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'Difficult economic situation to continue in 2013'
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SME Times News Bureau | 29 Dec, 2012
The difficult economic environment that has strained the performance of
corporate India this year is likely to persist in much of 2013 and
companies have to reinvent themselves in terms of business processes,
outgoing chairman of the $100-billion Tata Group Ratan Tata said Friday.
In
his farewell letter to all Group employees, Tata, who stepped down from
the top job Friday, said: "The difficult economic environment that we
face in the current year will most likely continue through most of the
next year. We will probably see continued constraints in consumer
demand, over-capacity and increased competition from imports."
"There
will therefore be great pressure on our companies to reinvent
themselves in terms of business processes and to dramatically reduce
costs, to be more aggressive in the market place and to widen our
product range to better address consumer demands."
Tata Group companies, he said, would be required to contain borrowings to improve their balance sheets.
"We
will also need to contain our borrowings and work hard to retain our
margins. This environment would once again call on you for your support,
your commitment and your dedication to achieve success in these
somewhat difficult times," Tata said in the letter.
Referring to the slowdown in the Indian economy, Tata said the seemingly gloomy picture would end soon.
In
2012, Indian economy suffered the worst slowdown in almost a decade,
with the country's GDP growth hovering around 5.5 percent.
India's
gross domestic product (GDP) growth slumped to nine-year low of 5.3
percent in January-March 2012 quarter. It improved marginally to 5.5
percent in April-June period and again fell to 5.3 percent in the third
quarter of the current calender year.
"I feel confident that
the robust growth that India has shown over the last several years will
be re-established and the strong fundamentals in the country will result
in India once again taking its place as one of the economic success
stories of the region," he said.
"The Tata Group will
undoubtedly play an important role in the continued development of the
country, providing leadership in various industrial segments in which
they operate and living by the value systems and ethical standards on
which our Group was founded."
In his letter, Tata, who turned 75 Friday, also listed the achievements over the last two decades.
He
pointed out that the Group's revenue has increased 20 times in the last
20 years. "We today are $100 billion Group in revenues. Over the past
20 years, our revenues have grown about 20 times and today 58 percent
come from overseas operations."
"Our brand has emerged as the
45th global and the number one Indian brand. Our products and services
are present in 85 countries. We therefore have every reason to feel
proud and feel confident in facing the challenges ahead," he said.
Tata urged employees to extend their full support to Cyrus Mistry, who takes over the top job in the Group Saturday.
"The
future growth of the Group will be led in the coming years by Cyrus
Mistry. I am sure that he will receive from you the same support, the
same commitment and the same understanding that I have enjoyed over the
years. Tatas are a Group where I feel proud to have belonged and proud
to have been associated through the years. I wish the Group, Cyrus
Mistry and each of you great success in the years ahead. I hope the
Group grows and shines in the coming years."
Mistry, 44, who was
unanimously named Tata's successor a year ago by the board of Tata Sons,
the holding company, will take over the reins as the sixth chairman of
the group, which was established in 1868 by Jamsetji Nusserwanji Tata.
Tata will remain as the Group's chairman emeritus.
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