BREAKINGVIEWS-Tata's new guard can break open old markets

Wed Apr 4, 2012 3:02pm IST

Stocks

   

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)

By Jeff Glekin

MUMBAI, April 4 (Reuters Breakingviews) - Cyrus Mistry's first major appointment at Tata is a young charismatic head of business development. Madhu Kannan will leave his role as the Bombay Stock Exchange's chief executive to join India's largest corporate house next month. With the younger pair of Mistry and Kannan leading the charge, Tata may be one of the few groups with the political and economic clout needed to breathe life into India's retail and financial services markets.

In Nehru's India, conglomerates played an almost exclusive role in incubating new businesses. That's no longer the case, but Tata remains an important driver of change in the Indian economy.

It may be too early to jump to conclusions about how Mistry will run the group once he succeeds the current Chairman, Ratan Tata, next year. He will no doubt himself focus on the three largest Tata businesses: Tata Steel, Tata Motors and Tata Consultancy Services. But Kannan's appointment suggests he also wants to make a mark in developing new markets.

Retail and financial services are two areas where Tata has been trying to build its presence, and where Kannan could play an important role.

The old state monopolies in banking and insurance have been lifted. But India continues to miss an opportunity to access large pools of domestic savings. Though 81 percent of rural households have savings, only half keep them in a bank account. Only 2 percent of households opt for any kind of insurance according to research by India's National Council of Applied Economic Research.

Retail remains hugely fragmented, bound by restrictions which protect vested interests and which pander to the fears of the three million small shop owners. It is groups like Tata, rather than foreigners such as Wal-Mart or Tesco, that can push the Indian government to make space for new business models and develop an environment that's conducive to business development.

For better or worse, it is still the top business houses in India that can prise open these markets.

CONTEXT NEWS

- Madhu Kannan is leaving his role as CEO of the Bombay Stock Exchange to join Tata Sons as group head of business development, the company said on April 3.

- Kannan will report to Cyrus Mistry, who is now deputy chairman and is due to replace Ratan Tata as chairman when he retires at the end of this year. Kannan, who is 38, joined the Bombay Stock Exchange in 2009 after stints at Merrill Lynch and the New York Stock Exchange.

- Reuters: Bombay Stock Exchange CEO leaving to join Tata Sons

- For previous columns by the author, Reuters customers can click on

(Editing by Hugo Dixon and David Evans)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Diplomacy

REUTERS SHOWCASE

Maruti Results

Maruti Results

Maruti Suzuki says profits helped by sentiment, not growth.  Full Article 

Tracking the Monsoon

Tracking the Monsoon

Monsoon turns patchy after revival.  Full Article 

ICICI Profit Up

ICICI Profit Up

ICICI Bank Q1 net profit up 17 percent, beats estimates.  Full Article 

Pharma Sector

Pharma Sector

FDA raises concern over drug production process at Cadila  Full Article 

Coal India

Coal India

Some Coal India mines may be run by foreign firms - minister  Full Article 

Fuel Prices

Fuel Prices

IOC to cut petrol prices by 1.5 pct from Friday  Read 

Economic Pulse

Economic Pulse

India's infrastructure output growth hits 9-month high in June  Full Article | Related Story 

Joint Bid

Joint Bid

ONGC, Oil India bid $1.5 bln for stake in Murphy Oil's Malaysia assets - sources  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage