FINDINGS

We are Industrialist and they are businessmen”.

The Tata and Reliance groups present an interesting study in contrasts - being the
two largest groups of India Inc. in terms of revenues and market valuations. Tata’s
are a conglomerate and a diverse business group spread over scores of companies,
Reliance is one company with a diverse footprint. This can make a huge difference
to valuations.

Tata’s are more global than Reliance; all their gains and losses relate to how they
globalized.

Tata’s, despite being called a group, are really a loose federation of independently-
run businesses, each with its own growth trajectory. Reliance is centrally
controlled by its promoter Mukesh Ambani, even though there are professionals
running the actual operations in major strategic business units.

The most important difference between the Tata and Reliance groups is structural.
The Tata’s are a horizontal conglomerate with vertical businesses run as separate
companies, while Reliance is both vertical and horizontal: in the textiles to
polyester to petrochemicals to oil refining and oil exploring chain, it is vertically
integrated. But Reliance is also a horizontal business with retail, infrastructure,
telecom, life sciences and other kinds of businesses embedded in it.

Valuation
Tata Consultancy Group leads the race between the two, currently, the Indian
company with the highest valuation, US$113.0 billion in the year 2019, while
Reliance Industries Group holds a valuation of US$87 billion 2019, trailing the
software major by little. It should also be noted that TCS has been leading the
Indian ground in terms of market capitalization for years since 2013 to be precise.
At previous the time, TCS was leading RIL by up to Rs 4 trillion. However, in
April 2017, RIL re-gained its perch of the leader after 4 years with an m-cap of Rs
4.60 trillion. Since then, both companies crossed the Rs 6-trillion milestone in
December and TCS regained its lead.

Revenues
The oil-to-telecom conglomerate Reliance Industries reported its highest quarterly
net profit of Rs 9,435 crore as its petrochemical and retail business registered
record earnings. Its telecom unit, Jio also increased in profitability. The
consolidated net profit of Rs 9,435 in January-March was 17.3% higher than the Rs
8,046 crore it recorded the previous year in the same quarter.

Reliance Industries registered a record net profit of Rs 36,075 crore in FY18 which

is a 20.6% increase compared to the 29,901 crores net profit registered in 2016-17
fiscal. The Mukesh Ambani Group also saw profits rise in its mobile data network
recording Rs 510 crore.

As for Tata Consultancy Services (TCS), the conglomerate recorded an increase of

4.4% in annual revenue for FY18, standing at Rs 123,104 crore while its Q4
revenue for the fiscal year 2018 stands at Rs 32,075 crore that is a 3.8% quarter-
on-quarter increase and 8.2% year-on-year increase. These figures meant that the
conglomerate was rewarded by being named among the Top 3 brands in the IT
services sector globally by Brand Finance. The brand value of TCS also crossed
the $10 Bn mark in 2017 and recorded a 14.4% year-on-year growth which
contrasted the largely stagnant valuation of the sector as a whole.

Businesses
  Tata Group is a conglomerate of diverse business streams spread across over
100 companies in 6 continents. On the other hand, Reliance is one big
company, with diverse footprint.
 TCS is a global company, all their gains and losses are related to their
globalization. However, while Reliance did purchase some gas companies in
the US and occasionally in Europe, it remains largely an Indian entity.
 The Tata’s have expanded globally mostly through debts while Reliance is
an almost debt-free company.
 Despite being called a group, TCS is actually a loose federation of
businesses ran independently, each having its own growth trajectory. As for
Reliance, it is centrally controlled by its promoter Mukesh Ambani, despite
the fact that several professionals also run the operations in major strategic
business units.

What is the difference?

As Tata Group possess a diverse group of different companies running different
businesses, it is actually easier to analyze and evaluate the revenue streams of the
company.

For example, out of the Rs 6 trillion market capitalization of the company,

 Tata Consultancy Services (TCS) contributed up to 60% of the value.

 Tata Steel accounted for only 5% of the valuation.
 Tata Motors brought 15% to the valuation, mostly attributed to the largely
successful acquisition of Jaguar Land Rover (JLR).

Moreover, the business core profit generator of both companies are very different;
TCS operates in the technology sector, which is a booming market in North
America. As for Reliance, it operates in tightly regulated businesses, where it is
forced to sell its bulk of gas at fixed rates. For example, the regulation of domestic
fuel prices makes it hard for Reliance to maximize profits, and this is why India’s
biggest private refiner prefers selling the majority of its resources in overseas
markets rather than India; because it can generate more profits.

The difference in valuation is also evident because of the different attitudes both
companies approach its cash payout. TCS’s payout ratio as a percentage of net
profits stands at 36% while Reliance is only 12.5%. If Reliance wishes to increase
its valuation, it will have to pay more out of its profits.
TATA’s donate 66% of their profit right away. About 66% of equity of Tata Sons
is held by philanthropic trusts endowed by members of Tata family. The Tata’s are
famous for their numerous philanthropic activities, the reason being this big 66%,
which leaves little less for themselves.

Who owns the businesses?

Tata Sons Limited is the holding company of Tata Group, meaning that it holds the
major portion of shares in these companies. Tata Sons Ltd is the parent company of
the Tata name and the Tata trademarks, encompassing all companies registered in
India and abroad.

About 86% of the equity capital of Tata Sons is owned by philanthropic trusts
retained by members of the Tata family. Therefore, the chairman of Tata Sons
indirectly holds the highest position in the Tata Group. Natarajan Chandrasekaran
is the current chairman of Tata Sons, appointed in January 2017 after receiving a
unanimous recommendation for the role by the selection committee. As for Ratan
Tata, the patriarch of the company, he only owns a mere 0.83% of the company!

The shares of Reliance Industries are distributed differently; the footprint boasts
shares of approximately 3.1 billion. Its promoter group, the Ambani family, headed
by Mukesh Ambani holds around 46.32% of the total shares while the remaining
53.68% is held by public shareholders, such as FII and corporate bodies. The LIC
of India is the biggest non-promoter investor in Reliance Industries, owning 7.89%
of shares.

SOME PROMINENT DIFFERENCS

 Revenue of Reliance US$87 billion 2019

 Revenue of Tata US$113.0 billion 2019
 The visible difference of US$26 billion .
 There is a visible difference of 19,84,91,50,00,000 in rupees
 The Tata’s are ahead in terms of both revenues and valuations.
The Tata and Reliance teams gift a noteworthy study in contrasts being the
2 largest teams of Republic of India Iraqi National Congress. in terms of revenues
and market valuations. Tata’s square measure a conglomerate and a
various business cluster contact ample corporations, Reliance is one company
with a various footprint. this could create an enormous distinction to valuations.
Tata’s square measure a lot of world than Reliance; all their gains and losses relate
to however they globalized.
Tata’s, despite being referred to as a bunch, square measure extremely a loose
federation of independently-run businesses, every with its own growth flight.
Reliance is centrally controlled by its promoter Mukesh Ambani, despite the fact
that there square measure professionals running the particular operations in major
strategicbusinessunits.
The most vital distinction between the Tata and Reliance teams is structural. The
Tata’s square measure a horizontal conglomerate with vertical businesses run as
separate corporations, whereas Reliance is each vertical and horizontal: within
the textiles to polyester to petrochemicals to grease purification and oil exploring
chain, it's vertically integrated. however Reliance is additionally a horizontal
business with retail, infrastructure, telecom, life sciences and different kinds of
companies embedded in it.
Valuation
Tata practice cluster leads the race between the 2, currently, the Indian company
with the very best valuation, US$113.0 billion within the year
2019, whereas Reliance Industries cluster holds a valuation of US$87 billion 2019,
trailing the package major by very little. It ought to even be noted that TCS has
been leading the Indian ground in terms of capitalization for years since 2013 to be
precise. At previous the time, TCS was leading RIL by up to Rs four trillion.
However, in April 2017, RIL re-gained its perch of the leader when four years
with associate degree m-cap of Rs four.60 trillion. Since
then, each corporations crossed the Rs 6-trillion milestone in Dec and TCS
regained its lead.
Revenues
The oil-to-telecom conglomerate Reliance Industries rumored its highest
quarterly profit of Rs nine,435 large integer as its organic compound and retail
business registered record earnings. Its medium unit,
Jio additionally inflated in gain. The consolidated profit of Rs nine,435 in January-
March was seventeen.3% on top of the Rs eight,046 large integer it recorded the
previous year within the same quarter.
Reliance Industries registered a record profit of Rs thirty six,075 large integer in
FY18 that may be a twenty.6% increase compared to the twenty nine,901
crores profit registered in 2016-17 business. The Mukesh
Ambani cluster additionally saw profits rise in its mobile knowledge network
recording Rs 510 large integer.
As for Tata practice Services (TCS), the conglomerate recorded a rise of four.4%
in annual revenue for FY18, standing at Rs 123,104 large integer whereas its this
autumn revenue for the twelvemonth 2018 stands at Rs thirty two,075 large
integer that's a three.8% quarter-on-quarter increase and eight.2% year-on-year
increase. These figures meant that the conglomerate was rewarded by being named
among the highest three brands within the IT services sector globally
by whole Finance. The whole price of TCS additionally crossed the $10 Bn mark
in 2017 and recorded a fourteen.4% year-on-year growth that contrasted the for the
most part stagnant valuation of the world as an entire.