Time to brew a success with India

Jul 15 2008 by Sue Scott, Evening Gazette

It gave us tiffin and jodphurs and the resources on which to build an empire; we left it with a legal system, a universal language, and a desire to turn the economic tables. The former jewel in the British crown is now shining brighter than ever and the lustre is rubbing off on Teesside. SUE SCOTT reports on a subcontinent that is anything but subordinate

RELATIONS between a nation state and its former colonial masters can - as recent history in Zimbabwe demonstrates - be rather more than tense.

But India has remained a cordial divorcee throughout the 61 years following partition from the UK in 1947.

If it did take any perverse satisfaction in buying up two of the most iconic British brands on Teesside, it didn’t let on.

Jon Bolton, managing director of Corus Cast Products, was quoted as saying it was “business as usual” following family-owned Indian Tata Group’s £6.7bn take-over of the former British Steel plant last year, while the folks at Tetley Tea in Eaglescliffe carried on making their little perforations as if nothing had changed when they were swallowed by Tata’s tea division in 2000.

“Whether it’s because they are family-owned or Indian, I’m not sure,” says Jon Bolton, who admitted that he quizzed the Tetley team over what to expect. “They said they didn’t come in and just impose themselves,” says Jon, who has huge regard for Tata’s corporate citizenship.

“When they integrate with an organisation, they do it in an inclusive way. You can see that’s what they are doing with Jaguar and Land Rover at the moment,” he adds referring to Tata Motors’ successful bid for the Midlands’ marques last year.

Whether this is acquisition Tata-style or India-style - no fuss, no upheaval, no slash and burn - it’s a pleasant change from the private equity blood baths that have come to characterise the global equity market.

And it’s blazing a trail for other companies from the sub continent to follow. Perhaps, as R K Krishna Kumar, vice chairman of Tata Tea, recognises when he says “sometimes acquisitions should have an equivalent impact on the acquiring company”, the old British bulldog can still teach the Indian tiger a few tricks.

That’s why managers from a country widely regarded as the temple of tea spent time learning what makes a good cuppa in Eaglescliffe - and went on to model Tata Tea’s own Indian exports on its success.

Peter Unsworth, CEO of The Tetley Group, says the cultural business exchange was important for both firms, but believes it changed Tata Tea more than it did Tetley. He credits Tetley with helping transform Tata from a simple plantation business to a premium branded beverage company and a world player. “Knowledge transfer from Tetley in terms of managing a branded tea supply chain and brand management processes helped this,” he says.

Tata may be the most high profile and certainly the most successful Indian company to wash up on Britain’s shores, but it is not alone.

The UK is home to 430 Indian companies. Among them are online training firm Nisai Group, which announced in 2005 that it was relocating part of its business from Hyderabad to Teesside, and Respondez, a division of Spanco Telesystems and Solutions, the global contact centre with eight regional offices in India, which has opened a base in Hartlepool.

In fact, 60% of all Indian foreign direct investment into Europe ends up in the UK, with major R&D partnerships already operating in the IT and pharmaceutical sectors.

According to Geoff Young, the North-east’s UK Trade and Investment (UKTI) advisor on India, the country is keen to see more collaboration in biotech, performance engineering and alternative energy technologies - sectors in which Teesside excels.

“It’s increasingly seen as business critical by UK companies that they have business partnerships in India. These partnerships are vital in developing their own competitiveness,” says Geoff.

James Robson of Teesside’s Exwold Technology agrees. The company had spent nearly five years indirectly involved with chemical firms in India, but recognised in 2006 that it needed to make its presence felt. After joining a UKTI trade mission which opened the doors to talks with Indofil, Sulphur Mills, United Phosphorus and Atul, James organised his own trip last year.

“The development of a trusting relationship in India takes time,” he says. “But on this second visit I was much more warmly received with one of the companies giving me a car and driver for the entire stay. I used the driver almost every day to get around in the Mumbai traffic, which is horrendous at the best of times. On the last evening I was invited to the home of one of the business owners. Mrs Shah insisted on giving me some of India’s best quality Basmati rice to bring home - a 5kg bag, which I had to get into my already stuffed suitcase!”

He says the business opportunities for Exwold in India are good. “But, as with many things, we have to be prepared to take a long view and be patient.”

Perhaps that explains why - given that India is one of the most densely populated countries in the world, with a growing middle-class earning more rupees in a week than their grandparents would have seen in a lifetime - Teesside appears rather slow in turning India into its consumer.

While the country ranks as the UK’s 18th largest export destination, it comes in at only 26th for the region. North-east exports were worth just £52m in 2007 - although, admittedly they finished 25% up on the year.

Most in demand were components for the automotive industry, which will almost certainly find their way back here in the form of the Nano - at 100,000 rupees (£1,300) the world’s cheapest car.

Geoff Young says ongoing liberalisation of the economy will see exports increase. “The peak tariff is down from 350% in 1995 to 20% in 2005 while privatisation programmes are gradually reducing the role of the public sector in the production and consumption of goods,” he says.

“India and the UK are one of the most profitable and significant bilateral trade and investment partnerships in the world. We expect to see more,” he says.