N. Chandrasekaran reiterates need for Tata group to consolidate
Mumbai: Tata Sons Ltd chairman N. Chandrasekaran reiterated the need for the $100.3 billion group to consolidate as he focuses on returns and capital allocation.
In an interview to the conglomerate’s in-house magazine, he also described India as the fastest growing market for group businesses.
“We have far too many companies in the Tata group and some level of consolidation is essential. Our aim should be to achieve the optimal level of consolidation without losing the entrepreneurial spirit we are famous for. We have not worked out all the details. We have our thoughts on this and we will consider them carefully,” Chandrasekaran told Tata Review.
Under the new chairman, the group’s strategy is to create clusters that will provide focus and drive growth under a so-called “One Tata” approach.
After taking charge, Chandrasekaran has overseen the merger of Tata Steel Ltd’s European unit with Thyssenkrupp AG. He also sold the debt-ridden consumer mobile business to Bharti Airtel Ltd for virtually nothing.
“One of the initial areas of focus has been on building a team with the requisite skills to get the immediate job done. From a business perspective, we have focused on situations that required priority intervention, such as the Tata Steel-Thyssenkrupp merger and the Tata Tele-Airtel deal. Suffice to say, we are focused on the issues that need our attention,” said Chandrasekaran.
He, however, emphasized that the group would not exit businesses indiscriminately.
“I have clearly stated the emphasis on returns and capital allocation, but that does not mean we will exit a business that does not meet our targets. We will always work hard together to realize the potential of every Tata business. There will be times, though, when hard decisions are inevitable,” said Chandrasekaran.
In the interview, Chandrasekaran also talked about the business opportunities in India.
“The opportunity for many of our businesses in India is fantastic. They should use this opportunity to make investments and participate in and contribute to India’s growth story. I’m quite bullish about the country’s economic prospects. No other market, I believe, is going to grow faster than India in the next 10-20 years. Having said that, our businesses need to understand their individual domestic prospects, because all of them may not have the same growth opportunities. Each will need to craft its own strategy and this will have to be company specific,” said Chandrasekaran.
In the last decade, the Tata group bought two large foreign businesses—Corus Plc and Jaguar Land Rover Plc—two of the largest cross-border acquisitions by Indian companies.
“We are enhancing our leadership capabilities in select businesses. Apart from the big three of Tata Steel, Tata Motors and Tata Consultancy Services, we want to have an improved play in financial services, infrastructure, consumer businesses, and in travel and hospitality,” said Chandrasekaran.
The group wants to create five-seven clusters, besides the three big firms. Different entities serving the same function will be merged to create a cluster of companies around infrastructure, defence, consumer goods, finance and travel.
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