Tata Sons has injected more than Rs 80,000 crore and made additional purchases in the secondary market of around Rs 10,000 crore in group companies in the past five years to strengthen their balance sheets.
The holding company of the $125 billion consumer goods conglomerate has also pumped an additional Rs 20,000 crore into new businesses such as consumer app – Tata Neu and Air India, as well as upcoming forays into sectors such as semiconductors, batteries and 5G. It has also already pumped up to Rs 15,000 crore since January 2022 in reviving the recent acquisition of the airline, Air India.
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The Tata Sons group of companies and their capital has strong balance sheets and every major company has made a transformation in the past four years to contribute significantly to the group’s profits. I am happy to say today that all companies have strong balance sheets and from where we are today, we see no need for Tata Sons to pump any additional money into these companies. Now Tata Sons will focus on the future developing business. Ann Chandrasekaran, Chairman of Tata Sons, said in an exclusive interview held at the Tata Group headquarters, Bombay House, that this is now possible because all the group companies are aligned and banded together and each department is focused on goals, aspirations and performance.
Chandrasekaran was reappointed as Chairman of Tata Sons for a second five-year term in February this year. He joined the Board of Directors of Tata Sons in October 2016 and took over as Chairman of the Board in February 2017.
Chandrasekaran also chairs the boards of directors of operating companies such as
And, Tata Consumer, and Air India, and Tata Digital, among others.
“Capital deployment has been strong across companies. Earlier, every big company whether it was Tata Power, Tata Motors or Tata Consumer had a negative story to go around. Today, that comment has changed and every company has a positive story. I am very proud of the way it has conducted All of these companies are a transformation powered by the synergy of the group. Essentially, all the initiatives we have undertaken have been based on three pillars: strengthening the core, transforming the core, and creating future businesses.”
“We have followed a set of principles and strategies over the past five years where we have said, fitness first, performance next, and we have invested in all of our companies,” Chandrasekaran said.
Between 2017 and 2022, Tata Group’s revenue grew 1.5 times from Rs 6.5 crore to Rs 9.5 crore. Profit after tax grew 2.7 times from Rs 27,500 crore to Rs 75,000 crore, or nearly $10 billion. PAT, excluding TCS, grew from Rs 1,100 crore to Rs 36,500 crore.
Return on equity grew from 11.5% to 21% while return on equity excluding TCS increased from 1% to 14%. The market capitalization excluding TCS grew by 2.8 times from Rs 3.6 crore to Rs 9.9 crore. Including TCS, it has grown from Rs 8.5 crore to Rs 23.6 crore.
The group is also doing some heavy work in its acquisition of Air India.
“Air India is a very important company and not just a purely emotional investment. We will do everything we can to make it work. Personally, I spend a lot of time at Air India. We do not take negativity or point fingers at anyone, but there is a lot of work to be done on Air India. IT systems, operations, maintenance, fleet, ground handling, human resources, training and network planning.We work on all dimensions.Air India needs to properly maintain the fleet, there are flight delays due to fleet issues, we need spare capacity for fleet and engines.Our job is to address all these aspects. We are reorganizing Air India with talent, training and IT systems deployment to deliver better products with a modern fleet and handling of drones through data analytics. There is a significant amount of work to be done.” “There is no magic wand to ensure that everything will be fine tomorrow morning. Be patient. We are systematically fixing problems and there will be no temporary fixes. Air India will always be our national carrier and main company. It will also be a financially viable company. Within 12 The next 24 months there will be significant progress.”
Tata Sons is now focused on making serious commitments to five companies – Tata Neu, Foray into the Digital Consumer Business, Air India, Semiconductor and
and 5G batteries. “5G has got solutions lab proven, 4G has been proven and we are looking to commercialize the solution, 5G and 4G need time to scale up. We will also manufacture car batteries and continue to build along the value chain such as mobile phones and we are committed to investing and building international company “. The group aims to build a “5G Stack” which it will aim to sell in global markets.
New companies may accommodate strategic or financial investors depending on the type of capabilities or strength they bring to the business, he said Tata Sons is also betting heavily on building a strong semiconductor and electronics value chain with a global focus that will spark a few business opportunities in The next five years, Chandrasekaran said. Creating resilience in the global supply chain is a big topic and the group has identified it as an opportunity. “We are in the process of building our electronics business and focus on precision manufacturing followed by packaging, assembly and testing. We will continue to build along the value chain and commit to investing and building a global business.” Initially the group will focus on basic semiconductors.
The group has now embarked on a core business transformation focusing on four themes – digitization, sustainability, supply chain resilience, and health, wellness and safety. “Digitization is a journey where every company thinks of data first. The sustainable transformation is the transformation of the market that we are doing whether in electric vehicles or fuels, renewable energy, carbon sequestration and a great commitment to biodiversity and water consumption. We have a comprehensive plan to be net group zero by 2045 Each company has a specific goal in all of these dimensions.”
Chandrasekaran denied criticism about some decisions in the past five years, saying, “We cannot be distracted by criticism. Some criticize us with data and others without data. All decisions are made backed by enough conviction, faith and commitments.”
Geopolitical issues were a risk factor in business and were intensified by the Russo-Ukrainian War.
The effects of the pandemic, war and supply chain shortages are driving up inflation. “What looked like high growth, high inflation in January now looks like low growth and high inflation environment globally. But I feel India stands out, India has higher consumer spending. We see that in both discretionary and core items across Tier 1, Cities 2 and 3 and 4. While we have to control inflation, it is important for us to protect and benefit from growth. So our capital spending on infrastructure must continue. My view is that growth creates jobs and cares about many issues.” Chandrasekaran.
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