Tata’s future bets woven along India’s growth ambitions: Chairman, ET BrandEquity

N Chandrasekaran, Chairman, Tata GroupTata Electronics, Air India and Tata Digital, which are in the building-up phase, will gain in scale and turn into financially strong businesses over the next three years, Tata Sons chairman N Chandrasekaran said in an interview. They are expected to be among the Tata Group’s top 10 businesses in the next three years, he added.

“Our group’s future growth bets are woven along the country’s growth ambitions,” said Chandrasekaran, 61, who took charge as Tata Sons chairman in February 2017 and got another five-year term at the helm in 2022.

FY24 was a “great year” for the group he said, with aggregate revenue rising 13 per cent while profit surged over 50 per cent. Revenue exceeded USD 165 billion and net profit was more than USD 13.5 billion. Importantly, the group’s net debt remained stable, he said.

Total investments in Tata Electronics will exceed USD 18 billion in the next few years and by FY27, it will rank among the top five group companies by revenue and be profitable by 2027, he said.

The group’s largest investments have been directed towards Tata Electronics, Tata Digital, Air India and battery manufacturing. The total investment committed across businesses estimated at USD 90 billion will exceed US$120b in next five years, he said.

N Chandrasekaran, 61, took charge as Tata Sons chairman in February 2017 and got another five year term at the helm in 2022. ” Our group’s future growth bets are woven along the country’s growth ambitions” he said.

“Tata group has done in three years what would otherwise typically take 10 years in the electronics sector. That is the pace which we are moving. Tata Electronics alone will employ over 200,000 people in manufacturing roles and will end the year with $10 billion in revenue runrate” he said.

Market capitalisation of several established companies such as Tata Power, Tata Consumer, Trent and Indian Hotels touched new milestones surpassing INR one lakh crore, signalling healthy balance sheets across the board. Tata Motors alone is now valued at over INR four lakh crore and is nearly debt-free. Tata Steel is investing 750 million pounds in installing a new electric blast furnace with an additional investment of 500 million pounds from the UK government, Chandrasekaran said.

Tata group is also taking challenges in the ecommerce and aviation businesses head-on to build it as scalable and pofitable businesses, he said.”Building a seamless business takes time. Tata Consultancy Services (TCS), for example, took 28 years to reach its first $100 million in revenue after its founding in 1968″ he said.

“It’s been two and a half years since Tata Digital was launched and while initially, there were some issues with app performance, those have largely been resolved. Today, the app is stable and user-friendly. Our financial services have been doing incredibly well. For example, in August, Tata Digital was responsible for 5% of the total credit cards issued in India.The gross merchandise value (GMV) for Tata Digital has crossed ₹40,000 crore of annual run rate, and performance continues to improve each quarter.

“Some categories like grocery have underperformed and we are making course corrections. If a high-frequency category like grocery doesn’t grow, it’s hard for other categories to compensate because grocery is a high-volume category. “We were a bit late in recognizing the rise of quick commerce, but we are now fully engaged in that space.” he said.

Air India, currently undergoing a complex transformation, has faced delays in fleet modernization due to supply chain disruptions at Airbus and Boeing, particularly impacting the arrival of new wide-body aircraft. However, by the third quarter of next year, all narrow-body aircraft will either be new or fully modernised. The wide-body aircraft delays have affected Air India’s ability to meet passenger expectations, but Chandrasekaran emphasized that the integration of Vistara with Air India is progressing well. “A fully integrated Air India is expected to offer a consistent and improved customer experience by 2026” he said.

Addressing criticism over Vistara getting merged with Air India, Chandrasekaran said the merger was essential. “Under our agreement with Singapore Airlines, we could not operate a competing airline, we had to get their permission to bid for Air India. They also wanted equity in Air India, and running two airlines with similar equity was not feasible. The integration is largely complete, and we are optimizing the network to improve efficiency.Additionally, the group has invested heavily in Air India’s training academy and completed a major recruitment drive for pilots and cabin crew to support its ambitious transformation plans.

Chandrasekaran also dismissed concerns about global and domestic stress around electric vehicle (EV) sales, emphasizing confidence in the long-term outlook. “I firmly believe that EVs represent the future. They are the destination technology for personal vehicles, and at Tata Motors, we are fully committed to this transition. Sales fluctuations from quarter to quarter are inevitable, but the broader trend is clear: the world is moving towards electric vehicles. Significant progress has already been made—battery plants are being established, charging networks are expanding, and original equipment manufacturers (OEMs) are heavily investing in electric and electronic architectures” he said.

Global and domestic revenues reflected the robust growth story of India.”India continues to record strong growth rates amidst geopolitical crisis where we need to keep a watch. In fact, this crisis has also favours investments in India to help accelerate the growth of our supply chain” Chandrasekaran said.

• Published On Sep 19, 2024 at 09:41 AM IST

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