Considered the unflappable Rahul Dravid of CEOs, the newly-appointed chairman of Tata Sons N Chandrasekaran will be under constant watch, as he seeks to restore the Tata brand which has taken a beating, dispel fears of massive write-off, pull up Tata Steel financials and disentangle the stand-off with Japanese partner NTT DoCoMo.
Most industry leaders expect Chandra, as he has come to be affectionately known, to treat the task with the same evenly paced approach with which he runs his marathons.
The turmoil he must calm will be as much internal as much as it will be external. “Tata Sons needed an `inside outsider’ as their chairman now. The new chairman has his task cut out for him since he has to carry the legacy of both Ratan Tata and Cyrus Mistry. He needs to act `clan leader’ and as a `venture capitalist’,“ said Anirvan Pant, associate professor of strategic management, IIM Calcutta.
“The first thing he needs to do is to take stock, since these are very vast and diverse businesses. He should initially spend time talking and listening to people and build a better understanding of his role and challenges. Right decisions and actions will flow from that,“ said OP Bhatt, chairman Tata Steel and former chairman State Bank of India,“ said OP Bhatt, chairman, Tata Steel and former chairman of State Bank of India.
Insiders expect Chandra to walk the fine line between the old and new guards. “He certainly won’t rush into any decisions on pet projects like Nano and aviation,“ said a senior group executive. Indeed, the old wound that triggered the battle between Ratan Tata and ousted chairman Mistry is still not entirely cauterised.
“We are sure that this will enable Tata group to continue in its endeavour to retain its premier position in the country ,“ said Arundhati Bhattacharya, chair man, State Bank of India.
The major damage control urgently needed is in repairing the perception the group’s ability to borrow and service loans is under cloud. Bankers have warned after Cyrus Mistry’s letter suggesting the group was staring at $18 billion write-offs that the cost of borrowing for the group would rise.
Key gaps for Chandra to assess and plug will include the telecom, steel and motors businesses that form the group’s spine. Tata Teleservices today faces a negative equity value with diminishing subscribers and market standing.This led the company’s 26% partner NTT Docomo to seek an exit.
The exit itself is stuck in a legal tangle after the Reserve Bank of India objected to Tata group buying back shares at a price they agreed on in 2008. In principle, the Tata group would rather honour its commitment to the Japanese partner, but the issue is being dragged around courtrooms in India, the UK and the US.
Tata Steel’s acquisition of Corus in the UK remains a burden on the company for which a turnaround has been elusive. Tata Motors benefits from the strong performance of Jaguar, but in the domestic market, it needs sprucing up. Indian Hotels, the group’s hospitality company that runs Taj Hotels, faces lease and property renewal issues as well as a tightened cash flow.
“The challenges in front of Chandra are huge. He has to define what he wants to be -a leader, champion or a facilitator. He has to take some urgent decisions since the group’s image has taken a massive beating in the last few months,“ said Kavil Ramachandran, executive director of the Thomas Schmidheiny Centre for Family Enterprise at ISB.