Tata companies are positioning themselves to take advantage
At a time when recession-hit multinationals are looking at India to capitalise on growing urban consumerism, the Tatas are delving deeper into the hinterland by increasing their focus on the burgeoning rural Indian market.
“A large part of the rural Indian market is under-penetrated and presents good opportunities,” said Siddhartha Roy, Economic Advisor, Department of Economics & Statistics, Tata Group, while addressing a media roundtable.
“The Indian rural market has gone beyond consumer products and agri-input marketing. Total rural income, which is now at around $572 billion, is estimated to reach $1.8 trillion by 2020-21,” Dr. Roy added.
He further said that India’s retail FMCG market could grow from $10 billion presently to $100 billion by 2024-25. The rural market is now flush with funds, and, according to Mr. Roy, it “ needs to be tapped.” Real rural wages have gone up 7.7 per cent annually over the last five years.
Mr. Roy said that the consumer pattern seen in early 2000s in smaller towns was now being seen in rural areas . Several government-sponsored projects are responsible for this. Considering the vast potential of the rural market, at least four Tata Group companies are well-positioned to take advantage. These include Tata Motors, Titan Industries, Tata Chemicals and Tata Teleservices.
Two years ago, Tata Motors started a rural marketing initiative called ‘Neev’, which is yielding results. Neev has helped the company sell 1,500 more small commercial vehicles (CVs) per month in six states, and would cross 2,000 units in November. Sales through Neev today account for 8 per cent of the company’s national sales volume of small CVs.
“Through Neev, we sold more than 13,000 vehicles in the last two years. We will go national by end-2013 and estimate incremental sale of 70,000 units by then which will add $500 million to turnover,’” said Sandeep Kumar, Head-Sales & Marketing, Small Light and Intermediate CV, Tata Motors.
Goldplus, promoted by Titan Industries’ Jewellery Division, sells jewellery in rural areas in four states. With 31 showrooms, it is focusedon creating awareness and educating rural customers about gold. “Starting from one store in Erode in 2005, we are aiming for a turnover of Rs. 800 crore in 2012-13,” said N. Vaideeswaran, Head – Retail (Goldplus), Titan Industries.
Tata Chemicals is scaling up farm services and expanding its footprint in Bihar and West Bengal. Tata Teleservices wants to increase internet penetration and targeted value-added services to capitalize on increased mobile phone usage amongst rural households.