A Land Rover vehicle appears in the parking lot of a dealership in Norwood, Mass., on March 26 2008. Ford Motor Co. is selling its storied Jaguar and Land Rover businesses to India's Tata Motors Ltd. in a deal that will net the U.S. automaker $1.7 billion, roughly a third of the price it paid for the two luxury brands. (AP Photo/Steven Senne)
A Land Rover vehicle appears in the parking lot of a dealership in Norwood, Mass., on March 26 2008. Ford Motor Co. is selling its storied Jaguar and Land Rover businesses to India's Tata Motors Ltd. Show more

Rebuilding the House of Tata



When Vehran Irani, a senior staff member, stepped for the first time into the central stairway of the Taj Palace hotel on Saturday, what he saw broke his heart. The walls were shot to pieces, mirrors shattered, carpets charred. But as he walked up to the first floor, he noticed something unexpected. Behind the bust of Jamsetji Nusserwanji Tata, the great 19th century industrialist who founded the group 150 years ago, the walls were riddled. But the founder himself, with his Parsi turban and flowing robes, had somehow escaped completely untouched. For Mr Irani, this was some kind of miracle. But that is not unusual - for its staff, being part of the Tata Group is a religion. During the horrific three-day attack on the hotel, Taj staff were extraordinary, remaining calm and attentive to guests' welfare. The hotel's general manager, Karambir Kang, lost his wife and two sons on the first day of the attacks, but continued to work tirelessly to rescue guests. Later, when Ratan Tata said how sorry he was, Mr Kang replied: "Sir, you know, we're going to beat this. We're going to build this Taj back into what it was. We're standing with you. We will build this thing back. We will not let this event take us down." It is not only Taj Hotels that needs this kind of spirit. The coming few years will be as testing as any in the Tata Group's history. The series of daring billion-dollar acquisitions, snapping up Corus - the former British Steel - the luxury car makers Jaguar and Land Rover, and the US soda ash producer General Chemical Industrial Products have left the Indian industrial group overly exposed to the coming world recession. And the need to rebuild comes at a time when Ratan Tata, who has transformed the company since he took the reins in 1991, may step down. "In an ideal world, after the small car has been launched and is successful, that would be a nice time for me to exit," he told the Financial Times last year. If he does exit early next year, his successor - and there are few names that stand out - will not only be faced with rebuilding the Taj Hotel, he will have to rebuild the financial strength of the two key companies, Tata Steel and Tata Motors. Even pessimists do not see India's economy growing at less than 5 per cent in the coming years. But around 60 per cent of Tata Group's consolidated revenues now come from economies such as the UK, which are likely to see negative growth. Corus generated 85 per cent of Tata Steel's revenues in the first half of this year, and 62 per cent of the profits. Jaguar and Land Rover are expected to generate some 60 per cent of Tata Motors's revenues. If you look at both companies' performances in the last downturn, that is a serious cause for concern. In the last sustained steel industry slump in 2002, Corus was losing more than £1 million (Dh5.4m) a day. In the first half of this year, well before the present slump kicked in, Tata Steel was only making about £1.3m a day. Similarly, in 2006, Jaguar lost Ford about £350m. In its latest quarterly results, Tata Motors made £46.5m. And the two deals, done at the peak of the market, have loaded debt onto the companies at a time when refinancing is hard to come by. Moody's ratings agency last week dropped Tata Motors's debt two levels to "B2", and said it would lower it a further step if it failed to refinance the bridge loan it took on to do the US$2.3 billion (Dh8.44bn) deal within three months. In October, Moody's changed the outlook on Tata Steel's ratings to negative, citing "the likely deterioration in demand in Europe and the UK in the next 18 months". This is not the first time Tata has faced dark days. "They've had terrible times," says Aman Nath, who co-wrote Horizon: the Tata-India Century, a company history. "At first the steel plant looked like it was not going to work and everyone thought the company would collapse." Tata Steel began production in 1907, two years after Jamsetji's death, but by 1924, at the nadir of the post-First World War steel slump, it was on the edge of bankruptcy. Jamsetji's son, Dorab, only kept the company from being nationalised by pledging his entire family fortune - including the 245-carat Jubilee Diamond - to secure an emergency loan from Imperial Bank of India. He also managed to win tariff protection from the government, a first for an Indian company. None other than Mohammed Ali Jinnah, the future founder of Pakistan, spoke out for Tata in the legislative assembly. Ratan Tata, too, has been no stranger to tough times during his 17-year tenure. In 2001, after the launch of Tata Motors's first passenger car, the Indica, it looked as if he had blundered badly. The Indica, which Business Week dubbed "Ratan's folly", fell far short of world standards, and Tata Engineering and Lorry Company (TELCO), lost an unprecedented 5bn rupees, (Dh367m) that year. But the Tatas persevered, and the Indica eventually did surprisingly well, becoming a major money-spinner for the group. The Tatas' biggest asset for braving such bad times is the loyalty of its staff. It is not only Taj Hotel workers who demonstrate almost uncanny loyalty, it is the graduates of its management training centre, the Tata Administrative Services, and also ordinary steel and car workers. A senior Tata Steel manager says: "In Tata Steel, if somebody wanted to touch a part of the plant, the workers will give their lives for it, for them the plant is like a temple." Tata Steel built a model company town around its steel plant in Jamshedpur and many great grandchildren of the engineers who came to work there in 1907 are still employed by the group. Tata Motors and Tata Consulting Services, both started by JRD Tata and expanded under Ratan, generate a little less loyalty. Rebuilding the Taj will be a monumental task. From the sea-facing promenade beneath, you can now see straight through the windows on the sixth floor to the sky behind - the tile roofing and wooden beams that supported it have collapsed completely. But of the three challenges facing Ratan Tata or his successor, this may be the most straightforward. The Sea Rock Hotel in Bandra, once one of Mumbai's finest, remains derelict a full 15 years after a 1993 bombing attack destroyed it. But the Taj is so core to the Tata Group that rebuilding will be a priority. And if any company can rebuild it, it is Tata. "They're one group which have been very concerned about heritage," says Vikas Dilawariv one of Mumbai's leading heritage architects. "They restored the Army and Navy Building, and I've helped them restore parts of [Tata headquarters] Bombay House. When they have old buildings they know how to look after them." Even so, reconstruction could be very costly, and there are still uncertainties over how much the $200m set up by India's general insurance companies will cover. A survey of the hotel began last week and is expected to take 10 to 15 days to come to a conclusion. Pavethra Ponniah, who rates Indian Hotels for the ratings agency ICRA, says it is too early to determine whether the damage will lead to a downgrade of the company's credit rating. "A 565-room hotel closing down will definitely have an effect on their revenues," she says. "We'll still have to see the impact over the next few months, what we need to know is how much money is needed to bring the hotel back, how much will come from insurers, and how long it will take." Pandurang Potnis, the vice president of the Indian Institute of Architecture, estimates that reconstructing the hotel will take 12 months and cost about $100m. But perhaps worse for the Tatas will be the loss of revenues. The group's hotels in Delhi and Mumbai provide 35 per cent of their revenue, and the Taj provides the most, with its six restaurants constantly packed with a procession of the city's prominent citizens. Mr Dilawari says that Mumbai does still have craftsmen to replicate carvings that were damaged. "If you constantly monitor and supervise, then you can get the work to that standard," he says. "They're hard to find, but it's not impossible." Some Tata officials argue that the place of the Taj in Mumbai's society and business life mean that, even if Indian Hotels's own internal funds and insurance do not cover a rebuild, donations from outside may be available to top up the funding. "I think there would be citizens of Bombay pitching in, there will be employees coming forward," says one Tata Steel employee. "I'm sure a lot of people would come forward to help fund it." Withstanding the future financial strain in the steel and motor industries may be more difficult. Just as Dorab turned to government aid and unusual financing techniques during the steel slump of the 1920s, Tata Motors and Tata Steel are looking at all possible options this time around. Tata Motors was forced in October to shelve plans to raise funds on international equity markets to pay off the $3bn bridge loan it took on to buy Jaguar and Land Rover, and needs to find the money to repay the loan by June next year. But the division is struggling to raise money from banks as the international debt market remains frozen. At the start of last month, Ratan Tata wrote a letter to the Indian prime minister, Manmohan Singh, suggesting that a special fund be set up in select state-controlled banks to help companies that have made major acquisitions overseas to deal with outstanding loans. Tata is also talking to the UK government for a £1bn cash injection to help Jaguar through the downturn. Tata Steel, meanwhile, is asking the Dutch government to pay up to 70 per cent of the salaries of 4,600 workers - about half of Corus's staff there - for six weeks under a government economic stimulus package. Corus reported last month that it would cut production by 30 per cent. But there seems little Tata can do to ensure profitability through the world recession. Corus and Jaguar Land Rover were sold after their managements had successfully turned them around. By and large, the company has left the old managements to continue with their plans. Jaguar has launched the acclaimed XF executive saloon. Tata Steel has signed mining joint ventures in Mozambique, the Ivory Coast and Canada aimed at making Corus self-sufficient in coal and iron ore. Neither of those moves, though, will help in a recession. The XF has propped up sales, but that will not be enough to offset the slump in the luxury car market. And none of Tata Steel's new mines will come into production in time to nurse Corus through the present slump. During the last major crisis in the 1920s, Dorab had the Jubilee Diamond. Sadly, his heirs sold it to a French industrialist in 1937. So Tata Group's main surety is its stakes in other groups. Tata last month sold a stake in its telephone company, Tata Teleservices, for $2.7bn. But the real jewel in the crown is Tata Consulting Services (TCS). Tata Sons already propped up the Tata Motors rights issue by selling a 1 per cent stake of TCS, reducing its share to 73.65 per cent. But every time it taps into this cash asset, Tata Group generates only a third of the value per share it would have received at the peak of the market, when TCS was worth $30bn. It is now worth a third of that. If the group is forced to sell more to keep Tata Steel and Tata Motors afloat, they could easily eat up TCS before the economic cycle turns. That would be a giant sacrifice to keep the "founder companies" such as Tata Steel and the Taj afloat. But it is one that the old man on the stairs would doubtless appreciate. rorange@thenational.ae

Picture of Joumblatt and Hariri breaking bread sets Twitter alight

Mr Joumblatt’s pessimism regarding the Lebanese political situation didn’t stop him from enjoying a cheerful dinner on Tuesday with several politicians including Mr Hariri.

Caretaker Culture Minister Ghattas Khoury tweeted a picture of the group sitting around a table at a discrete fish restaurant in Beirut’s upscale Sodeco area.

Mr Joumblatt told The National that the fish served at Kelly’s Fish lounge had been very good.

“They really enjoyed their time”, remembers the restaurant owner. “Mr Hariri was taking selfies with everybody”.

Mr Hariri and Mr Joumblatt often have dinner together to discuss recent political developments.

Mr Joumblatt was a close ally of Mr Hariri’s assassinated father, former prime minister Rafik Hariri. The pair were leading figures in the political grouping against the 15-year Syrian occupation of Lebanon that ended after mass protests in 2005 in the wake of Rafik Hariri’s murder. After the younger Hariri took over his father’s mantle in 2004, the relationship with Mr Joumblatt endured.

However, the pair have not always been so close. In the run-up to the election last year, Messrs Hariri and Joumblatt went months without speaking over an argument regarding the new proportional electoral law to be used for the first time. Mr Joumblatt worried that a proportional system, which Mr Hariri backed, would see the influence of his small sect diminished.

With so much of Lebanese politics agreed in late-night meetings behind closed doors, the media and pundits put significant weight on how regularly, where and with who senior politicians meet.

In the picture, alongside Messrs Khoury and Hariri were Mr Joumbatt and his wife Nora, PSP politician Wael Abou Faour and Egyptian ambassador to Lebanon Nazih el Nagari.

The picture of the dinner led to a flurry of excitement on Twitter that it signified an imminent government formation. “God willing, white smoke will rise soon and Walid Beik [a nickname for Walid Joumblatt] will accept to give up the minister of industry”, one user replied to the tweet. “Blessings to you…We would like you to form a cabinet”, wrote another.  

The next few days will be crucial in determining whether these wishes come true.

COMPANY PROFILE
Name: ARDH Collective
Based: Dubai
Founders: Alhaan Ahmed, Alyina Ahmed and Maximo Tettamanzi
Sector: Sustainability
Total funding: Self funded
Number of employees: 4
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It’ll be summer in the city as car show tries to move with the times

If 2008 was the year that rocked Detroit, 2019 will be when Motor City gives its annual car extravaganza a revamp that aims to move with the times.

A major change is that this week's North American International Auto Show will be the last to be held in January, after which the event will switch to June.

The new date, organisers said, will allow exhibitors to move vehicles and activities outside the Cobo Center's halls and into other city venues, unencumbered by cold January weather, exemplified this week by snow and ice.

In a market in which trends can easily be outpaced beyond one event, the need to do so was probably exacerbated by the decision of Germany's big three carmakers – BMW, Mercedes-Benz and Audi – to skip the auto show this year.

The show has long allowed car enthusiasts to sit behind the wheel of the latest models at the start of the calendar year but a more fluid car market in an online world has made sales less seasonal.

Similarly, everyday technology seems to be catching up on those whose job it is to get behind microphones and try and tempt the visiting public into making a purchase.

Although sparkly announcers clasp iPads and outline the technical gadgetry hidden beneath bonnets, people's obsession with their own smartphones often appeared to offer a more tempting distraction.

“It's maddening,” said one such worker at Nissan's stand.

The absence of some pizzazz, as well as top marques, was also noted by patrons.

“It looks like there are a few less cars this year,” one annual attendee said of this year's exhibitors.

“I can't help but think it's easier to stay at home than to brave the snow and come here.”

The specs: 2018 Chevrolet Trailblazer

Price, base / as tested Dh99,000 / Dh132,000

Engine 3.6L V6

Transmission: Six-speed automatic

Power 275hp @ 6,000rpm

Torque 350Nm @ 3,700rpm

Fuel economy combined 12.2L / 100km

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The Sand Castle

Director: Matty Brown

Stars: Nadine Labaki, Ziad Bakri, Zain Al Rafeea, Riman Al Rafeea

Rating: 2.5/5

Cricket World Cup League Two

Oman, UAE, Namibia

Al Amerat, Muscat

 

Results

Oman beat UAE by five wickets

UAE beat Namibia by eight runs

 

Fixtures

Wednesday January 8 –Oman v Namibia

Thursday January 9 – Oman v UAE

Saturday January 11 – UAE v Namibia

Sunday January 12 – Oman v Namibia

Business Insights
  • Canada and Mexico are significant energy suppliers to the US, providing the majority of oil and natural gas imports
  • The introduction of tariffs could hinder the US's clean energy initiatives by raising input costs for materials like nickel
  • US domestic suppliers might benefit from higher prices, but overall oil consumption is expected to decrease due to elevated costs
A timeline of the Historical Dictionary of the Arabic Language
  • 2018: Formal work begins
  • November 2021: First 17 volumes launched 
  • November 2022: Additional 19 volumes released
  • October 2023: Another 31 volumes released
  • November 2024: All 127 volumes completed
Sustainable Development Goals

1. End poverty in all its forms everywhere

2. End hunger, achieve food security and improved nutrition and promote sustainable agriculture

3. Ensure healthy lives and promote well-being for all at all ages

4. Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all

5. Achieve gender equality and empower all women and girls

6. Ensure availability and sustainable management of water and sanitation for all

7. Ensure access to affordable, reliable, sustainable and modern energy for all

8. Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all

9. Build resilient infrastructure, promote inclusive and sustainable industrialisation and foster innovation

10. Reduce inequality  within and among countries

11. Make cities and human settlements inclusive, safe, resilient and sustainable

12. Ensure sustainable consumption and production patterns

13. Take urgent action to combat climate change and its effects

14. Conserve and sustainably use the oceans, seas and marine resources for sustainable development

15. Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss

16. Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels

17. Strengthen the means of implementation and revitalise the global partnership for sustainable development

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