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The metamorphosis

Ever since Chandrasekaran took over as chairman in February 2017, the group has focused on the 3S — simplification, synergy and scale. Group companies have simplified their business structures and expanded the scope and scale by modernizing traditional operations and adding new ones. Similar businesses such as consumer and retail, financial services, and aerospace and defense were regrouped under 10 verticals to achieve synergy-related benefits.

To address the issue of legacy assets, products or services burning a hole in the group’s balance sheet, Chandrasekaran devised a plan. According to it, Tata Motors ended production of nanocars, while Tata Tele exited the consumer telecom business. Tata Sons paid 5,850 crore to Japan’s NTT Docomo to buy back the latter’s stake in Tata Tele and 38,000 crore for debt payments and spectrum debt.

Recently, Tata Steel separated its profitable Dutch operations from the loss-making UK unit. The company is currently in talks with the UK government for support to convert its units, including the aging Port Talbot plant, to sustainable technology. It plans to convert Port Talbot to a scrap-based arc furnace as the country has plenty of scrap available and has already taken several initiatives to de-risk the business, particularly across the procurement and supply chain. Tata Steel is also investing in technology and digitization to increase productivity and improve resilience.

Another loss-making unit was Coastal Gujarat Power Ltd. (CGPL), a Tata Power-owned power generation company. Lenders are likely to cut their Rs 8,000 crore loans to CGPL to revive the continuous losses incurred by the facility since its inception. The unit is currently operating at 60% of its capacity after Gujarat and Maharashtra agreed to buy power at a higher rate.

Besides solving long-standing problems, Chandrasekaran pooled resources to identify business opportunities. The launch of the Nexon and Tigor EV versions has given the company a significant lead in the electric vehicle industry. In October last year, a group of investors led by TPG Rise Climate agreed to invest £7,500m in the EV subsidiary of Tata Motors for an 11-15% stake. The deal valued Tata’s electric car business at $9.1 billion.