Tata Sons Hiring Bankers to Help Sell or Merge Dozens of Units

Nearly six months after his turbulent elevation to run India’s biggest conglomerate, Natarajan Chandrasekaran is assembling a team of dealmakers to refocus some of the group’s biggest businesses, expand its financial services and consumer businesses and sell or merge dozens of smaller units, according to interviews with senior executives. As many as one-third of the group’s 100-plus units could go as Chandrasekaran and his team try to balance the need to prune unprofitable businesses at the 149-year-old group with the Tata family legacy of social responsibility, according to officials who asked not to be named because the negotiations are private. Chandra, as the 54-year-old chairman is called by his colleagues, has set his primary task to bring more focus to a conglomerate that assembles buses in Africa, serves kebabs at London’s ritzy Bombay Brasserie and sells cheap bags of salt in Indian supermarkets among much else. There are plans to merge consumer and retail businesses, bring infrastructure firms under one umbrella, club defense units together and combine technology firms, according to the people.

tata sons

“Chandrasekaran is hoping to increase the efficiency of the conglomerate and exit from businesses which don’t fit the group’s priorities or don’t have the ability to scale,” said Harish H. V., partner at consultancy firm Grant Thornton India LLP. “He is trying to simplify the complex conglomerate business structures, many of which were created in another era due to licensing and other regulatory reasons or the need to form joint ventures.” A Tata Group spokesman said the company does not comment on such matters.

The six largest listed Tata companies account for about 90 percent of the group’s market capitalization and total revenue, according to data compiled by Bloomberg. To help broker the reorganization, Tata Sons Ltd. in May hired former investment banker Saurabh Agrawal as chief financial officer, filling a role that had been vacant for five years. Agrawal was a key lieutenant of Kumar Mangalam Birla and helped the billionaire merge Grasim Industries Ltd. with Aditya Birla Nuvo Ltd. into a $9 billion industrial group, and Idea Cellular Ltd. with Vodafone Group’s local unit to create India’s largest wireless carrier. Shuva Mandal was picked to be the group’s legal counsel the same month, taking over from old Tata hand Bharat Vasani.

Chandra also hired Ankur Verma, who was Bank of America Corp.’s head of India for deals in technology, media, telecommunications, oil and gas, and Nipun Aggarwal who specializes in metals and mining deals. More hirings from banks are expected, the executives said. Chandra’s priority of restructuring Tata “is evident from the fact that the first set of core team members have come from investment banking and legal background,” Harish said. The marathon-running chairman’s focus is on repairing the group’s balance sheet, in line with his fitness-before-performance mantra. He has asked top executives across companies to focus on profit and cash reserves, not EBITDA, a measure that doesn’t include interest payments on loans and other costs, one of the people said. Total debt for 25 of Tata’s listed companies had swelled to 2.42 trillion rupees ($38 billion) as of March 2017, compared to 1.75 trillion rupees when Cyrus Mistry took over as chairman from Ratan Tata in December 2012. That doesn’t include about 350 billion rupees of debt at unlisted and unprofitable Tata Teleservices Ltd., which is high on Chandra’s list of urgent fixes.

Chandra may have to tread carefully in the way he reorganizes the group to avoid the fate of his predecessor. The board of Tata Sons ended Mistry’s four-year tenure and appointed Ratan Tata as interim chairman in October, citing a “trust deficit” and “repeated departures” from the group’s culture and ethos. Mistry, in turn, had accused Tata Sons and its largest shareholder Tata Trusts, of “oppressing” the interests of investors and had said Ratan Tata, through his chairmanship of Tata Trusts, had sought to control business decisions. Chandra, speaking to Tata Steel Ltd. shareholders on Aug. 8, said there have been challenges “owing to leadership change” at Tata Sons. The input from Ratan Tata and other owners in managing the company had been “value enhancing,” he said. Ratan Tata’s intervention to settle an acrimonious $1.2 billion lawsuit with NTT Docomo Inc. has paved the way for Chandra to sell or merge the troubled telecom unit. Tata Teleservices Ltd. has been battered by a tariff war unleashed by the entry of Mukesh Ambani’s Reliance Jio Infocomm Ltd.

All consumer-facing and retail businesses could be brought under one umbrella, according to the executives Bloomberg News spoke to. Under consumer products and retailing, Tata Group sells products ranging from bottled water to jewelry and footwear through a bevy of companies such as Tata Global Beverages Ltd., Tata Coffee Ltd., Titan Company Ltd., Trent Ltd. and Tata Unistore Ltd. Similar plans are being worked out for the defense units, the people said. Tata Advanced Systems Ltd., Tata Advanced Materials Ltd. and some of Tata Power Company Ltd. and Tata Motors Ltd. are part of group’s defense portfolio. Infrastructure firms may also be clubbed together while technology arms may be folded into Tata Consultancy Services Ltd., the company that Chandra helmed for more than seven years, making it Asia’s largest software services provider and Tata’s cash cow. Financial Services, currently a smaller piece in the group and mostly under closely held Tata Capital Ltd., is set to get more attention under the new chairman. “The management bandwidth, the financial resources, everything which is finite can be channeled in a proper way,” said Vishal Kulkarni, a Singapore-based analyst at S&P Global Ratings. “Rather than putting up resources in businesses that are not growing or not returning sufficient returns, it maybe better to pool it in companies which are the long-term focus.”

  • Bloomberg

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TATA, world's 6th most innovative company

India’s two leading conglomerates, Tatas and Mukesh Ambani-led Reliance Group, have made it to the league of the world’s 25 most innovative companies, riding on the cheapest commercial car Nano and an aggressive growth path, respectively.

In the list of world’s 25 most innovative companies released here on Friday, Tata group is ranked at the sixth position, while Reliance Industries is at 19th spot. The list, published in the April 28 edition of BusinessWeek magazine that hit the newsstands on Friday, has been compiled by the US financial publication in collaboration with Boston Consulting Group.

Both Tata and RIL have made it for the first time to the annual list which is topped by Apple Computer, the maker of iPod music players and Mac personal computers. Apple is followed by Internet search giant Google, Japanese auto major Toyota, industrial conglomerate General Electric (GE) and software behemoth Microsoft in the top five.

About Tata group , BusinessWeek said that “Mumbai-based conglomerate jumps onto our list for the first time, fuelled by its paradigm-busting 2,500 dollar ‘Nano’ car for the masses”.

“The car, from its Tata Motors unit, is the world’s cheapest, thanks partly to a distribution model that sells the auto in kits to entrepreneurs who assemble them for buyers.”

About RIL, it noted that “the Indian petrochemicals giant made it onto our list this year thanks to fans of its aggressive growth. “But its ambitious plans to reach into grocery retailing, which is dominated in India by small shopkeepers who have rebelled against corporate entrants, have faltered,” it added.

Above news courtesy: TimesofIndia

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Tata buys Jaguar & Land Rover

Its official. India’s Tata Motors has finally bought Jaguar and Land Rover from Ford Motors. The exact pricing is to be unveiled today. But estimates are around 1 billion pounds. Finally after months of intense negotiations, Tata Motors will lay hands on two of the world’s most iconic automobile brands. The product profile of Tata Motors will now include the world’s cheapest car, Nano to expensive products like the Jaguar and Land Rover.

Earlier, there was news that Ratan Tata was interested in taking a stake in Ferrari. With this deal, the Tata group now holds on to some of the most iconic brands in the world which include Corus Steel, Tetley Tea, Ritz Carlton hotel in Boston, Jaguar and Land Rover.

jaguar fx concept

tata motors logo

land rover

Thousands of workers at Jaguar and Land Rover plants are expected to be told today that the marques have been sold to the Indian conglomerate Tata.

It is understood that a deal between Tata and Ford over the sale of two of the best known names in British car making was concluded last night after months of painstaking negotiations.

Ford refused to confirm a deal had been signed last night, saying any significant development had to be communicated to employees first. However, formal confirmation that the two sides have reached agreement is expected via simultaneous announcements in India, Britain and the US at around noon GMT today.

The companies have been in detailed negotiations for almost three months after Tata emerged as the leading bidder, ahead of rivals One Equity, a private equity concern, and automotive group Mahindra and Mahindra.

Yesterday the two sides were refusing to be drawn on reports from India that Tata had agreed to pay $2.65bn (£1.3bn) for the marques. The Reuters news agency quoted a source close to the deal as saying: “That figure of $2.65bn is highly unlikely. You have to come south from that by quite a bit.”

Full article here

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Tata buys Jaguar & Land Rover

Its official. India’s Tata Motors has finally bought Jaguar and Land Rover from Ford Motors. The exact pricing is to be unveiled today. But estimates are around 1 billion pounds. Finally after months of intense negotiations, Tata Motors will lay hands on two of the world’s most iconic automobile brands. The product profile of Tata Motors will now include the world’s cheapest car, Nano to expensive products like the Jaguar and Land Rover.

Earlier, there was news that Ratan Tata was interested in taking a stake in Ferrari. With this deal, the Tata group now holds on to some of the most iconic brands in the world which include Corus Steel, Tetley Tea, Ritz Carlton hotel in Boston, Jaguar and Land Rover.

jaguar fx concept

tata motors logo

land rover

Thousands of workers at Jaguar and Land Rover plants are expected to be told today that the marques have been sold to the Indian conglomerate Tata.

It is understood that a deal between Tata and Ford over the sale of two of the best known names in British car making was concluded last night after months of painstaking negotiations.

Ford refused to confirm a deal had been signed last night, saying any significant development had to be communicated to employees first. However, formal confirmation that the two sides have reached agreement is expected via simultaneous announcements in India, Britain and the US at around noon GMT today.

The companies have been in detailed negotiations for almost three months after Tata emerged as the leading bidder, ahead of rivals One Equity, a private equity concern, and automotive group Mahindra and Mahindra.

Yesterday the two sides were refusing to be drawn on reports from India that Tata had agreed to pay $2.65bn (£1.3bn) for the marques. The Reuters news agency quoted a source close to the deal as saying: “That figure of $2.65bn is highly unlikely. You have to come south from that by quite a bit.”

Full article here

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India hosts world's 4th fastest supercomputer

supercomputer

India has surprisingly broken into the Top Ten in a much-fancied twice-yearly list of the fastest supercomputers in the world, marking a giant leap in its push towards becoming a global IT power. A cluster platform at Pune’s Computational Research Laboratories (CRL), a Tata subsidiary, has been ranked fourth in the widely anticipated Top 500 list released at an international conference on high performance computing in Reno, Nevada.

It is the first time that India has figured in the Top 100 let alone Top Ten of the supercomputing list. The list, which is usually dominated by the United States, is also notable this time because it has five new entrants in the Top Ten, with supercomputers in Germany and Sweden up there with the one in India.

The fourth-ranking Tata supercomputer, named EKA after the Sanskrit term for one, is a Hewlett-Packard Cluster Platform 3000 BL460c system. CRL has integrated this system with its own innovative routing technology and to achieve a 117.9 Teraflop or trillions of calculations per second.

The No. 1 position was again claimed by the BlueGene/L System, a joint development of IBM and the US Department of Energy’s (DOE) National Nuclear Security Administration (NNSA) and installed at DOE’s Lawrence Livermore National Laboratory in California.

While the US is clearly the leading consumer of high power computing systems with 284 of the 500 systems, Europe follows with 149 systems and Asia has 58 systems. In Asia, Japan leads with 20 systems, Taiwan has 11, China 10 and India 9.

The second ranked supercomputer in India, rated 58th in the Top500 list is at the Indian Institute of Science in Bangalore. Others are ranked 152, 158, 179, 336, 339,340 and 371.

Full article here.

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