Tata Group to prune portfolio, bring consolidation: Tata Sons Chairman N Chandrasekaran

The Chairman of India's largest salt-to-steel conglomerate is looking to prune Tata Group's extensive portfolio and consolidate group companies. Tata Sons Chairman N Chandrasekaran, in an interview to The Economic Times, said "I will be the first to admit that we are very complex. We need to be simplified. I would like to see ourselves as 5,6,7 groups as opposed to 110 companies. The more we see ourselves as (many companies), nothing will get done."

Leaving five major Tata Group companies alone - TCS, Tata Steel, Tata Motors, Tata Power and IHCL - the rest could well be clustered as communications and ITES companies, consumer and retail companies, realty and infrastructure companies, agriculture and chemicals companies, service-related companies and financial services companies, as so on. During Ratan Tata's tenure from 1991 to 2012, Tata Sons reduced the number of group firms from around 250 to about 100, through mergers.

Tata Sons is eyeing new business clusters such as defence, infrastructure, consumer and retail, financial services and hotels and airlines while supporting the growth of the three largest companies, Tata Consultancy, Tata Steel and Tata Motors, the report said.

On Tata Sons' telecom unit Tata Teleservices, the 53-year-old Chairman of $100 billion-plus group said it made little sense to invest large sums in Tata Teleservices as it would mean "throwing good money after bad." "Reviving it would need Rs 50,000-60,000 crore and that is not a choice."

"In passenger cars, our cost structures are out of whack. Every single car and model is losing money. It's important to pick up volumes and try to become profitable," Tata Sons Chairman Natarajan Chandrasekaran told ET.

Meanwhile, Tata Teleservices, the telecom unit of Tata Sons, is said to be finalising an exit plan for most of its 5,000-odd employees. The company will offer severance packages, voluntary retirement scheme (VRS) to most of its employees. Early this year, when Chandrasekaran took over as chairman, Tata Sons resolved its two-year long legal dispute with partner NTT DoCoMo, agreeing to pay $1.18 billion to buy out the Japanese mobile operator's stake in Tata Teleservices Ltd (TTSL).

Shares of Tata Teleservices fell 15 per cent on Monday after its senior management met Department of Telecommunications (DoT) officials and discussed plan to exit their spectrum holdings.

On Air India,  N Chandrasekaran told CNBC-TV18 that Tata Group will look at Air India's disinvestment being executed by the government currently. The group, however, needs more details from the government on the process.

Referring to full-service carrier Vistara, Tata Group's joint venture with Singapore Airline, Chandrasekaran said the group can't remain with a fleet of just over a dozen planes. Tata Sons also holds a 49 per cent stake in no-frills airline Air Asia.

Chandrasekaran is expected to consolidate similar businesses and reduce cross holdings. Tata Finance, Tata Housing Finance and Tata Capital Finance, for instance, do much the same thing and could well benefit from being merged. The same holds for the group's realty business - Tata Realty and Tata Housing; or its beverages business - Tata Global Beverages (TGBL) and Tata Coffee.

Tata Sons Chairman began disentangling the cross holdings among Tata companies, starting with Tata Steel's stake in Tata Motors. Chandrasekaran has brought in a range of fresh talent at the top to equip the group better for tackling challenges.