As N Chandrasekaran moves to the historic Bombay House on Tuesday, the Tata Sons’ new chairman has his task cut out – to make the group companies as profitable as Tata Consultancy Services, which he led for over seven years.

Popularly known as Chandra, the avid marathoner will have to run doubly fast to address three major challenges.

First, to turn around some of the heavily bleeding group businesses, second improve the group’s brand image, which took a beating in the aftermath of the Ratan Tata-Cyrus Mistry boardroom battle, and the third big task will be to tweak corporate governance issues that has been flagged post the ouster of Mistry.

According to Brand Finance 2017 report, the Tata group ranked 103 compared to 82 last year, falling out of the top 100 brands list post the feud with Mistry.

And this brand image will get a boost if Chandra can turn profitable some of the group’s money-guzzling businesses like steel and telecom. Tata Steel and Tata Teleservices both posted losses of over ₹3,000 crore each last fiscal.

The bulk of the group’s capital is employed in loss-making or financially struggling businesses such as steel, power, telecom and domestic passenger car business.

In contrast, TCS is the most valuable company in the Tata portfolio, bringing in nearly 70 per cent of Tata Sons’ revenues as well as profits. It is this success that Chandra will have to replicate in other group companies. But the question is: Can he do it?

The group companies, excluding TCS, had average gross debt of ₹2.36 lakh crore last fiscal and it cost them ₹14,766 crore in interest cost. Tata Teleservices has never made a profit in its history so far and with the entry of Reliance Jio it may be impossible for it to make profits in future too.

“The scenario in the telecom sector has changed for the worst in the last few months. The speed at which Jio is garnering subscribers and forcing even number two and three players (Vodafone and Idea) to consider a merger, it will be extremely difficult for a fringe player like Tata Tele to make profits,” Jayanth Kolla, founder and partner at tech research firm Convergence Catalyst told BusinessLine .

Even Ratan Tata’s pet project Nano has been a drag on Tata Motors’ finances and Mistry has claimed it lost ₹10 billion at its peak. Abdul Majeed, Partner at PwC India, points out that Nano was positioned between two-wheeler and entry level cars.

But due to various teething issues, it never took off. “And once a perception around a product is built, it is difficult to change that.”

The way out for Tata Motors, says Majeed, is to re-think the whole strategy of affordable transportation. But this does not apply to the group’s auto business alone. It is time for Chandra to re-think the group’s strategy on many other businesses and investment decisions, which were made during the boom days of the pre-2008 global financial crisis.

The domestic and global business conditions are now different and Chandra will have to steer the group in a new direction accordingly.

Man in the corner office

The corner office on the fourth floor of Bombay House, which was earlier occupied by former Chairman Ratan N Tata during his tenure as the Tata Sons’ Chairman, is being readied for its new occupant, N Chandrasekaran.

The 54-year-old, popularly known as Chandra in the IT industry, will officially take over as Tata Sons’ Chairman on Tuesday.

The move comes nearly four months after the ouster of Cyrus Mistry as group’s chairman following the boardroom tug-of-war. Ratan Tata had moved out of his corner room at Bombay House to his new office at Elphinstone Building, an iconic British-era building, which is a stone’s throw away from Bombay House in 2012, after Mistry was appointed as chairman.

However, Mistry never used the chairman’s cabin.

During his tenure as chairman, the corner room was used by the Group Executive Council (GEC) formed in December 2012 to advise Mistry. Mistry preferred using the deputy chairman’s cabin.

The GEC was formally disbanded in October 2016.

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