efficient. That makes me more likely to go to them next time for other needs.

Personally, my image of the Tata group is already a lot less positive than it used to be. It's certainly not a name I can trust blindly, and wouldn't be my first-choice provider in any of the above businesses, or many others. If a significant number of other Indians think so too, the Tatas are in trouble.

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