Tata Sons has commenced plans to halve the number of listed companies in the conglomerate to an estimated 15 from 29 in the coming months to focus on investing in fewer but bigger entities that can ably compete in the marketplace.
The group with $128 billion revenue and $255 billion market cap is hastening its simplification and synergising strategy to better focus on growth and scale and improve cashflows in the larger companies, said executives close to the development. This is part of Tata Sons chairman N Chandrasekaran’s stated plan of transforming the country’s oldest conglomerate to make it future ready.
A lot of management time and effort that’s put into smaller companies will also be minimised through this effort, they said. Apart from the 29 listed companies, the Tata Group currently has nearly five dozen unlisted ones and hundreds of subsidiaries in 10 sectors. The conglomerate has been consolidating businesses under the leadership of Chandrasekaran to unlock synergies and efficiencies.
The group last week initiated the process of consolidating its steel business by absorbing seven subsidiaries into Tata Steel.
The process will include merger of four listed companies.
Earlier in March, Tata Consumer Products announced the merger of all businesses of Tata Coffee with itself. Tata Consumer, the group’s fast-moving consumer goods (FMCG) arm, is planning to reduce the number of legal entities it holds to around two dozen from the existing 45 after restructuring.
Tata Sons did not comment.
“The move is long overdue and needless overheads and costs in the system will be eliminated,” said one of the officials cited above. “Several such small entities were created and listed with some specific needs at that point of time. Today, scale and cost optimisation will help efficient deployment of capital and resources.”
In 2018, Tata Sons consolidated its various businesses in the aerospace and defence sectors under a single entity-Tata Aerospace & Defence. In 2017, CMC was merged with Tata Consultancy Services. In technology, the group now has three major companies–Tata Consultancy, Tata Elxsi and unlisted Tata Digital.
Similarly, in the automobile sector, the group has three listed companies–Tata Motors, Automotive Stampings & Assemblies Ltd, and Automobile Corp. of Goa Ltd. Tata Autocomp Systems is unlisted.
The group plans to create a larger infrastructure vertical by bringing all the related companies under one umbrella. These include Tata Projects, Tata Consulting Engineers, Tata Realty and Infrastructure, and Tata Housing. The group has three airline companies-AirAsia India, Vistara and newly acquired Air India. Tata may consider consolidating them under the Air India brand by 2024.
Tata’s retail businesses are presently dispersed across multiple units–Trent, Infiniti Retail, which operates under the brand Croma, Titan, and consumer electronics unit Voltas.
In the telecommunications and media verticals, the group has two listed firms and Tata Teleservices (Maharashtra). Tata Teleservices and Tata Play are unlisted. The group has two listed chemicals companies–Tata Chemicals and Rallis India.
The move, say group watchers, is aimed at driving synergies, while simplifying the group holding and management structure.
“The group is also betting on new areas of growth and future businesses, and efficient capital allocation is imperative to build large competitive companies,” said a top group official.