Tata-SIA, Tata-AirAsia, Nano relaunch, Tata-Tesco, banking exit, withdrawal of airport privatisation bid, Orient Express write-off of Rs 305 crore… Mistry, who will complete one year as the Tata empire supremo, proves he’s a man of action.
Tomorrow, Cyrus Mistry, 45, will complete one year in office as chairman of Tata Sons, the holding company of the Tata group of companies. Friday will also mark the first anniversary of the country’s preeminent, $100-billion salt-to-steel-to-software conglomerate without the legendary Ratan Tata at the helm. In his farewell letter to staff, Ratan Tata wrote: “The future growth of the group will be led in the coming years by Cyrus Mistry.”
While one year may be too short a time to meaningfully evaluate Mistry’s performance, corporate experts are already looking for signs to understand what has changed, what has not and what will likely change.
“He (Cyrus Mistry) usually has his shirt-sleeves rolled up. This has not changed. It seems he has adopted the same style of approach of leading from the front, ever since he took charge,” said a Tata official.
But what has definitely changed is the group chairman’s trust in younger blood. Mistry’s focus on operational efficiencies, identifying newer segments and making Tata a global conglomerate is another striking feature, observers said.
“His focus is on two areas: strengthening the performance of existing businesses, taking the unfinished work of Ratan Tata forward; and bolstering or seeding new businesses,” said a Tata empire tracker.
The youth brigade
Soon after completing a month at the Bombay House’s corner suite, Mistry made his first major move – human resource or HR changes. On February 6 this year, he roped in Mukund Govind Rajan, younger brother of RBI governor Raghuram Rajan, as Brand Custodian and Chief Ethics Officer of Tata Sons, a clear sign that the Tata Way remains central to the conglomerate’s dealings with the community at large. After all, the Tata Way, which gives primacy to a corporate’s socially responsible ways of doing business over crass pursuit of profit-maximisation and project wins, had come under the scanner during the peak of the 2G telecom scandal.
Mistry followed up on Rajan’s appointment with the formation of the Group Executive Council (GEC) on April 30, a specialist team of young professionals such as N S Rajan, Madhu Kannan and Nirmalya Kumar (plus Mukund Rajan), which reports directly to Mistry – a clear departure from the past (which saw the rise of corporate satraps such as Darbari Seth, Russi Mody and J J Irani) to a more collective leadership model.
The GEC also dismantled Ratan Tata-instituted structure comprising the Group Corporate Centre (GCC) and the Group Executive Office (GEO), instead bundling them under itself.
That saw old (pun unintended) Tata hands being honourable eased out from the helm. While A Soonawala, Arun Gandhi and Kishore Chaukar retired, R Gopalakrishnan (age 67), R K Krishnakumar (74), Ishaat Hussain (65) and Farrokh Kavarana (69) were sort of upstaged by the GEC members whose average age is 45.
Why, even Tata Steel got a new MD in the 42-year-old T V Narendran, whose rise from vice-president (safety and flat products) surprised many.
Global and glocal
The youth brigade is key to whether or not Mistry realises his ambition of making Tata a global, world-class conglomerate. For, Mistry expects his A-team to stay the course over the long haul.
At an individual level, Mistry, Tata experts said, is very approachable and believes in giving a free hand to CEOs of various Tata firms, as long as they remain aligned with his larger goal making Tata a stronger global player.
This zest for global play can be seen in Mistry’s unrelenting pursuit of major deals for the Tata-Air Asia low-cost carrier, the Tata-Singapore Airlines full-service carrier and the recent Trent-Tesco joint venture for multi-brand supermarkets.
With almost 100 firms in the group, Mistry’s challenge now is to make some of the lesser known segments more visible. “Retail, financial services, infrastructure, defence and aerospace are going to be the focus areas in addition to the existing sectors,” said a source knowledgeable about the future course of Tata. “Tata Housing, Tata Realty & Infrastruture and Tata Projects will execute projects worth about Rs 70,000 crore in the next five years.”
Tata Steel: Had a debt of Rs 57,981 crore. Declining steel prices, coupled with weak demand, increased losses, especially for its European operations.
Tata Motors: Falling market share in the domestic auto market
Tata Teleservices: Stuck with falling market share in a crowded telecom market.
Tata Power: Mundra UMPP which wasn’t completely commissioned then, was suffering huge operational losses due to high coal cost. It had appealed to the regulator for tariff revisions to make the project viable.
European operations have improved in the past three quarters, thanks to cost-cutting measures and pick-up in demand; however, sustaining this improvement and engineering a complete turnaround will be the challenge ahead. Also, keeping debt (Rs 64,334 crore at Sept-end) under check is a key concern.
Market share in the passenger car segment continues to fall; commercial vehicle demand is yet to show signs of a pick-up.
Concerns about dropping market share remain; fears about NTT-Docomo ending its partnership loom large.
Regulator’s order for granting compensatory tariff for Mundra project is expected by this month-end; with this revision, the company will be able to bring down its operational losses at Mundra.