In Short:
N Chandrasekaran, chairman of Tata Sons, has returned from climbing Kang Yatse 2 to focus on making the Tata Group future-ready through significant investments in growing businesses. The group’s market value has risen to ₹35.07 lakh crore. Tata Electronics is becoming a key player, while challenges for Air India and Tata Digital are being addressed. Plans for a Tata Capital IPO are anticipated next year.
Following his recent ascent of Kang Yatse 2 in the high-altitude desert of Ladakh, N Chandrasekaran, chairman of Tata Sons, has returned to his pivotal role at the corporate headquarters, Bombay House, in Mumbai. His focus remains on positioning the Tata Group for future growth through significant investments across various sectors.
Market Capitalisation Growth
The Tata Group’s established enterprises are also showing robust performance, with 25 listed firms collectively adding over Rs 4.4 lakh crore to their market capitalisation since April 1, increasing the total to Rs 35.07 lakh crore—a rise of 14.2%, compared to the Nifty’s gain of 13.8%.
Challenging Comfort Zones
“It is about constantly challenging oneself out of comfort zones,” states Chandrasekaran regarding his recent trek. He acknowledges the criticism directed at Air India and Tata Digital, while also addressing the strategic initiatives being undertaken by the group.
Assessing Performance
Kala Vijayraghavan inquired about the effectiveness of Tata Group companies, to which Chandrasekaran affirmed, “Group companies have performed well. All our existing companies possess strong balance sheets, and continue to show improving performance.” The significant achievements of companies such as Tata Power, Tata Consumer, Trent, Tata Motors, and Indian Hotels contribute to the group’s enhanced market capitalisation. Notably, Tata Motors alone is now valued at over Rs 4 lakh crore.
Tata Steel’s Strategic Adjustments
Despite facing challenges due to market conditions, Tata Steel has taken decisive actions, including the shutdown of the blast furnace at their Port Talbot facility in the UK. Chandrasekaran highlighted the commitment to fairness in handling the situation, ensuring that affected employees received ample support and training resources. In light of ongoing investments, Tata Steel is allocating £750 million to establish a new electric blast furnace, with an additional £500 million from the UK government.
Investing in New Businesses
The primary focus for Tata Sons in the coming years will be on new ventures, including Tata Electronics, Air India, Agratas (battery manufacturing), and Tata Digital. Chandrasekaran views Tata Electronics as a transformative entity, with operations fully engaged at their Hosur site, and significant enhancements in assembly and packaging capabilities.
Challenges in Air India Transformation
Progress in the transformation of Air India has encountered obstacles, particularly with delays in the arrival of new aircraft. Nevertheless, narrow-body aircraft are set to either be new or fully modernised by the third quarter of next year, while wide-body aircraft modifications are anticipated to conclude by the end of 2026.
Criticism of Vistara Merger
In response to criticism surrounding the merger of Vistara with Air India, Chandrasekaran emphasized the necessity of optimising operations to fulfil legal obligations stemming from their agreement with Singapore Airlines. The objective remains to retain the strengths of Vistara while integrating the brands effectively.
Tata Digital’s Progress
Tata Digital’s super app, TataNeu, has navigated multiple user experience challenges since its launch. However, as issues related to app performance have been addressed, the platform is now stable and gaining traction within India’s credit card market. Despite facing setbacks in specific categories like grocery, Tata Digital is adapting to the rapid growth of quick commerce.
Integration Challenges
Chandrasekaran acknowledged the time-intensive nature of integrating businesses within Tata Digital. Although initial hurdles have delayed progress, the focus remains on refining the app and enhancing user engagement.
Future Aspirations
While revenues at Tata Motors are increasing, the profitability of TCS is expected to remain superior. Nevertheless, the company anticipates substantial growth from multiple sectors such as Tata Steel and Tata Electronics.
External Investment Considerations
Currently, Tata Sons is heavily investing to scale up its operations in Tata Digital before contemplating external investment opportunities.
IPO Plans Within the Tata Group
For the upcoming year, the only entity prepared for an IPO is Tata Capital, with no additional immediate plans for listings.
Commitment to Electric Vehicles
Regarding the broader trend in electric vehicle (EV) sales, Chandrasekaran reinforced Tata Motors’ commitment to this “destination technology,” forecasting significant growth as infrastructure continues to develop.
View on Hybrid Vehicles
Finally, he categorized hybrid technology as transitional, emphasizing the importance of incentivizing true advancements in EV technology and hydrogen solutions, as Tata Motors progresses towards these sustainable destinations.
