Mumbai: Tata Group chairman Cyrus Mistry today said the challenges some of the group’s businesses face require hard and bolder decisions on pruning portfolio.
Mistry, who took up the baton at the salt-to-software conglomerate in December 2012, said he wanted the group firms to have speed and agility to adapt to turbulent environments.
He gave his first ever interview since he became chairman to the group’s corporate website Tata.com.
Mistry said the group was focused on enabling individual companies to “earn the right to grow by building strong operational cash flows and looking at their capital structures.”
“The group will be supporting this with required capital expenditure investment, which was at a record $28 billion in the last three years and about $79 billion over the last decade. It was clear to me relatively early that one needed to confront the challenging situations facing some of our businesses, and this would entail hard decisions on pruning the portfolio,” said Mistry.
In the last three years, the group’s operating cash flows had grown at a compounded annual growth rate of over 30 per cent, he added.
Cyrus Mistry wrote off about $4 billion as goodwill impairment across group companies since he took over in December 2012.
About $3 billion of impairment was in Tata Steel for its European assets as it UK business struggled.
“My approach is to ensure that we have a deeper understanding of the structural drivers for every stressed business and our presence in that context. We would then evaluate the leadership, strategy and operations of each business before we take any decision to exit,” he said in the interview emphasising compassion for employees.
Mistry admitted that the huge value attached to the Tata brand has made exits difficult. “We will try and balance our portfolio to ensure that we are more insulated from business cycles.”
Mistry added that the conglomerate was open to acquisitions within and outside India, besides organic growth. He said “green shoots” of a turnaround were visible at Tata Motors and Tata Steel had the potential to grow significantly, while several Tata firms were gaining traction in the two new markets of Iran and Myanmar.
The $103-billion Tata group has identified the need to get closer to the consumer and anticipate their needs. “We are building customer centri-city as a cultural pillar at Tata group of companies. We are not afraid of taking tough decisions for the right reasons,” he added.
The group will build strong operational cash flows, invest in talent, brands and technology to achieve its ambitious Vision 2025.
The Tata group chief revealed that he was now preparing the group for the next 150 years.
“Our companies track metrics such as workforce engagement, customer focus, net promoter score and the number of patents published in addition to metrics such as Tata brand performance. The metrics show a healthy and positive trend, though we still have a long way to go to meet our aspirations for 2025,” he said.
The group is developing three companies in the digital space – Tata CLiQ, Tata iQ, Tata Digital Health.