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Chandras Mantra: Plan to prune portfolio, create new

groups, support steel, motors & TCS , say Ta-Ta to 110 cos
BY ARIJIT BARMAN & BAIJU KALESH, ET BUREAU | OCT 09, 2017, 01.58 AM IST Post a Comment

MUMBAI: Indias largest conglomerate by revenues will simplify overlapping business

operations, prune its expansive portfolio by consolidating companies which have
synergies, create new business clusters such as defence, infrastructure, consumer and
retail, financial services and hotels and airlines while supporting the growth of the three
largest companies, Tata Consultancy, Tata Steel and Tata Motors. Loss making or
marginal operations like Tata Teleservices could be shut down while in capex heavy
sectors like aviation multiple JV operations are likely to be streamlined for maximum scale.

I will be the first to admit that we are very complex. We need to be simplified. I would like
to see ourselves as 5,6,7 groups as opposed to 110 companies. The more we see
ourselves as (many companies), nothing will get done, Tata Sons chairman N To solve legacy problems of the group flagships,
Chandrsekaran said in an interview to ET on Sunday. Chandra has already hit the ground running.

The 53-year old group insider who took charge of the corner office eight months back, Related
emphasised that he will not shy away from tough decisions to drive agility, increase
Tata Teleservices prepares exit plan for
accountability and ensure high performance. His turnaround strategy pivots on staff
collaboration between similar businesses, and stricter financial discipline to enhance
Don't want to criticise past decisions...Will
better shareholder returns. Excluding the successful computer software unit, the empire take tough calls: N Chandrasekaran,
has $25.5 billion in net debt. So he adds our first priority is fixing the companies balance Chairman, Tata Sons
sheets.
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To solve the legacy problems of the group flagships, Chandra has already hit the ground
running. The strategic partnership with Thyssen Krupp for its European steel business will Tata Tele
give financial muscle to Tata Steel to double down on the growth prospects in India. We Tata Steel
have delinked the Indian and European opeartions of Tata Steel, Chandra said. Similarly
Tata Power, hamstrung by the loss-making Mundra power plant will have to bring down its Tata Motors
debt either by selling non core assets or by realigning its geographical footprint. EXPAND TO VIEW ALL

Tata Morors, for its part, would have to improve market share in commercial vehicles while Big Change:
The end of Five-Year Plans: All you need to know
reducing losses in the passengar -car business before deciding if it needs to have a
platform sharing arrangement with a global strategic partner. Chandrasekaran also said it made little sense to invest large sums in Tata
Teleservices as it would mean "throwing good money after bad." Reviving it would need Rs 50,000 -60,000 crore and that is not a
choice.

He insists his approach will not be confrontational.

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I don't want to criticise decisions that were taken in the past as every decision makes sense in a context. In hindsight, we can question
that. We are now in a new context and in that let us take a transformative view, let us rationalise what is required and go forward, said
Chandra as he is popularly known, in his first interview after he took over on February 21. The aviation portfolio may see changes. You
cant run two airlines each having 15-20 aircraft.

Under his watch, capital allocation will face rigorous scrutiny and the funding tap traditionally from Tata Sons or through dividends of
group companies TCS and JLR -- will be tighly controlled. Any capital we allocate to a company will have rigorous scrutiny. In fact it is
 something we are already doing. Unless we are fully convinced and we have a business case, we will be stingy with capital. I think for
the right project we will find money.

To drive transformational change, Chandra is also building a new team.

The amount of things we need to do in terms of consolidation, portfolio mapping, market deals, requires a very strong finance team. So
we are hiring, he clarifies. Right talent is key, we should not make too much of this internal or external candidates. It is my job to
ensure that the team is integrated.

The composition of the Tata Sons board will also see some changes. It's not command and control. It's about creating value
proposition. With the right set of people and collaboration, you can do it. With all humility I can say I have done this before.

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