Tata and Vedanta team up for India's Industrial Policy
Tata Group's $125 million acquisition would eventually be used as a case study for Indian industrial policy. By buying its way into the iPhone manufacturing business, the conglomerate could achieve great success and teach other empires, such as the mining firm Vedanta Ltd., a lesson about the best way to expand their industrial base.
Wistron Corp., a Taiwan-based manufacturer of cellphones, servers, and PCs, is gradually getting out of the business of putting together Apple Inc.'s flagship product. It paid Luxshare Precision Industry Co. 3.35 billion yuan ($457 million) two years ago for selling a Chinese iPhone manufacturing plant. It made the announcement on October 27 that Wistron InfoComm Manufacturing (India) Private Ltd., or WMMI, was being sold to Tata Electronics Private Ltd.
This transaction was widely anticipated, as both parties had been in discussions for over a year. The WMMI segment experienced a post-tax loss despite growing revenue and operational profitability, according to Wistron's annual report. Tata should be able to get the company to break even in a few years despite the fact that the worldwide smartphone market is currently in decline. That's the simple part.
Pegatron Corp. and Foxconn Technology Group, two Taiwanese companies that are growing in India, present a serious threat to Tata. Wistron found it difficult to gain traction in Apple's supply chain for a reason. Each of the two bigger competitors is more skilled in a wider range of manufacturing processes, such as the assembly of partially assembled electronics and the parts that go inside.