MUMBAI: Tata group spent over Rs 70,000 crore ($10 billion) in 2018 to deleverage and restructure Tata companies, consolidate cross-holdings, acquire strategic assets and infuse much-needed capital.
In a year-end message to employees, Tata Sons chairman N Chandrasekaran also warned that 2019 will bring a number of macro challenges.
“As the economic cycle matures in developed economies, global growth will rely increasingly on momentum in the emerging markets. This heightens concerns around country risk, liquidity trends and trade-related shocks at a time when China’s growth impulse is slowing. Global liquidity is tighter going into 2019, while political uncertainty remains high with the upcoming elections in India” he said.
Tata group will have to address these global shifts effectively by harnessing scale, synergy, digital depth,operational focus and agility.
“Our job is to run our marathon — not to be distracted by somebody else’s sprint. We need to focus intently on what we can control: providing our customers with the best products and service, while managing our costs, strengthening the Tata brand and driving long-term value creation” he said.
The group will make strategic decisions factoring in both the ups and downs inherent in business cycles. “We should be prudent in good times, while creating an operating and capital structure that will see us through difficult periods” he added.
Chandrasekaran called 2018 a year of “mixed performance” as the Tata group works at diligently simplifying its structure to build capital and navigate an unpredictable global environment — one characterised by a new regime of trade tensions, geopolitical volatility and regulatory uncertainty.
” We are embarking on a process of simplifying, synergising and scaling (3S) to create an agile, powerful platform. Across the group, we made significant headway this year in strengthening balance sheets and building healthy cash flows.for future growth. At the same time, our collective market capitalisation crossed ₹10 trillion” he said.
“Some clusters are focused on simplification, while others are building on scale. In some areas like aerospace and defence vertical, the group is consolidating its businesses into a single unified entity,” he added.
“This unified entity will enable us to move beyond merely providing individual products to developing integrated offerings and executing larger and more complex solutions. In other areas, companies are reducing subsidiaries or exiting non-core businesses to bring focus and agility.” All our companies are also prioritising on leveraging technology to simplify operations” Chandrasekaran said.
Tata companies are engaging closely to work together where it makes business sense, to create new business approaches and differentiation. Tata Motors is leading the effort to develop an Electric Vehicle (EV) ecosystem in partnership with Tata Capital for financing and Tata Power for the charging infrastructure network. There are similar efforts underway in many areas including Group loyalty programmes, payments, shared services etc.