5 Tata Companies That Got Acquired by Competitors

Tata Group has an amazing history of successful acquisitions left and right. Take the epic and quite satisfying deal of Jaguar Land Rover (JLR), for example. Ratan Tata looks like a hero figure in my eyes whenever I think about that particular acquisition. 🤩

There is Tetley, BigBasket, Air India, and more. You can catch the list of top Tata acquisitions from another of our articles.

However, if you think that the company worth ₹33.85 lakh crore has always been on the receiving end of successful acquisitions then you are grossly wrong. Tata has also had to sell many of its precious companies to its competitors due to losses, restructuring, or other strategic decisions.

Some of the names in this list might still feel like a major loss to the group’s shining portfolio. Let’s have a look at them.

Table of Contents:

1. Lakme
2. Tata Oil Mills Company
3. Corus Group
4. Tata Interactive Systems
5. Tata Teleservices

Lakmé

HUL’s beauty segment’s crown jewel, Lakmé used to be part of the Tata portfolio. In fact, Lakmé was Tata’s & India’s first step into the cosmetics sector and what a success it has been! As of now it is the number one selling cosmetic brand in India, with a revenue of over ₹1,200 crore in 2023.

Launched by the Tata Group in 1960, the brand became a major part of its consumer products division, primarily under Tata Oil Mills Company (TOMCO).

Here’s a brief explanation of what exactly happened:

• The 1960s led to the expansion of operations and product range with Simone Tata (Naval H. Tata’s wife) in charge. The idea of Lakmé being a definition of sophistication and elegance was defined during this era.
• In the 1980s and 1990s, the company introduced several iconic products like Lakmé Face Powder, Lakmé Lipsticks, and more. It was also the year of Lakme’s first beauty salon inauguration.
• Then came 1993 bringing with itself the end of Lakme’s association with Tata Group. As part of a strategic deal, Lakme’s parent TOMCO merged with Hindustan Lever (now HUL) leading to the beauty company forming a 50-50% JV with the FMCG giant. After 3 years in 1996, it divested its 50% stake and gave full control of Lakmé to HUL.  

This raises the question: why exactly did Tata let a successful venture like Lakmé be sold off to its competitor? Here’s why:

The Tata Group wished to focus more on its core operations, including steel, automobiles, and chemicals, rather than on a consumer sector like cosmetics. On that front, HUL seemed like a much better fit for the beauty brand.

Lakmé had tremendous potential even in its earliest days, but it needed the right infrastructure setting & distribution expertise to scale up. HUL, with its well-established brands like Dove, Lux, POND's, and Fair & Lovely (now Glow & Lovely), had it all.

Fast forward to 2024, Tata made a comeback in the beauty & fashion segment with brands like Tata Cliq, Tata Beauty Cosmetics, Zudio Beauty, etc. still, I believe the loss of one of India’s leading beauty brands might still sting quite a bit to Tata!

Tata Oil Mills Company (TOMCO)

One of the first establishments of the Tata Group and a dream of founder Jamshetji Tata, Tata Oil Mills Company led to the group’s entry into their strong grounds: Consumer & Retail. Founded in 1917, TOMC portrayed the vision of manufacturing soaps, detergents, and cooking oils in India.

The company introduced products such as Hamam, Moti, and OK soap, which gained popularity for their affordability and quality. With the inclusion of natural ingredients like neem, tulsi, and aloe vera, Hamam was marketed as a “family soap”.

It won’t be too farfetched to say that the company soon became instrumental in shaping India’s consumer sector. Still, the profitable subsidiary brought on its decline with the arrival of the foreign peers and the Liberalisation Policy in 1991.

Global FMCG giants like Unilever (through Hindustan Lever Ltd.) and Procter & Gamble landed on Indian soil in the 1980s-90s due to economic liberalisation. The extensive distribution networks and superior economies of scale of these competitors blocked TOMCO’s way to further growth.   

Despite having a successful product line in its arsenal like Hamam soap, TOMCO lacked the “keeping up with time” approach. The company failed to modernise its image and appeal to a changing customer base. Outdated manufacturing processes, lack of technological advancements, and higher operational costs, added up to the troubles faced.

Although Tata’s plans to enter into the consumer & retail segment was a good idea, the conglomerate forgot to consider one crucial aspect: the competition. Tata had no experience with the FMCG sector, whereas its competitors were leading the market massively.

The below table will give a peek at the massive difference in the league:

Compare both TOMCO’s and HUL’s products, and you will be able to distinguish which one is still ranking on the charts. The fundamentals of the company also reflected the lost war:

And so, in 1993, after reporting consistent operating losses, TOMCO was merged with Hindustan Lever Ltd. (HLL) for ~₹400 crores, marking the end of its operations as a standalone entity.   

Corus Group

Tata Group, with its sights set on international expansion, turned its attention to the steel industry. In 2007, they acquired Corus Group plc, a British-Dutch steel giant, for a hefty $13.1 billion (₹5,41,68.5 crore).

You have to give it to Tata Group; they made a groundbreaking deal by merging one of the world's most profitable companies (Tata Steel) with Europe’s 2nd largest steel producer. After all, Tata Steel's low-cost production capabilities and Corus's advanced product portfolio and distribution network were nothing to take lightly of.

The result? Birth of world’s second most global steel producer that boasted a combined presence in 45 countries.

However, the vision for the deal soon backfired with the arrival of the 2008 recession.

• This stock market’s downfall ended up hitting the steel industry hard, reducing demand and increasing competition from Chinese steelmakers.
• China racked up exports in foreign land to offset domestic demands by offering produce at considerably lower prices.
• Operational inefficiencies and cultural clashes between the two companies further hindered the merger’s success.

In the end, the vision of creating and running a successful steel producer went down the drain, creating one of Tata’s biggest failures.

This wasn’t the only time that the Indian giant failed to successfully hold onto a brilliant idea. Read about the other times apart from the Tata Steel-Corus acquisition from here.

Tata Interactive Systems

A leader in the e-learning and learning solutions space, Tata Interactive Systems (TIS) was established in 1991. The company has been instrumental in helping organisations worldwide solve critical challenges through innovative learning solutions.

This particular division of Tata Industries Ltd (TIL) in this list was a successful venture with:

• A global client base of over 70 Fortune 500 companies, including names like Amazon and P&G.
• Developed India’s first Computer-based Training (CBT) product
• Pioneered unique platforms such as TOPSIM & Quizbiz.

However, May 2018 hit and the news headlines showed the acquisition talks at price of over ₹85 crores. MPS Limited (formerly known as Mackenzie Petersen Services) acquired TIS to expand its presence in the e-learning and digital learning solutions market.

This move was part of a broader strategy to streamline the group’s portfolio and focus on core businesses such as technology, consumer, automotives, etc.

TIS had a strong presence in the global e-learning market, with clients across various industries. MPS likely saw this as an opportunity to expand its reach and tap into new markets.

On the other hand, by joining forces with MPS, TIS gained access to a wider range of resources, expertise, and a broader market.

Tata Teleservices

Marked as another decision that went wrong, Tata’s telecom venture Tata Teleservices suffered massive losses and evidently merged into Bharti Airtel in 2017. Tata Teleservices (TTSL) was established in 1996 and initially aimed to be a major player in the Indian telecom industry.

However, Ratan Tata's strategic decision to pivot from GSM to CDMA technology in 2003 proved to be a misstep for Tata Teleservices.

In case you aren’t aware, Global System for Mobile Communications, aka GSM and Code Division Multiple Access, aka CDMA, are two ways in mobile networking. GSM allows users with dedicated time slots one by one to avoid interference, whereas CDMA shares a unique code to send & receive signals so there is no interference.

Sounds good, right? But it actually wasn’t because this choice of CDMA over GSM cost the group TTSL. Here's a brief explanation of the how:

• TTSL launched its flagship brand, “Tata Indicom”, in 2002 for its CDMA technology-based mobile services. Despite how much cooler features like better voice clarity and data transfer rate, it was less popular than GSM.
• This led to the brand’s decline when faced with competitors like Airtel and Vodafone. After all, CDMA handsets were more expensive and less widely available, limiting Tata Indicom's growth. The entrance of Jio in 2015 didn't exactly work in the company's favour as well.
• As a last attempt, in 2008, TTSL launched Tata Docomo in partnership with NTT Docomo, a leading Japanese telecom player. This was done with the objective of joining the GSM space but the decision came about too late.
• Tata Docomo introduced innovative tariff plans, such as per-second billing which allowed TTSL to enjoy initial success. But then, Docomo struggled to maintain momentum against telecom giants, high operational costs, and limited market differentiation.

NTT Docomo exited the partnership in 2014, citing continuous losses and a failure to meet performance targets. Tata Group later had to buy out Docomo’s stake after a legal settlement.

The story ends with Tata Teleservices merging its consumer mobile business with Bharti Airtel with the approval of National Company Law Tribunal (NCLT), as well as the Department of Telecom and the Competition Commission of India. The Tata Group is said to make an investment of around ₹50,000 crores to the government and lenders to finalise this deal.

The Bottom Line

And we are done with the list. Tata is one of those conglomerates that has a trust factor in its arsenal and hardly makes mistakes. But no one is invincible as the article above proves otherwise.

So, what do you think? Was the decision to sell these companies right from Tata's end or should they have done it a long time ago?  Type your opinions in the below comment box and let the world hear it.

Or you can share your wisdom with us about any other Tata-related fact we might not know about.

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