|By Amrit Raj, Mint, New DelhiMcClatchy-Tribune Regional News |
March 19--NEW DELHI -- Tata group, which gets 2.3% of its revenue from Africa, aims to grow its business in the continent by 30% a year by increasing its presence in automotive, mining, infrastructure and hospitality sectors, a company official told reporters on Monday.
The group, which had operations in Africa since 1977, plans to enter seven new countries in the next 3-4 years, increasing its presence to 20 countries in the continent.
Indian companies such as Essar, Bharti Airtel Ltd, Bajaj Auto Ltd and Tata Motors Ltd are investing in the continent to create new markets for their products, establish brands and influence consumer preferences. Commerce minister Anand Sharma on Monday said that the bilateral trade between Africa and India is expected to reach $100 billion by 2015 and the target could well be achieved in 2014. Sharma said that Indian investments in Africa are now close to $50 billion.
Tata group said five of its companies are operating Africa and it will increase investments in the continent.
"We have made investments of around $1.7 billion in all the running projects in Africa and we will continue to augment that," said Raman Dhawan, managing director, Tata Africa Holdings. "The focus areas will be power projects, telecommunications, automotive, mining and hospitality."
Tata Africa Holdings is a wholly-owned subsidiary of Tata International. It was set up in South Africa in 1994 as a strategic investment arm of the Tata group in Africa.
R.T. Wasan, head international business (commercial vehicles) unit at Tata Motors, said that the company will form alliances to sell commercial vehicles in Africa.
"We have identified a few partners in Tunisia and Kenya," said Wasan. "They will be assembling our small, light and medium commercial vehicles. We are evaluating the options for Nano as well."
Wasan said it takes anywhere around $5-10 million to establish a joint venture for assembly operations.
Currently, Tata Motors has a vehicle assembly facility in South Africa from where it produces its commercial vehicles. Passenger vehicles such as Indica are, however, exported to South Africa.
Tata Motors will also start bus body building in South Africa through its global partner Marcopolo, Wasan said.
"It is getting increasingly important for the companies across the globe to look at Africa as the next destination for investments and Africa is realizing its potential and hence wants to attract more investments," according to an expert with a consultancy firm who did not want to be identified. "If you look at the eastern block, which includes countries like Kenya, Uganda, Tanzania, what governments have done is that they have formed blocks. So, if you manufacture a vehicle in Tanzania then there is no customs duty when you move them into Kenya. This shows that they are positioning themselves as an investment-friendly destination."
Still, setting up an assembly plant will be a challenging activity initially as the infrastructure is not as advanced as it is in South Africa, he said. "You got to give them time. But in terms of opportunities for a market, I think that exists. There certainly is a market."
Commenting on the hospitality sector, Dhawan of Tata Africa said that the firm has two five star hotels in Zambia and South Africa and it is planning to expand in other countries.
"We have got proposals from 3-4 countries to set up hotels there. All of these may not be totally in the luxury space," Dhawan said.
On competition from Chinese companies, Dhawan said, "We do not compare ourselves with China purely due to governance reasons. Their investments are driven by their governments. They may be running a bit faster but our journey will be a bit more sustainable."
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