Tata Group Chairman Cyrus Mistry on Tuesday said that the challenging situations facing some of the group’s businesses would ultimately entail hard decisions on pruning the portfolio but this will be done with compassion and after deeper understanding of every stressed businesses.
In an interview to to the group’s internal communication website Tata.com, Mistry said that there will, however, be no short cuts in taking tough decisions. “ There will always be external influencers and so-called experts, who may be motivated by immediate transactional gains, goading us on to churn our portfolio. It is important that we develop our own prognosis based on knowledge and context, keeping all stakeholders in mind. We should not be afraid of taking tough decisions for the right reasons, with compassion,” Mistry said.
““Compassion” is the key word. If there is one thing that I have absolute clarity on it is that the course of action selected should not undermine the moral contract with our larger employee base,” he said adding that the approach would be to have a deeper understanding of the structural drivers for every stressed business. “ We would then evaluate the leadership, strategy and operations of each business before we take any decision to exit,” Mistry said.
The Tata Group has invested `1.70 lakh crore over the last three years across its businesses while the operating cash registered a compounded annual growth rate of over 30 per cent in the same period. In fact, the group has pumped in `4.15 lakh crore in capex over the last decade.
The Tata Group sees investment in research and development combined with a multi-layered understanding of customers would create new industries, products and business models.
In this front, Mistry said the Group is incubating three companies in the digital space including Tata CLiQ, an e-commerce platform, Tata iQ, data analytical firm and Tata Digital Health to build business model for healthcare.
Mistry said the world has moved away from large industrial innovation labs to more distributed innovation at multiple locations.
Crediting Gopalakrishnan for Tata Innovista, the Group’s platform for innovation, Mistry said it has filed 7,000 patent applications and in last three years, the top five companies in the same period have tripled the number of patents secured each year.
Even after taking out the top three global Tata companies — TCS, JLR and Tata Steel Europe — the remaining portfolio of Tata Group would still rank as the second-largest business group in India, with respectable operating profits and market leadership in distinct sectors, said Mistry.
Excluding financial services business, the debt of the group has increased by about two per cent per annum in US dollar terms, while cash and equivalents have grown at over 10 per cent, leading to a reduction of 3.3 percent in net debt in the same period, Mistry said allying concern on Group debt.
As of March 2016, the group had a net debt of about $24.5 billion with an investment of $9 billion in each of the last three years. In the financial year 2016, cash from operations reached $9 billion a year and exceeded the capex.
Overseas businesses contribute about 70 per cent of Group’s turnover. Iran and Myanmar has opened new business opportunity and several of Group companies are gaining traction there, he said.
On Tata Motors, Mistry said there are challenges in aspirational design, platform strategy and an over-reliance on diesel power trains. Product and service quality were areas that need to be strengthened.
To address the challenges, the company has set up over hundred cross functional teams to provide opportunity for young leaders. “This strategy has paid dividends. Our journey has just begun, but we can already see the green shoots of a turnaround,” he said.
On the Group’s commitment on diversity and inclusion, he said it might sound incredible today, but the Group had crèches for working mothers in 1880s and maternity benefits in 1921.
The Group plans to double the number of women employees across the group and develop at least 1,000 Tata women leaders by 2020. A key step in this direction has been the launch of ‘Tata Mentors’, a unique cross-company mentorship programme that in its first phase covers women executives.
“We have also launched a set of women-centric policies which address the needs of working women during different life stages,” he said.
“As we pursue our mission, to improve the quality of life of the communities we serve, we must reflect that after almost 70 years of India’s independence, one among four of our population is still a victim of centuries of prejudice, discrimination and denial. Unless we positively discriminate to provide these sections of society their due share of opportunities, they will continue to languish,” he said.