Saturday, January 14, 2017

Will Chandra reverse Tata's fortunes and get it soaring ??

The largest and most respected Indian
business congolmerate ..
Tata Sons as we all know had a very tumultuous four years since Cyrus Mistry took over the reins. Even though Cyrus's subsequent removal and Ratan Tata taking over temporarily, in the process washing lot of dirty linen in public, did raise much stink, the Tata Sons board has done a lot of homework before committing ng up with an important announcement yesterday. 

The financial performance of Tata Sons took a beating of late with a 67% drop in profits to INR 3013 crores in 2015-16.

Cyrus Mistry, out-going Chmn
Regarding group turnover, from $108 billion Tata Sons turnover in 2014 -15, it fell to $103 billion in 2015-16, by about $5 billion (app about INR 32,000 crores) causing much heartburn in the group. There are many reasons attributed to this decline. As per Economic Times, India's most respected economic daily,  important among them are listed here, 

1. Cyrus' focus was majorly only on profit making cos. in the group namely TCS, Tata Motors, Tata Chemicals and a few others ...

2. In the highly competitive telecom field Tata Sons lost a battle with former partner NTT DoCoMo paying out $1.2 billion as damages
N. Chandrasekharan, incoming Chmn

3. Net debt for the group rose from $23.4 billion in 2015 to $24.5 billion in 2016

4. In FY 16, performance of Tata Sons was lacklustre and not promising, even though it could have made great strides given the positive sentiment for the group in the Indian people's minds. Nine of the 27 listed cos. reported losses and earnings of 7 others dropped. 

5. Only TCS and Jaguar Land Rover (JLR) have been consistent top performers, with JLR out performing all expectations ..

6. Tata's 2007 $12.5 billion acquisition of European steel Co. Corus, though looked very promising and far reaching then, it did not fetch good returns over the years as global steel prices fell with Chinese dumping of steel in global markets (extraneous reasons) ..

Cyrus did his best for Tata Sons. He was a great leader, and his strategy was to give more attention to the performing companies. Though it may be difficult to pinpoint Cyrus for the temporary decline in Tata fortunes, the intricate play between market dynamics, pricing and global demand may have acted against Cyrus' strategies. Time will tell whether Cyrus had great intentions for Tata and whether the buoyant market conditions acted against him in the short run.

Chandra, the marathon runner ..
After JJ Irani, Chandrasekhar is the only person from outside the family (and the only non Parsi) taking the reins of Tata Sons on Feb 21, 2017. It also shows the professional commitment of the group allowing professionals more freedom to run the group.

Will Chandrasekharan give able leadership to the group to change the course of Tata Sons and help it cross into the $125 billion league ? ( Tata sons is the only $100 billion plus Indian conglomerate ) ..

Thomas A Edison and his co.
General Electric, 1890 ..
Chandra says that it is while running that he gets great ideas to take his organisation forward. Chandra has taken part in Mumbai (2), New York, Chicago, Berlin and Boston full marathons and has run at least eight half marathons around the world. The 1987 MCA graduate from NIT Trichy, Tamil Nadu, India who would otherwise have become a farmer following the footsteps of his father, instead, like his brothers, chose to enter the corporate world and made a name for himself. At age 42 he became the youngest CEO of Tata Consultancy Services (TCS).

We only wish good for him. Heading the only $100 billion + conglomerate (the most respected and adored group) in the country, we want Tata Sons to grow still further under Chandrasekhar's leadership .. Chandra has been rewarded by the Tata Board for successfully guiding their biggest entity profitably and successfully. This elevation of Chandra is ample proof of the import of IT and hence TCS in the country's development in the coming years.

Jamshedji Tata, the pioneer of the
Tata family started a textile firm
in 1868 
General Electric was started by Thomas Alva Edison in 1890 as Edison General Electric Co which in 1892 merged with another co. to become the General Electric co. In due course of time the company got professional managers and now in 2017, it's 125 th year of founding, GE is synonymous with innovation and high quality and have spread their wings into all aspects of engineering right upto aircraft turbine manufacture with total turnover of $140  billion in 2015.

The Tata group started by Jamshedji Tata in 1868, who moved away from their family profession of priesthood to business, by establishing a textile company in Mumbai will be celebrating its 150 th anniversary next year under a professional manager and leader with a global focus, ready to take on the world ..


1 comment:

  1. Exceptional article Sir. TATA is India's pride.... They had been innovative, risk taking and a go beter under Ratan Tara's leadership. Lets hope that Chandrasekhar will help TATA's cross the $125 billion mark during this decade


Ambani and cautious days ahead for Indian economy

Reliance is planning slowly to be a zero debt company by 2020.  As an overtly safe move from India's richest man, is it reflective of...

My popular posts over the last month ..