Must address group complexity to move ahead: N Chandrasekaran

October last year corporate India saw one of its most bitter corporate battles. It changed things for the House of Tatas and it changed things for the man who is now heading the House of Tatas, N Chandrasekaran.

Below is the transcript of his interview with CNBC-TV18's Shereen Bhan.

Q: It has obviously changed life for you in many ways but what was the mandate that was given to you when you took this job on? What was the brief that was given to you when you took this job on?

A: The board of Tata Sons, when they appointed me, had concerns about the performance of the different businesses. I think it was a broad brief to get the group together and also to look at individual companies and then define the roadmap for the future. Some of them are private companies, some are holding companies, so it was a broad brief.

I spent the first month or so looking at all the data and taking stock and then formed an agenda which I played it back to the board later on.

I think there are big positives in the group. I was just completely overwhelmed by the level of support I got from within the group as well as from corporate India.

The single most thing that also impacted me is the level of trust that this group enjoys and everybody wants you to succeed. There is a tremendous amount of goodwill, which feels very good, and at the same time it puts a lot of responsibility as well.

Key among the areas I needed to look at was capital allocation because that is the feedback I got from several investors.

Q: So you are taking on a fund manager’s approach now?

A: They pushed me so much on returns and disciplined investments and all the things which we have heard from the media.

The second thing is I feel, while the strength of the group is the portfolio and the platform that you have, there is tremendous opportunity in each of the sectors. On the other side there is the complexity of the groupIf we have to move forward then that has to be addressed as well.

So, in a manner of speaking, if I can use three words it will be like simplify, synergise and scale; that is the kind of approach in terms of the business performance.

The second thing is, I felt there were gaps in talent for the things that I needed to do. So I decided that my first focus should be on building a team. So, I went about building a team and you have seen it in media and pretty much it is all known. Significant amount of time went in building the team.

Q: Is it done now?     

A: It is more or less there but you always have a few additions. Many key people have come onboard and a few more will come on board as we go along. But major portion of the formation of Tata Sons team is done.

The other aspect is also, we have to communicate a little bit more in terms of what we are going to do and how we do etc, build little bit more transparency and that is something that I am working on.

Q: Let me pick up on each of those points that you talked about. Let me start by asking you about simplification, 100 operating companies, 29 listed entities, over 900 subsidiaries and let us now talk about performance. The top 10 companies account for 94 percent of the groups revenues and 60 percent of your companies actually have a return of equity of less than 10 percent. So, when you start to now look at whether it is restructuring, rationalising, pruning, what are the parameters that you are going to put individual companies through before deciding what you intend to do with them?

A: You can’t do a clinical mathematical approach overnight, that is not the approach that I will adopt. Let us look at it in multiple dimensions, first going forward what is the capital allocation policy? That we have firmed up and we will look at returns very seriously in every which way. Some companies we will look at capital employed, some companies we will look at return on equity, we have worked out what the process is going to be, what the returns are going to be and we will use it very rigorously.

Now, when you look at the existing companies, there are companies which are performing well, and others which are not performing well and you need to get into the details. You cannot just say that this company is not performing well. Maybe execution is bad, then we need to fix that. Every single company has to be looked at. If there is an opportunity to fix that, we will fix that. If we cannot fix it, then we have got to take the call.

Q: In your assessment today and you have spent the last seven months doing exactly that, how many companies fall under the head where it is not fixable anymore, it is time to let go?

A: I cannot get into numbers and statistics yet because I would like to also tell you that I have to simplify some structures. If you look at the whole group, there are three big companies, Tata Steel, Tata Motors and TCS and they have scale. If you take the remaining, there are a number of companies in different sectors, but they have not scaled up. So I need to figure out a way of scaling them up. If you take the total group, the areas of growth has to be, apart from (Tata) Steel, (Tata) Motors and TCS which are segments of their own, if you will, then we have retail and consumer, then we have financial services, then we have infrastructure, then we have, for want of a better word, tourism. In each one of these sectors, we have multiple companies and also we have defence, multiple entities over there. I can talk about each one of those. So, at least there are five segments apart from the three big companies and all of them present significant opportunity of growth and we want to address that. There we need to see how to consolidate where we can, how to synergise where we cannot, and how we can scale.

I particularly have not mentioned telecom. The area where we have a big issue is telecom. If you take telecom, we have three companies. We have Tata Teleservices and Tata Tele (Maharashtra) which is the mobile consumer business. Then we have Tata Communications and then we have Tata Sky. While Tata Sky and Tata Communication are in a great place, Tata Teleservices, the mobile consumer business is really in bad shape. We have a huge debt and with the foot print we have and the kind of spectrum we have it is very difficult, close to impossible for us to be able to recover. So that is a company that we have got to find a solution very quickly.

Q: You have been trying to find a solution for Tata Teleservices for a while. You have been on the lookout for a buyer. You have not found one. So, how much more runway do you actually have before you take a call on whether you pull the plug altogether and where do things stand with the possibility of finding a buyer for that business?

A: Whichever way, I have given myself Tata Teleservices as the number one priority to find a solution and I had Steel also and that deal has been done. On Tata Teleservices, I am at a point that I need to make a call. I am looking at all options. I will figure out a way this fiscal year.

Q: So that would mean closing down the business altogether?

A: It could mean anything. It basically means that I do not want to put good money after bad. I have a situation where already the debt is about Rs 31,000 crore. Additionally, I have spectrum liability and we are making cash losses on a month on month basis. So, it is not a business that I can easily turn around unless and otherwise I am willing to commit another Rs 50,000-1,00,000 crore. And that is not prudent. So, I will make a call. I am at the point now. Do not ask me whether it is this month, this quarter, next quarter, but this financial year, I would like find a solution.

Q: Do you still believe that there is a possibility of finding a buyer?

A: Let us not speculate because every newspaper, your channels, others channels have been speculating. In fact speculation has been more than what is really happening, so I do not want to add to it.

Q: Would it be fair to say that the interest from a potential buyer at this point in time is not looking particularly bright?

A: Let us leave it at a statement that I have to find a solution and I am committed to finding a solution one way or the other. I will have to take a tough call and I will.

Q: You said TTSL is your number one priority. What is your number two priority in terms of the company or the business that requires fixing today?

A: Basically, if you look at the group, in the group let us look at a concept. I think priorities are also there for growth, priorities are also there for execution, priorities are also there for balance sheet. From a balance sheet point of view, a few companies are highly leveraged. Telecom is number one, Tata Teleservices is number one. Then we have high leverage in steel and I think we have found a very beautiful solution in the way we have formed the joint venture, the way we have done the capital structure of that entity, I think it frees up Tata Steel India to focus on the growth in India. So Tata Steel in India, we have definitely aggressive growth plans, whether it is organic or inorganic because there is demand, there is market in this country. So we will definitely go about building the steel business in India and the joint venture will operate on its own, the capital structure is solid, so the joint venture will survive on its own, in fact it will grow on its own.

Q: If I can just pursue the conversation on steel for a little bit longer. You said that the focus now, very clearly is going to be on growing the business in India organically or inorganically. There is a bunch of potential distressed assets on the block. Are you on the lookout? Have you examined any possibility closely?

A: Yes, very much. It all depends on where it ends finally, but we will definitely look at it.

Q: What is the kind of war chest that we would be talking about for potential acquisitions within the steel business?

A: It is fair enough to say that whether it is organic or inorganic, we have the potential to double our capacity in India. For what period of time, I do not know. It depends on whether it is organic or inorganic. But definitely, I think there is a big possibility for growth and we look at what deal comes and at what price, whether it makes sense and we will do it. Otherwise, we will go about parallelly, looking at organic options because our Kalinganagar plant has to scale up.

Q: Again, just a quick word on the steel business and if one looks at the return on equity, Tata Steel at 2.5 percent, JSW Steel at 16 percent, so given the outlook and the vision that you have now for the domestic business and the fact that you believe that you will be able to double capacity whether organically or inorganically, what is it going to mean from the new business perspective?

A: If you look at Tata Steel, once you remove the European business and the pain, still, while doing this deal, we have taken some pain in Tata Steel India. But what it does now is, it brings all the capital ratios under control, both for the European entity and for Tata Steel India. Immediately, once this structure is done, we will have very respectable capital ratios and Tata Steel India is a well-run business and the EBITDA (earnings before interest, taxes, depreciation and amortisation) per million tonne of steel is a benchmark. So I think, from here in terms of returns, Tata Steel will perform exceedingly well.

Q: Let me talk to you about Tata Motors and you acknowledged this in your speech at the AGM as well that you are disappointed with performance of Tata Motors. You hope that things will turn around. You would like to get back to the path of providing dividends to shareholders. I spoke with the MD and he said that there is a long-term turnaround plan and there is currently a short-term turnaround plan that has already been put into place to ensure that we see a turnaround over the next 6-9 months. What is your view specifically on Tata Motors because whether you look at margins on either the passenger vehicle side of the business or the commercial vehicles side of the business, lagging peers like Maruti and Ashok Leyland quite significantly and for significant periods of time? What is the view now on Tata Motors?

A: Tata Motors, we are definitely on the move. The team is working extremely hard. We have had intense discussions and if you look at Tata Motors business per se on a Rs 2,80,000 crore business, approximately, Rs 2,35,000 crore business is Jaguar Land Rover which is doing well which is giving a double digit volume growth year on year and some years their margin is good, some years, their margin is not so good, but the point is that they are very committed and their balance sheet is good. They have significant number of products that are being launched and it is all committed for 2019, 2020, 2021 and so forth. Now if you look at the remaining almost Rs 45,000 crore business, Rs 35,000 crore business is commercial vehicles and I think passenger cars is roughly around Rs 8,000-9,000 crore. And we have to get both the commercial vehicles and the passenger cars performance both in terms of growth, market share, as well as profitability and that is the journey we are on.

If you look at commercial vehicles, the market share has dropped significantly and now, we are working very hard to turn around the market share and we are confident because of two or three reasons. One is there is a tremendous focus that has been brought in in terms of commercial vehicles. Second is, any product gap that we have, we are addressing it, some decisions have been taken and those vehicles are coming, some are in the works. There is a significant effort going on specifically on cost management, on profitability improvement and you will start seeing the results. I hope the results will be seen sooner than people expect.

Q: When you say sooner than people expect? The guidance?

A: I do not want to, I think Guenter Butschek is the right person to speak and I am fully supportive of what the team is doing and we are engaged closely.

Then in terms of the passenger cars, passenger car business, margins are suffering very deeply in every single model. Every single model it is suffering and that is something that we have got to work on and there, the challenge is twin. First is, they have got to get the volumes. At the same time, they have got to fix the margins because you see more volume on a loss-making product and you will continue to make more losses.

So, I must say that the recent models have got a lot of traction and we are looking into the contribution margin and the margin of that business and that is under review as we speak. So Tata Motors is a priority. I think we will come out strong, both in terms of market share and in performance and I am also very happy that we won this EV (bid). That is again a call we took because we spent time looking at all the models. They have got multiple models on EV, they have done a lot of work and we sat together and said we have got to go for it. And I am very glad the team put up a great show and we are there.

Q: Since you spoke of the bid that you have just won, do you make any money because the second bid was Mahindra and Mahindra and there is a difference of Rs 2 lakh between your bid and their bid.

A: I have seen the comments by Pawan Goenka and Anand Mahindra, both of whom I deeply respect, but I want to tell you that we will make money.

Q: You will make money?

A: Yes.

Q: Is this going to be done through the Sanand plant?

A: Leave the details. If you want the details, you go to Guenter Butschek and Mayank Pareek. I know, I have the details but I do not want to speak on behalf of Guenter or Mayank. Otherwise, you will tell them that your boss told me this. I think they are working very hard and they know what is going on and I think you should talk to them.

Q: Let me then go back to my conversation on Guenter and put that forward to you. When I asked him specifically what is the future as far as the Nano is concerned and he said, that decision will have to be taken in context of our strategy for passenger vehicles and that decision will have to be taken keeping a view on where we stand and as far as the entry level segment is concerned for the passenger vehicle space. What is the call finally as far as the Nano is concerned?

A: I want to clarify this for everybody. This question keeps on coming. People are targeting Nano for no reason. Tata Motors passenger cars has multiple models starting from Indica. They have got a series of models. The only model that makes money is Indica. Every other model makes loss and Nano loss on a yearly basis is less, I have actual numbers, it is less than 4 percent, it is about 4 percent of the total loss that the passenger car vehicles make. So, whether you shut down Nano, whether you give it life, number is not going to change, needle is not going to move. But, we have got multiple options in front of us, not only for Nano, but for every other model and we are evaluating all those models.

In fact, I am also learning this industry. I am not an auto expert. I have looked at the financials but I am also learning these models. Every other passenger car maker always has multiple models. So how do you actually make money on these models? It is if you are able to sell especially after you have depreciated the investments on the product development you start making money as long as the product sells. So this decision has to be taken for every model, but the limited point I want to make is that this is not a billion dollar question in front of Tata Motors. But this is a question that will be answered for every model and we will see what is the model that can be repurposed, what models we will launch for our electric version and what models can continue to sell and what models have to be upgraded, all these questions have to be looked at. But Tata Motors actually has a very small passenger car business, so we need to scale up because the number of vehicles we sell is one tenth of the market leader. So, that definitely means that there is a market and overall the market is also expanding. So there is a big market in this space. So how do we capture this market and it is not going to be a one quarter affair, but we will work on it.

Q: Let me then ask you about Jaguar Land Rover (JLR). In terms of scale versus its global peers, if you look at BMW or if you look at Daimler, JLR for FY17 was about 0.6 million units versus 2.2 for Daimler and about 2 million for BMW. So what is the aspiration for JLR in terms of scale and again, the question that keeps coming back, are you looking at a listing for JLR? Is it likely to be any time soon? Is that an active consideration today?

A: Couple of answers. I think you should meet Ralph Speth when he comes here. There have very ambitious plans. Obviously, how we achieve that is something that we have got to see because the amount of money that we are investing in terms of new product development, the capital that we are putting in place is very significant. We put 4-5 billion every year. So, there is a big ambition and what is the route to achieve that ambition is something that is being deliberated upon.

Q: If there is an inorganic opportunity also?

A: If there is an opportunity, yes. But there are no easy options in that space because they are a very super high-end luxury segment and there no easy options there. But definitely, Ralph and team have high aspirations. You never answer these questions like whether you are going to list JLR but I can definitely say, if you are asking me whether it is under active consideration, the answer is no.

Q: Let me then move on from Tata Motors and talk to you about perhaps the other pain point that is on your radar and that is what is the strategy going to be as far as Tata Power is concerned and specifically with respect to Mundra? Where do things currently stand?

A: Tata Power has to me, three priorities and I do not want to talk specifics, but at a broad level, if you look at it, one is, we have got to deleverage the company and depending upon which accounting standard you use, their debt is either six times or eight to nine times EBITDA. So it is a very high leverage and that needs to be fixed.

Q: What is the plan of fixing it?

A: We have to pare down the debt, I think we are looking at definitely how we can get out of the non-core assets and what does it mean in terms of monetising, definitely Tata Power board is deliberating on that. So we will figure out a way. But the board definitely is of the view that the leverage has to come down.

Q: Is there a target that you have in mind that you would like to move towards?

A: We have internal targets but I would not want to talk about it, but basically, get the leverage under control. And each of these industries have got benchmarks and it is what is acceptable and what is not acceptable. At least we have to move towards what is acceptable.

Q: In the case of TTSL you said very clearly that something has to be done within this financial year. In terms of Tata Power?

A: Tata Power situation is… it would be gradual. We will get the leverage going in the right direction and then there will be a destination and we will hit it at some point. Second is, we have got to find a solution to Mundra and we do not have one. The current situation we have is untenable and there are no easy options. We are looking at basically a couple of options now. One is this talk about whether this proposal that is floating around in terms of divesting. Second option we have is whether we can get cheaper coal and we have not found one. So we are exploring all options and currently, I would say that it is a problem but we do not have a solution and we are actively thinking.

Q: Has there been any further conversation with the government about the future and the fate of Mundra?

A: I think you have to talk to Anil Sardana. Third aspect is again we will have to simplify the company. That is the theme we are working on.

Q: So when you say simplify the company, what do you mean?

A: We are looking at what markets we should be in, should we have presence in many markets, should we have smaller plants, should we have so many joint ventures. All these things have to be looked into because unless or otherwise we can scale again, you are not going to make progress. So these are the three things that Tata Power board is looking at.

Q: I want to digress from talking about individual companies to pick up on one of the points that you mentioned earlier on. In the context of simplification, reorganisation, you said where consolidation is possible, you will look at consolidating. If I were to just look at your listed universe now, you have got Tata Motors in the auto space and then you have got smaller listed entities like Automobile Corporation of Goa, Automobile Stamping and Assemblies, in technology CMC has already been done (merged) with TCS, but then you have got Elxsi where Tata Sons has about 42 percent. In the metals space, there is Tata Steel, Tata Metaliks, Tata Sponge Iron, TRF, Tin Plate. Where do you see the scope of consolidation today?

A: Thank you for reeling out my task list. There are things to do in every area and obviously listed companies are sensitive and we have to take it up with the boards and some will make sense, some will not make sense. And unlisted companies, easy calls sometimes, but everything that we do will be done very judiciously. Nothing will be done in a rash manner. But there are opportunities everywhere. Give me some time. I have been here for six months.

Q: But broadly in just the three areas that I listed out for you which is the automotive space, the technology space?

A: I cannot be specific.

Q: But do you see these are the three spaces where you would like to see the consolidation?

A: There are many other spaces as well.

Q: But these three specifically you would like to see?

A: We look at across the board. Wherever possible we will do it. Wherever possible and it makes sense, we will have to press the button.

Q: let me then go back to talking to you about the possibility of scaling up companies. Tata Global Beverages for instance, what is the aspiration there? Once again, the possibility of Tata Coffee and Tata Global Beverages and the possibility of consolidation there, is that something that has been considered at all? What is the aspiration on this part of the business?

A: Let me just say simply that we are the best brand in terms of the Tata brand. We have a huge connect with the consumer base in this country. The Tata Group, I read somewhere in the analytics that we are almost touch 900 million consumers. And so, if you look at the group brand and the consumer that we have, we have the most powerful story and we have the biggest opportunity. So definitely, our consumer businesses have to scale and whether it is in terms of only merely consolidation, the answer is no. There may be consolidation opportunities, but also we have to look at our product portfolio and again, we will have to take a call on which markets in which we operate because I feel that the domestic consumer market is huge.

Q: Would it be fair that that is going to be the emphasis for most businesses within the group because you see that the India story to your mind is more attractive?

A: You don’t say anything definitely but I feel very bullish about the India story. Where in the world you will have such a large consumer base and such a situation where the affordable spend for the consumer will continue to increase for a long period of time? The demography is such, the aspiration of the consumer will constantly increase. So, it is a question of organising ourselves whether we may have a presence in the space today, we may not have a presence in the space today, whether it is consumer, whether it is retail, whether it is financial services, organising ourselves to address that aspiration is a huge opportunity and I am bullish on that.

Q: Tata Pigments, Tata Ceramics, Tata Décor, Tata Unistore, Tata Petrodyne, have you now evaluated and again I understand sensitivities involving specific companies but is there now clarity that you have on which are the spaces that you believe are not viable for you to continue in the future?

A: Do I have clarity? I have clarity. Do I have a view in terms of what should get consolidated, where it should go? Yes. It will be only my decision? No. I need to engage with the listed companies individual boards and even in unlisted situations I will have to get a view because something may look very small today and I may be of the view that last 3 or 4 years it has not performed or 10 years it has been there in some form but the point is, is there a way that there is a huge opportunity of growth in that company, that is something that specifically we will look at. We are looking at all of those things and all the companies we have listed, we are looking at them.

Q: Are lot of people making representations to you about where things stand as far as their businesses are concerned and where they see the future, trying to convince you to bet on them?

A: It is a question of being transparent, it is a question of not taking any high handed decisions. Every decision has to be properly analysed and should be data based. As long as you do that, you can carry everybody. I always believe that I have to convince or I have to get convinced.

Q: Let me ask you about Indian Hotels and the process of exiting non-core assets within Indian Hotels has been underway as well. Taj Mansingh that is going to be the big one and I am sure that you have got your warchest ready to take on the domestic big boys as well as the international big boys. Are you ready for a fight on Indian Hotels?

A: Taj Mansingh is a very prestigious property of the group. I think the group has done a fantastic job. It has been a flagship hotel, we have paid our dues and we would definitely like to keep that asset with us. So, we will see, everything has to make sense eventually. However we are very keen to have that property because it has been our hotel for a long time. There are many people outside the group also who would want to see us succeed. Whenever people meet me in this connection they tell me, we hope that it will stay with you. So, I hope it does.

Q: The hope within some quarters of government certainly is, that the Tatas should actually come back to Air India. Is that under active consideration?

A: So, far there has only been broad news about Air India being divested.

Q: It is not news, there is a group of ministers that meets very regularly.

A: I know the process is underway but we still don’t have all the details. Every business proposal will be very seriously looked at and we will look at that. However currently we don’t have the data. What is the structure because there are so many different groups within Air India, there is real estate, there is debt, there is liabilities, we have to look at all of that and we will definitely look at it. We have a team which can definitely spend the time as soon as the details are out.

Q: So, you are saying that if it makes business sense you would consider the Air India option?

A: That is true for any proposal.

Q: You already have two aviation businesses.

A: We need to look at aviation as a whole. We are sub scale, we have two airlines, both are sub scale. So, any decision that we take Air India or otherwise, we have to have a story because we can’t be operating with 15 and 20 aircrafts. Again I feel scale is important. In every industry and every group we operate in, scale is important. Without scale, you get to a situation where you are all over the place and it is very difficult to pay management attention and all problems usually come because of marginal plays. That is my learning in life. So you cannot have too many marginal plays. So we have got to look at it holistically.

There are things that I have to do today, there are things that are important and I will have to do it over a period of time. And everything does not happen overnight. These are strategic decisions and data is required and a long-term story is required and we will take a call.

Q: So as I said, the process is currently underway. IndiGo has already expressed its interest in Air India. They would like to take only the international operations, but we do not know whether that demerger will in fact be approved by the government. Would you be interested in all of Air India or like IndiGo, are you also interested in some parts of Air India?

A: We have to look at all the data. We do not have all the data yet.

Q: Have you had an informal conversation with your partner, Singapore Airline on whether this would make sense for you?

A: Do you think I would not have? And do you think I am going to tell you about what we discussed?

Q: Are they on board with the possibility?

A: Do you think I am going to answer that question?

Q: What next now as far as Indian Hotels is concerned? You have been able to bring down your debt to equity to about 1:1 by March, 2017. What is the aspiration now?

A: Indian Hotels is a great brand. Pretty much, I should not look like a broken record, simplification is required there also. Currently we have debt, we have roughly Rs 3,000 crore of debt and that needs to be brought down and we are going for a rights issue for Rs 1,500 crore which the board has approved and I think the process is on. There are non-core assets in Indian Hotels and I am waiting for Puneet Chhatwal to join. Puneet is joining in first week of November. I had the opportunity to meet him last week when I was in Europe. So as soon as he comes, we will sit down and have a discussion.

Q: Let me then ask you about your aspiration for the financial services business. You have got one listed entity there which is Tata Investment, you have Tata AIG and Tata Finance and so on and so forth. How strategic is the financial services play going to be for you given the fact that this is highly competitive and some would also say commoditised market.

A: I think it is a beautiful business. It is a very strategically important business. Again, if you look at our financial services business, leave Tata Investment Corporation, I think I would put the remaining four as the financial services business and that is more investment business. We have two insurance companies and we have Tata Capital and we have the asset management company. I think we have again, it comes back to a couple of things. We have a fantastic brand and for the brand positioning we have, we should be doing better. We should also look at the group leverage we have whether it is in the insurance space or the NBFC space, we can scale. Our insurance companies are doing very well and our Tata Capital business is also on the upward curve.

We have to appoint a CEO for Tata Asset Management. We did appoint a CEO for Tata Capital. He is joining again in one month's time. I think we will take a holistic look at financial services. We will look at distribution, we will look at digital, we will look at the processes and the cost income ratios. There are many different aspects that we want to pay attention to. We want to be a big player in this space and we have everything in terms of ingredients. So we need to bring it altogether.

Q: So would the rule of three apply to each of your businesses? And when I see the rule of three that you want to be in the top-three in terms of the pecking order and that will decide future capital allocation that will decide the kind of bets that you make?

A: That will be too harsh a statement to make and too strong a statement to make, too early. I think the group has enormous opportunity and we have people who want to deliver and we want to look at each of these companies where they are and where they can reach as an aspiration, but they cannot overnight switch to some number one position or number two position. That will be very unfair ask. But as long as we can, on the right direction with the right velocity, we are fine.

Q: Very quickly I will ask you about your defence aspirations. Which is going to be the main entity for your defence business? There are parts of it in Tata Motors, parts of it in Tata Advance Systems. What is really going to be your defence entity?

A: We have four defence entities and some are, at least two of them are unlisted and two of them are subsidiaries of listed companies. We will have a single face to the defence market, that is my aspiration whether it is consolidation or cooperation, we need to see where we can get to. But my aspiration is that we will have a big play in defence and we will have a single face to defence.

Q: Any specific area within the defence space that you would like?

A: All the spaces that we are in today, we will play in all the spaces. If you look at the Tata Group, one thing that has been a big learning for me after I moved to this job, Tata Group merely does not look at only financial performance and that is something that I am focused on, as you know, very strongly. But Tata Group has always done things to build India. Whatever the priority for the nation, Tata Group aligns very quickly. Defence is a priority for the country, so we will align and we will be a big player because if there is an indigenisation of defence, definitely we would like to play. And it is a long-term gain. This is not an industry which will happen in 12-24 months.

I can say that we have spent time on this and we have got a blueprint and we have got to see in terms of structurally, when I say blueprint, blueprint in terms of structure how you have to go and we are exploring a couple of options and hopefully, you will see us executing in six months.

Q: More partnerships like with Lockheed Martin, is that on the cards?

A: Wherever it makes sense, yes. We will need partners because in this space we do not have the skill sets in India, so we will need partners and I have also experience in working with some of these companies in my previous job, so we will look at what partners we can bring.

Q: So given the fact that your you are bullish on India, you are bullish on the fact that you want your businesses to look at the domestic opportunity, what kind of investment plans can we expect over the next year or so as part of the group?

A: Firstly let me take the write down on Tata Teleservices then I will come back to you. That is for the next interview. Now I am in a mood to take write offs.

Q: Since we are talking about write offs and as I said, I did not want to dwell on the past, but I will just ask you about the big headline that came in from Cyrus Mistry about the potential write down which caused a great degree of anxiety and nervousness. Now that you have assessed where things stand within the group, was that an exaggerated claim?

A: I do not want to, I am not here to pick a fight or anything, so unnecessarily do not want to be drawn. But I tell you, when you run a large group, there will be decisions that will be taken that will go well, there will be decisions that will not go well. When the decisions go well, you move on and if you are talking about write down, what did you talk about JLR? Investment was less than USD 2 billion, USD 1.5 billion or something. Today the value of Tata Motors is 100 percent JLR value, more than USD 20 billion. It is a remarkable story. So, some goes well because the strategies and execution is right. Some does not go well because the strategy may be right, external factor was wrong or execution is wrong or we did not take corrective action at the right time. When you make big bets, we have the responsibility also to take corrective actions and some will go well, some will not go well and if it does not go well, just move on.

TCS was listed at the right time. If TCS was not listed at the right time, it was a very complicated decision at the time in 2004. I was at least very closely involved with Ram at the time and that decision, had it not been taken that day, we would not be where we are today. A group also will not have that fire power. So I feel that you take decisions and some are bold decisions and you hope that you can make all of them work and if some of them do not work then you have got to take tough calls in putting them behind and moving on. And if you do not then you will never have the stomach to take the next big decision and you need to always have the stomach to take the next decision.

Q: Speaking of having the appetite for risk and having the stomach for risk, the underperformance that we have seen, 132 billion, that was the Tata Group value in 2015. It is down to 131 billion in 2017. Priority for you is to get all engines to fire?

A: Absolutely.

Q: And you feel confident of being able to do that?

A: I do not want to be arrogant to say what I will deliver. That is an outcome. That depends on a lot of factors. But you will not find me wanting in setting up a very high aspiration. Count down me on that.

Q: Are you getting any time to run at all?