Four years of N Chandrasekaran as Tata Sons chief: How he changed the course of the conglomerate

Chandrasekaran is the first non-family, non-promoter head of the Tata Group

The abrupt and messy exit of Cyrus Mistry from Tata Sons handed Natarajan Chandrasekaran the reins of salt-to-software conglomerate, and in that he became the first non-family professional to head Tata Sons.

Chandrasekaran, fondly referred to as Chandra, completed four years at the helm of India’s biggest conglomerate Tata Sons on February 21.

The then chief of Tata Consultancy Services, which continues to be the backbone of the Tata Group, Chandra in 2017 was sought out for the top role to steer the company ahead and make the management and organisation structure simpler and more effective.

Here's a lowdown on Chandra's tenure and the Tata Group under his leadership.

What Chandra inherited

When he took over the reins, Chandra inherited a bad set of companies that had been ‘bleeding’.

Tata Motors’ domestic business was not strong. Tata Steel was muddled in disputes in Europe at the time. Beleaguered telecom business NTT Docomo and its related legal disputes were also ongoing. Tata Power was debt-laden mainly due to losses in the Mundra UMPP project.

Right from the start, both the responsibilities and expectations were high.

Within his first year, Mistry finalised the resolution of Docomo’s $1.2 billion legal dispute and sold the company to Bharti Airtel. Tata Steel’s Europe business was merged with ThyssenKrupp. Since 2017, Tata Steel has deleveraged Rs 29,000 crore of debt.

Tata Motors’ passenger vehicles segment was facing challenges with the debate over Nano’s future among other issues and industry-wide shift towards cleaner fuel.

Under Chandra, Tata Motors overhauled the Jaguar Land Rover portfolio and pushed it towards electrification. The company also honed down on its passenger vehicles business and saw significant market gains. It has also shed nearly Rs 22,000 crore in debt since 2017.

Simplify, Synergise, Scale

Soon after coming to power, Chandrasekaran embarked on a journey to make the Tata Group more structurally sound and organised. He wrote to his employees explaining the three concepts:

Simplify: Verticals that could be consolidated into single entities to make organisation simpler, like the Aerodynamics and Defence vertical.

Synergise: Companies under Tata Group would work together where it made business sense to forward each other’s causes. For example, Tata Motors delves into EV technology with help from Tata Capital for financing and Tata Power for charging infrastructure.

Scale: High growth and high scale to achieve expansion of the companies and their businesses.

Chandra has achieved that by merging eight companies to launch an ecosystem for electric vehicles. Similarly, Tata Chemicals’ consumer products business came together with Tata Global Beverages to form Tata Consumer Products. This company was a big success, with its stock rising over 300 per cent since 2017.

The stellar performance of Tata companies under Chandra

Listed companies under the Tata Group in the past four years have grown handsomely, according to research. The market capitalisation of Tata Group companies has more than doubled since Chandra took charge in 2017 to Rs 17 lakh crore.

Challenges faced by Chandra

There are two wide concerns that still plague Tata Sons and its boss. One is the Tata Group companies’ growing debt. Data suggests that its debt grew faster than its net sales between 2017 and 2020.

The other concern is Tata Group’s reliance on TCS. Data suggests that the group companies’ market capitalisation increased by 112 per cent in the past four years, but a major push for this came from TCS, whose m-cap has soared by over 140 per cent in the same period. In January, TCS also became the most valuable domestic firm for a brief period surpassing Reliance Industries Limited.

There are some concerns from the legacy business of Tata Group that Chandra is still facing. For example, Tata Steel’s issues in Europe remain. Tata Motors has also gained market share in India in the past four years in the passenger vehicle segment, it has a long way to go. In fact, it has lost market share in the commercial vehicle segment. Tata Realty and Tata Mutual Fund are finding themselves under new leadership.

One eye on the future

Chandrasekaran has planned for the Tata Group to enter the uber-competitive online grocery market with rivals like Reliance and Amazon, with the $1.3 billion acquisition of BigBasket.

Tata Electronics announced a nearly Rs 4,700 crore investment in a mobile manufacturing unit in Tamil Nadu, one of whose clients could be Apple.

The Tata Group is also looking to move into healthcare with the newly launched Tata Medical and Diagnostics, renewable energy with Tata Solar Power, which is the largest integrated solar power generator in India. It also received an order of Rs 1,200 crore from NTPC.