Exclusive N. Chandrasekaran interview: Tata boss reveals new road map for India's oldest, most iconic conglomerate

With a turnover of $128 billion and multiple businesses, the Tata group is a behemoth. Despite being around for more than 150 years, the salt-to-software conglomerate—led by Tata veteran N. Chandrasekaran—is taking nimble steps towards capturing a slice of new-age businesses. With a capex outlay of $90 billion, the group is hoping to fire on many cylinders—such as Air India, Tata Neu, 5G and perhaps even fab manufacturing. The 59-year-old Tata Sons Chairman, who is Business Today’s Business Icon of the Year, talks about where the group is currently placed and what lies ahead. Edited excerpts:

BT: You took charge in February 2017. What did you want to do with the group and its businesses then?

There is nothing more iconic [than] to have the opportunity to head this group and follow the likes of J.R.D. Tata or Ratan Tata. You are speaking of extraordinary men and when I say that, it’s not just about their business acumen. It is for who they are in terms of vision, integrity, care for society or care for India—there are just so many dimensions to them. From that point of view, it was a great moment but the important thing was to understand the job and [the] multi-faceted responsibility that came with it. I am still growing into it and I don’t think I will [ever] fully grow into it. It is a journey and I consider myself fortunate to be here.

Moving to the business, I do have some thoughts. Our greatest assets are the Tata brand [and] the group’s value systems and in that background, I have to manage expectations. Everyone has a view on the group and how we should go about our businesses. If they have respect, admiration and affection, there is a right to express views too.

The group had a lot of complexities and there were financial challenges as well. My job was to stabilise the group, assure all stakeholders and go about the process of building teams. One key part was to build a ‘One Tata’ culture, where everybody can sit together, raise the aspirations of different companies and show what we can achieve as a team.

The second part was to strengthen the financial health of the group. I wanted to take the tough decisions and that had to be done quickly. Then came the need for simple messaging, one that everyone should understand easily. Therefore, I came up with two-three lines—[such as] ‘fitness first, performance next’—[where] fitness referred to a focus on the balance sheet. We then had another saying, ‘direction first, velocity next’. We needed to agree where we must run and then worry about speed. The catchiest was the ‘3S’ strategy—‘simplification, synergy and scale’. One must realise that the Tata group is complex and in some sense, unwieldy. If a group has been around for over 150 years, complexity will set in and a decision taken at a certain point in time may not be relevant anymore. There is nothing we don’t have—be it expertise, experience or sheer talent—across the group.

BT: Why is the 3S strategy so important and how has it played out?

Simplification was to look at why we needed so many companies and subsidiaries. The process of re-evaluation led to the merger of the foods business to create a stronger company. Likewise, I had to decide on telecom, or for that matter, Tata Steel’s strategy to have scale in India compared to an equal proportion split between Europe and the domestic market. The latter led to the acquisition of assets such as Bhushan Steel.

Synergy was obvious in the case of the foods business [the salt business of Tata Chemicals was merged with Tata Global Beverages to later create Tata Consumer Products]. Another instance was how Tata Motors came out with an EV offering in record time by picking up talent from across group firms.

Speaking of scale, my belief is not to do the marginal things. Scale is what we should be looking at for every business. Apart from all this, we must remember our heritage, tradition and evolution. Without evolution, traditions die and without traditions, evolution is meaningless. Therefore, they are all interlinked.

BT: For long, there has been a high level of dependence on TCS for profits. What is your view?

When I took over in early 2017, the group’s combined profit was less than TCS’ profit. Of course, we had loss-making businesses then. I wrote off Rs 50,000 crore in telecom and had to do something similar in Tata Steel, Tata Motors and Tata Power. Now, the basis was not founded on something being wrong. To reiterate my earlier point, you will have difficult situations in a 150-year history. It was unfortunate that it all came together. Through the 3S strategy and these initiatives, we now have all these large companies strongly positioned.

BT: Was the job more complex than what you had expected it to be?

Not really. There are a lot of talented people in the group. You need to work with them and raise their aspirations. At the end of it, you are not going to be a master of all the industries.

BT: Over time, how many sectors and companies will the Tata group be in?

To be honest, I have gone away from that theme. Initially, my approach was to have a certain number of verticals. Now I feel we should be in certain industries with a respect for tradition and evolve them for the future. We are therefore creating new businesses and transforming the old ones. All of them have a great future. We are in the technological businesses and also in hard businesses like steel and power, which are fundamental and core in nature. In fact, I really like the steel business!

BT: From a personal point of view, how much of a learning has this been?

All of it has been a learning. I know the basics of many of these industries because I used to serve a multitude of clients during [my stint with] TCS. But I will never know as much [as] the people in the company know. I understand the drivers and also the core in each of these companies. There is no need to understand every small detail.

BT: It is important to have a strong B2C presence in today’s world. How is the group placed on that?

I feel B2C is more important to us because we already have a fantastic set of consumers. They use a lot of our products right from Tata Tea to Indian Hotels to Trent to Westside to Titan to Tata Power or our insurance business. I truly believe the future of the consumer business is to know how to play the digital game regardless of which industry one is in.

We have very isolated entities in B2C. A banker once told me, ‘You merge all the companies and call it Tata Retail.’ But each of these companies is in a different stage of evolution and we could not have done that. I am a big believer in the concept of omni-channel and I think we have a very strong footprint across several consumer formats. We will then build a very strong value proposition through Tata Neu. Already, we have a huge loyalty engine, plus there are opportunities across businesses. We will put all that together.

BT: With the challenges Tata Neu has had, what is the way forward?

Yes, we did launch it and had a lot of hiccups. I wish we had not had them. There were a number of downloads and the app was heavy and it did not perform too well. Some experiences were not good and there have been glitches. The first six weeks were fine and then it had experience issues, product gaps and the navigation was not intuitive. I finally said, ‘No more launches until we fix all this.’ That’s the journey so far. I think we need to add more financial services and products. That will strengthen the loyalty story and, of course, we will add Air India too.

BT: Does the absence of a telecom business weaken the B2C story?

No, I don’t think so. We have enough consumers and they love us and want to be with us. But we have to give them the right value proposition.

There will be individual online channels and Tata Neu will be a connector. Don’t underestimate the power of omni-channel. The general belief is that people who are coming to an e-store will now shop online. It does not work that way. Obviously, there are a lot of people coming online and some of them will want to see the store.

I was talking to the [Madras] Music Academy people in Chennai. They took the kutcheris (the music sessions) online during the pandemic but did not take the kutcheri experience online. The moment you take the kutcheri experience online, there is no need to fear that the sabhas will be empty. In fact, there will be a lot more people who will get interested in Carnatic music. The thinking will be—if the online experience is so good, the physical experience will be better and the halls will be full. Therefore, omni-channel is extremely powerful.

BT: Has Air India been your biggest bet?

Air India is more than a business. We will have to do it with discipline—it should be a business that is viable, profitable and cash-generating. At the same time, we have to remember, there is a huge focus on the customer. I get a lot of feedback—both positive and negative (laughs)—and it could be about the entertainment systems or how the seats can recline better, food being great or some issue with the cutlery.

You will see a lot more [on this] in the next two to three years with the best entertainment system for sure! Our goal is to make it a really world-class brand and at the end of the day, only time will tell. Our sincere effort is to create a great experience. You will see one Air India this year.

BT: Was there a Plan B?

I could not [have scaled up without Air India] since I did not have the routes.

BT: What will be the big focus areas from a new-age business point of view?

There are five businesses—Tata Neu, Air India, batteries (lithium-ion), 5G, electronics and maybe a fab, which I am looking at very seriously. We will take a decision this year.

The next three to four years will be critical since a big part is execution. The batteries will be launched shortly, 5G is ready and Tata Neu will only get better. Air India is taking the right [decisions] and on electronics, we have to do the assembly bit and decide on fabs.

BT: The $90-billion capex of the group becomes very critical in that case…

That will be over five years starting FY23. It will take Tata Steel’s domestic production to 30 million tonnes per annum and scale up Tata Power’s renewables capacity to 25 GW, among other things. A lot of cash is getting generated by these companies and they have good credit ratings, plus the Tata Sons’ brand name means you get good rates when you want to raise money.

@TheSouravM, @krishnagopalan