Indian anger at US business snub to Tata
Saturday, 15 December 2007
Jo Johnson, FT Syndication Service
NEW DELHI: India's government and business community have taken offence at suggestions that Tata Group, the country's most respected and acquisitive conglomerate, would be an unsuitable owner for luxury brands in the US.
Tata received a second rebuff in a matter of days this week when Orient-Express, a New York-listed hotels, trains and cruises group, rejected its offer of a tie-up with its Taj hotels.
After the Tata-controlled Indian Hotels, owner of Taj, increased its stake in Orient-Express to 11.5 per cent, Paul White, chief executive, wrote a blunt letter, saying a link with the chain was not in shareholders' interests.
He said: "Any association of our luxury brands and properties with your brands and properties would result in a reduction in the value of our brands and of our business and would likely lead to erosion" in Orient-Express's premium room yields.
This follows reports last week that US dealers of the ailing Jaguar had objected to Tata Motors as a potential owner of the luxury marque, which, along with Land Rover, has been put up for sale by Ford, its US owner.
Referring to "unique image issues" associated with Indian ownership, Ken Gorin, Jaguar Business Operations Council's chairman, said the US public was not "ready for ownership out of India of a luxury car brand such as Jaguar".
Ravi Kant, Tata Motors's managing director, strongly disagreed. He told the FT: "We've met dealer networks in the US and did not find this in our due diligence. This is a problem of communication. People may not know Tata Group - what our competencies are."
Kamal Nath, India's commerce and industry minister, said: "There cannot be any discrimination against outward investment from India." In an era of globalisation, "trade and investment [is] a two-way street".
Venugopal N. Dhoot, the president of the Associated Chambers of Commerce and Industry of India, told the Press Trust of India that Orient-Express hotels had displayed "arrogance toward one of India's most respected business houses".
An editorial, entitled "Racism can't halt Indian takeovers", in India's Economic Times business newspaper, accused Orient-Express of discrimination "barely camouflaged in the language of branding".
An Orient-Express official said: "It was not our intention to be racist in any way. Our letter was based solely on the business rationale."
A company with sales of $28.8bn (£14.1bn, euro19.7bn) last year, Tata tends to take such slights as spurs. When Jamsetji Tata, its founder, proposed making steel for the British-run Indian railways in 1907, Sir Frederick Upcott, a colonial administrator, scoffed. "Do you mean to say that Tatas propose to make steel rails to British specifications?" he asked. "I will undertake to eat every pound of steel rail they succeed in making."
NEW DELHI: India's government and business community have taken offence at suggestions that Tata Group, the country's most respected and acquisitive conglomerate, would be an unsuitable owner for luxury brands in the US.
Tata received a second rebuff in a matter of days this week when Orient-Express, a New York-listed hotels, trains and cruises group, rejected its offer of a tie-up with its Taj hotels.
After the Tata-controlled Indian Hotels, owner of Taj, increased its stake in Orient-Express to 11.5 per cent, Paul White, chief executive, wrote a blunt letter, saying a link with the chain was not in shareholders' interests.
He said: "Any association of our luxury brands and properties with your brands and properties would result in a reduction in the value of our brands and of our business and would likely lead to erosion" in Orient-Express's premium room yields.
This follows reports last week that US dealers of the ailing Jaguar had objected to Tata Motors as a potential owner of the luxury marque, which, along with Land Rover, has been put up for sale by Ford, its US owner.
Referring to "unique image issues" associated with Indian ownership, Ken Gorin, Jaguar Business Operations Council's chairman, said the US public was not "ready for ownership out of India of a luxury car brand such as Jaguar".
Ravi Kant, Tata Motors's managing director, strongly disagreed. He told the FT: "We've met dealer networks in the US and did not find this in our due diligence. This is a problem of communication. People may not know Tata Group - what our competencies are."
Kamal Nath, India's commerce and industry minister, said: "There cannot be any discrimination against outward investment from India." In an era of globalisation, "trade and investment [is] a two-way street".
Venugopal N. Dhoot, the president of the Associated Chambers of Commerce and Industry of India, told the Press Trust of India that Orient-Express hotels had displayed "arrogance toward one of India's most respected business houses".
An editorial, entitled "Racism can't halt Indian takeovers", in India's Economic Times business newspaper, accused Orient-Express of discrimination "barely camouflaged in the language of branding".
An Orient-Express official said: "It was not our intention to be racist in any way. Our letter was based solely on the business rationale."
A company with sales of $28.8bn (£14.1bn, euro19.7bn) last year, Tata tends to take such slights as spurs. When Jamsetji Tata, its founder, proposed making steel for the British-run Indian railways in 1907, Sir Frederick Upcott, a colonial administrator, scoffed. "Do you mean to say that Tatas propose to make steel rails to British specifications?" he asked. "I will undertake to eat every pound of steel rail they succeed in making."