APAC Ex-Japan & China Corporates Analyst, Phidelis Capital

Nandini Vijayaraghavan, CFA

APAC Ex-Japan & China Corporates Analyst

Finsights Research

Our core competencies include counterparty analysis and credit rating of corporates, banks and government linked entities, debt structuring, credit risk management, and penning financial and investment research.

Counterparty & Credit Analysis

Cyrus Mistry, the sixth chairman of the more than a century old Indian conglomerate, the Tata group, was ousted on October 24, 2016, in an uncharacteristically bawdy board room coup and was replaced by Natarajan Chandrasekaran in February 2017. During the year following Mistry’s ouster, the Tata Group undertook four key initiatives<ul><li>The buyback of <a href="https://www.smartkarma.com/entities/18708" target="_blank" data-smartkarma-citation="entities:18708:1">Tata Consultancy Svcs Ltd (TCS IN)</a> shares that enabled Tata Sons, the holding company, raise INR102.78 billion ($1.59 billion) cash to build a war chest to revive the group’s problem companies or “legacy hotspots” as Mistry labelled them – Tata Steel Europe, Tata Teleservices, and <a href="https://www.smartkarma.com/entities/15618" target="_blank" data-smartkarma-citation="entities:15618:1">Tata Power Co Ltd (TPWR IN)</a> among others,</li><li>The settlement of a three year dispute with Tata Teleservices' Japanese telecom partner, <a href="https://www.smartkarma.com/entities/1089" target="_blank" data-smartkarma-citation="entities:1089:1">NTT Docomo Inc (9437 JP)</a> that involved a payout of $1.17 billion in October 2017,</li><li>The hiving off of the consumer mobile business of Tata Teleservices Limited (TTSL) and <a href="https://www.smartkarma.com/entities/9534" target="_blank" data-smartkarma-citation="entities:9534:1">Tata Teleservices (Maharashtra) Limited (TTLS IN)</a> (TTM) on a debt free cash free basis with TTSL retaining INR287.68 billion debt and the fixed line, broadband, enterprise operations and its stake in tower company Viom Networks, and</li><li><a href="https://www.smartkarma.com/entities/20934" target="_blank" data-smartkarma-citation="entities:20934:1">Tata Steel Ltd (TATA IN)</a> and the German steelmaker <a href="https://www.smartkarma.com/entities/21729" target="_blank" data-smartkarma-citation="entities:21729:1">ThyssenKrupp AG (TKA GR)</a> agreeing to merge their European steel operations in a 50:50 joint venture to create Europe’s second largest steel manufacturer after <a href="https://www.smartkarma.com/entities/21125" target="_blank" data-smartkarma-citation="entities:21125:1">ArcelorMittal (MT NA)</a>. Tata Steel will transfer €2.5 billion (approximately INR188.48 billion) of its senior debt.</li></ul>The transfer of INR188.48 billion debt to the new joint venture, will result in Tata Steel’s proforma financial leverage declining to a still high 5.5x from 7.2x as of March 31, 2017. Tata Steel stated that the balance €4.4 billion debt on the books of Tata Steel Europe will be restructured. In the absence of additional disclosure at this stage, the restructuring could involve write-downs, as Cyrus Mistry had highlighted.Mistry had highlighted the “legacy hotspots” and his not being given a free hand to resolve these issues in his October 25, 2016 letter. His opponents allege that he did not address these issues in a timely manner. But the unresolved question that persists is that why did the board of Tata Sons, Ratan Tata and Cyrus Mistry keep the shareholders of the listed company in the dark about the turf war.The second part of this insight will<ul><li>provide a bird’s eye view of the performance of the ten largest listed companies of the Tata group under Cyrus Mistry and if his ouster was warranted, and</li><li>analyse if there have been significant changes to the group’s vision and strategy under N. Chandrasekaran’s stewardship.</li></ul>

Cyrus Mistry, the sixth chairman of the more than a century old Indian conglomerate, the Tata group, was ousted on October 24, 2016, in an uncharacteristically bawdy board room coup and was replaced by Natarajan Chandrasekaran in February 2017. During the year following Mistry’s ouster, the Tata Group undertook four key initiativesThe buyback of Tata Consultancy Svcs Ltd (TCS IN) shares that enabled Tata Sons, the holding company, raise INR102.78 billion ($1.59 billion) cash to build a war chest to revive the group’s problem companies or “legacy hotspots” as Mistry labelled them – Tata Steel Europe, Tata Teleservices, and Tata Power Co Ltd (TPWR IN) among others,The settlement of a three year dispute with Tata Teleservices' Japanese telecom partner, NTT Docomo Inc (9437 JP) that involved a payout of $1.17 billion in October 2017,The hiving off of the consumer mobile business of Tata Teleservices Limited (TTSL) and Tata Teleservices (Maharashtra) Limited (TTLS IN) (TTM) on a debt free cash free basis with TTSL retaining INR287.68 billion debt and the fixed line, broadband, enterprise operations and its stake in tower company Viom Networks, andTata Steel Ltd (TATA IN) and the German steelmaker ThyssenKrupp AG (TKA GR) agreeing to merge their European steel operations in a 50:50 joint venture to create Europe’s second largest steel manufacturer after ArcelorMittal (MT NA). Tata Steel will transfer €2.5 billion (approximately INR188.48 billion) of its senior debt.The transfer of INR188.48 billion debt to the new joint venture, will result in Tata Steel’s proforma financial leverage declining to a still high 5.5x from 7.2x as of March 31, 2017. Tata Steel stated that the balance €4.4 billion debt on the books of Tata Steel Europe will be restructured. In the absence of additional disclosure at this stage, the restructuring could involve write-downs, as Cyrus Mistry had highlighted.Mistry had highlighted the “legacy hotspots” and his not being given a free hand to resolve these issues in his October 25, 2016 letter. His opponents allege that he did not address these issues in a timely manner. But the unresolved question that persists is that why did the board of Tata Sons, Ratan Tata and Cyrus Mistry keep the shareholders of the listed company in the dark about the turf war.The second part of this insight willprovide a bird’s eye view of the performance of the ten largest listed companies of the Tata group under Cyrus Mistry and if his ouster was warranted, andanalyse if there have been significant changes to the group’s vision and strategy under N. Chandrasekaran’s stewardship.

Has The Tata Juggernaut Resumed Rolling? – Part 1

India

Tata Group operates as a holding company. The Company, through its subsidaries, provides information technology, infrastructure, automotive, tourism and travel, consumer, telecom, and financial services. Tata Group serves customers worldwide.

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Tata Group (1396Z IN)

Has The Tata Juggernaut Resumed Rolling? – Part 1

Cyrus Mistry, the sixth chairman of the more than a century old Indian conglomerate, the Tata group, was ousted on October 24, 2016, in an...

Nandini Vijayaraghavan, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)