‘Some things are taking longer than I thought. Can be frustrating
Presidency of the expansion of $ 100 billion more from salt to steel to software Tata Group The speed of N Chandrasekaran has not slowed, although the 56-year-old marathoner confesses that managing the largest conglomerate in India (for income) sometimes exhausts his patience.
I don't like things moving at a slow pace, he tells TOI Reeba Zachariah in obstacles to rationalize business. Excerpts
Compared to when he was CEO of TCS, he now has a more supervisory than operational role as president of the holding company of an expanding conglomerate.
What is the critical difference?
It is no longer enough to be a high performance CEO, now it is more about creating the conditions for other CEOs to perform at their best. It is about influencing, having the correct strategic contributions and monitoring mechanisms, and forming teams. These have priority, and sometimes one gets impatient because different paths move at different rates. And you want to do things but you can't participate. You have to work with people, form teams, sell ideas, bring the board. Take time. But you can create lasting companies.
You came from a purely technological environment to a group where the largest companies, except TCS, are classic industrial businesses such as steel, cars, energy and chemicals. How was the transition?
It's very different. For me, it has been great. I have always had an appreciation of each sector, whether I have a deep knowledge about it or not. At TCS, at the end of the day, my job was to help clients in any other industry use technology. I never believed in technology for the sake of technology.
Why did the Aakash tablet fail? Because they thought we just had to make it and give it to everyone and it will work. You have to see technology from the context of a business. So, in my opinion, the best thing I can do in the next two or three years is to help each company transform into a digital company. We will definitely do it for steel, cars, energy: these are industrial companies.
Then you come to financial services, retail ... Tata Digital It's about connecting all consumer platforms. There will never be a pure physical world again. It will be a figural world: digital connection of physical assets. For each business, digital will be essential for the customer experience. I call it an experience economy. How do you make a consumer feel special if you don't know her? Memories, analytical help.
Have you faced resistance when digitally connecting the various companies of the group?
It is not about resistance. There are a number of challenges. In some companies it's about appreciation, in others it's about skills, and in others it's about prioritizing budget allocation. But companies must realize that IT is moving from being in the back of the business to the front of the business. Some have traditionally allocated less money to digital. For example, if you take Chroma The entire company must be based on technology, but its technological budget is Rs 15 million. What do you do with Rs 15 crore? But now I will drive the change.
He will soon complete three years as president. What is the biggest difference you have made?
(Smiles) That's for you to say.
Where do you see the group in two years? You will have completed five years as president by then ...
Directionally, I am working to strengthen the balance sheet, with most companies improving in terms of profits, cash flows and profitability for shareholders. Corporate structures are being simplified, companies are being rationalized and key companies are being expanded. The process is under way.
But some things are taking longer than I thought. Like the closing of the sale of the mobile consumer business of Tata Teleservices, it has been suspended for a long time. There was also a delay in closing the joint venture with ThyssenKrupp for the European steel business and, ultimately, collapsed due to regulatory disapproval. Now, we want to make sure that the European steel business does not take capital from Tata Steel.
There are certain businesses that have been identified as assets for sale, but again, these are taking time. We are waiting for market conditions to improve. I am a little worried about market conditions in the financial services business. We are growing at 25%, and that worries me. I tell them to be careful so we don't have NPA in the future.
Some of the problems that group companies face are macro. Deceleration of demand, Brexit, regulatory standards, protectionist measures. These are out of your control ...
When I was with TCS, I saw the best and the worst moments. At that time, I would tell people that TCS has a small market share (1.5%) in the global IT services industry, so why do you complain about macro factors and austere customer spending? Even if you increase your participation by 0.5%, that's it. Hiding behind macro problems will not solve your internal problems.
Take Tata Motors, for example. Tata Motors has a 6% stake in the passenger car market. Since we do not have a dominant share as one of our competitors, we cannot have the same opinion as the competitor. The question we must ask ourselves is: Am I as good as the market leader in all aspects: product quality, distributor network and customer service? If we are, we will surely sell more cars. We have a lot to fix. Blaming the macro situation is good for press interviews and for analyst reports. I have to change the mentality of our companies.
Tata Motors is the largest company in the group in terms of revenue and also the most leveraged. How do you plan to improve the balance sheet?
A large part of Tata Motors' debt belongs to Tata Motor Finance. The auto debt is Rs 50,000 crore, and this is mainly in the domestic business. This is due in large part to the accumulation of inventory. The inventory should decrease in March, and you will see that the company's auto debt will be reduced. Even then, Tata Sons has decided to invest Rs 6.5 billion rupees in Tata Motors. This will address some problems. First, send the message that Tata Sons is firmly behind Tata Motors and is not going to leave it. Second, it will help the company reduce debt. And finally, the participation of Tata Sons in Tata Motors will increase.
You are also looking for a partner in Jaguar Land Rover ...
The question that they repeatedly ask me is if we are going to sell JLR. The answer is no. The key problem of JLR is a problem of the external market. We need to discover how to sell more and we are looking for different ways to do it. Operationally, our cost structure needs improvement. We also need to reduce our capital expenditures, but that is difficult because we need to make investments in new engine types and technologies. And this is where a partner could come in.
What about your airline business?
I would like to find some solution for our airline business. I want to scale but I also know that the business will have losses over the next five years, at least until 2025. Because it is in investment mode. Having made a commitment, not putting capital would be sacrilegious.
If you are looking to climb, why not buy Air India? Do you have sensors?
Everyone asks me: Do you have a call?
Would you be interested if the terms are good?
I will ask the team to evaluate it. Ideally it should be a Vistara decision, not a Tata Sons decision. I'm not going to run a third airline (in addition to Vistara and AirAsia ) Unless we join. There are problems I will never say yes or no. I do not know.
Are you enjoying the role of the president?
Yes. I feel frustrated when things move at a slow pace. I want them to move fast.