MUMBAI: While describing the impact of the economic meltdown as the worst crisis the business has been facing, Tata group chairman Ratan Tata
has asked the employees of the 98 firms that make up the group, to prepare themselves for some ‘‘hard decisions''.
India's oldest industrial house has been hit because of slowing consumer demand with people tightening their purse strings. In addition to this, the group is finding it tough to raise capital due to non-availability of credit and depressed stock markets.
With no signs of an immediate economic revival, Tata, in a letter to the 3.5 lakh employees across the globe, said, ‘‘The most challenging task will be to sustain a meaningful level of operation through the next nine to 12 months. It will call for hard decisions on the part of the management teams in many of our companies.''
The 140-year-old group, with a turnover of $62.5 billion in 2007-08, earns over 60% of its revenues outside India. ‘‘This economic crisis may well be the worst we have ever faced in our living history,'' he told employees in his New Year's message.
The letter, dated December 31, 2008, went on to say that the priority is to operate cost-effectively and conserve cash. Tata has called for deferment of all avoidable expenditure and growth plans. Group companies like Tata Steel, Tata Power, Tata Chemicals have been re-working their capital expenditure plans, while some group companies have slashed jobs and cut down on production against the backdrop of a falling demand.
While applauding that the spirit of the Tata employees, the chairman said, ‘‘The environment over the next 12 months will require us to display, more than ever before, the strength of this spirit that has enabled us to succeed in previous years. We will need to innovate, galvanize ourselves to synergize our strengths, and operate most cost effectively, in line with current level of market demand.''
Tata also came down strongly on critics who have written off the group. His message reads: ‘‘Our critics would say that Tatas can never succeed, and that our recent growth and our major acquisitions will devastate us. I firmly believe that our growth strategies and our strategic acquisitions will contribute to our group's leadership position in the years to come.''
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