Tatas want to prune number of listed, unlisted firms in one year
Tata Sons’ consolidation plans have moved beyond PowerPoint presentations and merchant bankers are already crunching numbers. >
Cyrus Mistry spelt out his intention to consolidate the group soon after taking over as Tata Sons chairman in December 2012. Reports show that as early as February 2013, at a boardmeeting, he had said consolidation was the only way forward. Then in a June 2016 board meeting — four months before being ousted — Mistry proposed consolidating the businesses under eight verticals. The plan never took off.
The $104-billion group is again in consolidation phase under N Chandrasekaran, who took over as the chairman in February. But this time, sources said, plans have moved beyond PowerPoint presentations and that merchant bankers are already crunching numbers.
As some of the group firms are being valued for sale or exit opportunities, mergerroutesare being worked out for several others. Chandra, as he’s popular ly called, is spearheading the projectand his finance team—Chief Financial Officer Saurabh Agarwal along with bankers Nipun Aggarwal and Ankur V er ma—is the key driving force.
The objective is to “substantially reduce” the number of listed and unlisted entities, so that it’s a cohesive business operation, people in the know said. The idea is not to reduce the workforce, they said. Chandra told executives last month that their plan was not to inflict any pain through consolidation. However, in a recent interview to Fortune, Chandra had said that some of the Tata firms may have to be shut during the consolidation. Responding to a Business
Standard questionnaire on various aspects of consolidation, a Tata Sons spokesperson said, “We do not comment on such matters.” Sources aware of the plans said the consolidation would unfold over the next one year or so. The effort would be to bring down the number of group companies’ subsidiaries, running into dozens in many cases. “In the process, there will have to be shutdown. None of it is going to be easy,” another source said.
Besides defence, infrastructure and finance, retail or consumer business is another area of consolidation. Broadcasting business Tata Sky, where the numbers have remained weak, is one of the ventures where the group could look at an exit. Telecom is another. Under retail, companiesmay be reconfigured. The retail portfolio includes Trent, Landmark, Tata International, CLiQ and Croma, among others.
Another person aware of the plans said this should not be seen as a typical consolidation and that the group would not shrink. Rather, this is an exercise to make the business much more powerful by putting the group’s muscle behind it all, he said. The source cited the example of Tatas reviewing its banking foray and giving up the licence. “A company is created at a particular time for a particular reason. When the purpose of a company is lost, there has to be a review.”
In some other cases, like in defence, the sector is being scaled up and no two companies