CNBC interview with the Warren Buffet of India, Ratan Tata (TTM)

Ratan Tata is chairmain of India's Tata Group. The market cap of Tata Group companies has reached $29.8B. In 2000, he paid $435M for Tetley Tea, making Tata Tea the world's 2nd largest tea company. In March he bought Daewoo Motor Co.'s truck unit, Daewoo Commercial Vehicle, for $120M.

CNBC: He's been called the Warren Buffet of India but even that doesn't do Ratan Tata justice. Last year, profits of four of his biggest listed companies, Tata Motors, Tata Steel, Taj Hotels, and Tata Tea, rose 178%. Share prices have more than doubled. What is the key to his success? Let's ask the man himself. Joining us from the big board, Ratan Tata, chairman of the Tata Group.

CNBC: As I read over the information about you and your company, I'm struck by the fact that... your doubters say, this company now has 91 operating divisions- how can you possibly manage a company that diverse?
Tata: Well, it's a bit of a question that one asks oneself every night anyway, but... we have these various companies that are autonomous in their own right, with their own managements, and it's an issue I think of focusing on providing motivation and direction, not so much day to day operations -- [that] gets taken care of pretty much on [its] own.

CNBC: According to what I read, you expect, in the future that the face of your company will primarily be the software, TCS, Tata Motors, and Steel... am I correct on that?
Tata: No. Those will be the larger of our companies. I would say that we'd really be looking at Tata's in two parts. One is the old economy group, which would be Tata Motors, Steel, Hotels, Chemicals, etc., and the other would be the new economy of Software and Communications, where a fair amount of our new attention and investment are going.

CNBC: Can you describe your plans for building this very small car, and describe what small means?
Tata: The small car is not small in size -- it will hold 4 to 5 passengers -- it's a low priced car. Hopefully, priced at Rupees 100,000, about $2,200 in today's exchange rate. It's a bit of a breakthrough in the sense of looking at an automobile fresh on a clean sheet of paper.

CNBC: Let's talk about the telephone business -- that is not going as well as you had hoped, is it not?
Tata: I would say, I will have to admit we have gotten off to a late start. The telecom business, unfortunately, in India, is full of regulation and there is unfortunately a long-standing battle between the GSM and the CDMA technology providers, which is hindering the way we start. We, however, are very confident of becoming a major and long-term player in the telecom market in India.

CNBC: How much of a market will China be for your companies?
Tata: At the present moment... uh... we don't understand the Chinese market... we certainly see its importance, but we haven't penetrated the Chinese market in a meaningful way, other than in software.

CNBC: When you say you don't understand the Chinese market... could you expand on that... what do you mean by that?
Tata: What I mean is, I don't understand what India will provide to that market. China is really so much ahead of us in terms of manufacturing technology and advantage, that other than in the case of services, IT services, where we have made a serious investment, I don't know what we can in fact provide China, other than working with the Chinese companies to address third markets, or even the Indian market.

CNBC: Well, as you plan the manufacturing segments of your business, what are your options? I mean, do you think you'll be outsourcing your manufacturing to China, or do you feel you compete with Chinese manufacturers... how do you approach that?
Tata: Well, for example, in telecommunications, very recently we have started sourcing telephone instruments, that is, wireless telephone receivers, from China. This is extended also now to some switching systems and in the case of power equipment the Chinese are coming forward with very competitive prices for generating equipment... all of these are being looked at in India, and looked at by us, as being possible areas that we might avail of.

CNBC: Final question, sir, as we're almost out of time. As you look toward the future, do you want to pare down your company, reduce the number of different businesses you're in, or are you willing to continue to expand and add businesses that you are not in.
Tata: No. We will add some businesses, but our main thrust is going to be to refocus our company... our group... into a lesser number of companies, a lesser number of businesses, maybe by merging, or maybe by divesting.