We’ll def­i­nitely prune the port­fo­lio: Tata Sons chair­man

The Northlines - - BUSINESS -

New York:

Em­pha­sis­ing that there will “def­i­nitely” be prun­ing of the Tata port­fo­lio, Tata Sons chair­man Natara­jan Chan­drasekaran has said the com­pany will not exit a busi­ness “just to get a head­line” but only when it is cer­tain it is not get­ting re­turns from it.

“Tata is al­ready a $100 bil­lion group. To get to the next level we need scale. We can’t do it with mul­ti­ple small com­pa­nies. We need top com­pa­nies. I am not say­ing specif­i­cally that all com­pa­nies need to be No. 1 or 2 [in their sec­tors], but we need to have top com­pa­nies,” Chan­drasekaran said in an in­ter­view to For­tune mag­a­zine. The mag­a­zine noted that Chan­drasekaran, 54, is not rul­ing out sell­ing off un­der­per­form­ing com­pa­nies. “We won’t exit a busi­ness just to get a head­line. But we will exit if we aren’t get­ting re­turns to­day and we don’t think we’ll get them to­mor­row. I have thought a lot about this. We’ll def­i­nitely prune the port­fo­lio,” the for­mer Tata Con­sul­tancy Ser­vices (TCS) chief said. The re­port said Chan­drasekaran’s col­leagues and in­vestors hope he can trans­fer to the rest of the Tata group some of the “dig­i­tal magic” he brought to TCS, where he tripled sales and prof­its dur­ing his seven years as CEO.

“One of my key mes­sages is that we’re go­ing to look at per­for­mance for every op­er­at­ing com­pany—growth rates, prof­itabil­ity, re­turn on cap­i­tal,” he said. “You can’t per­form if you’re not fit. If you want to run a six-minute mile, you have to bring your weight down.”

The re­port said much of the House of Tata is in “ur­gent need” of ren­o­va­tion, with some of its big­gest busi­nesses grow­ing slug­gish and vul­ner­a­ble to smaller, nim­bler ri­vals. “Chandra has vowed to re­or­ga­nize the group to fo­cus on growth and scale. Tata’s cor­po­rate ros­ter is rife with op­por­tu­ni­ties for con­sol­i­da­tion, with mul­ti­ple com­pa­nies com­pet­ing in the same seg­ment. Even vet­eran Tata ex­ec­u­tives are hard-pressed to ex­plain why Tata Fi­nance, Tata Hous­ing Fi­nance, and Tata Cap­i­tal Fi­nance op­er­ate as sep­a­rate com­pa­nies,” the mag­a­zine said. Chan­drasekaran took over as chief of the hold­ing com­pany of the multi­na­tional con­glom­er­ate in Fe­bru­ary. He is the first non-parsi chair­man of the 150-year old Tata Group. The re­port said Chan­drasekaran isn’t push­ing sig­nif­i­cant changes to the re­port­ing re­la­tion­ship with the trusts. “I am not brief­ing [them] on what we’re do­ing with every sin­gle com­pany. But they are the pri­mary share­holder for the group. I don’t think there is a con­flict in keep­ing them in­formed,” he said. On the group’s Nano car, Chan­drasekaran stresses that Tata Mo­tors will have other pri­or­i­ties.

“You know the cor­po­rate world. If you are ask­ing if I feel like I have as much power as any other CEO, the an­swer is yes. But it’s a process. It’s not like I can get up in the morn­ing and say, ‘ Hey, I want to exit fi­nan­cial ser­vices.’ There’s a dis­cus­sion. I have a long con­ver­sa­tion with the board. Every de­ci­sion has to be thought through, ex­plained to the man­age­ment?... I’m pretty happy with the amount of free­dom I have,” he said.

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