Tata Sons = Infosys, Ratan Tata = Narayana Murthy and Cyrus Mistry = Vishal Sikka

Has The Tata Juggernaut Resumed Rolling? – Part 1

Ta-Ta Tata. Bharti Airtel Gets Tata Mobile For a Song. Highly Accretive.

Bharti Airtel Poised to Gain Market Share, While M&A/Restructuring Will Drive Positive Surprises.

APAC Ex-Japan & China Corporates Analyst, Finsights Research

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

The first part of my insight, “<a href="https://www.smartkarma.com/insights/has-the-tata-juggernaut-resumed-rolling-part-1" target="_blank">Has the Tata Juggernaut Resumed Rolling?</a>” covered the developments since N. Chandrasekaran became the chairman of the salt to software Indian conglomerate, Tata Group. Key developments include<ul><li>The buyback of Tata Consultancy Services (TCS) shares that enabled 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 among others,</li><li>The settlement of a three year dispute with Tata Teleservices Japanese telecom partner, NTT Docomo, 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 Tata Teleservices Maharashtra (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>Tata Steel and German steelmaker Thyssenkrupp AG agreeing to merge their European steel operations in a 50:50 joint venture to create Europe’s second largest steel manufacturer after ArcelorMittal. Tata Steel will transfer €2.5 billion (approximately INR188.48 billion) of its senior debt.</li></ul>Part 2 of the insight focusses on the performance of the ten largest Tata companies for the eight year period ending March 31, 2017. This eight year period includes four years each of Ratan Tata and Mistry being at the helm of the Tata Group. The ten listed companies covered in this insight are <a href="https://www.smartkarma.com/entities/18708" target="_blank" data-smartkarma-citation="entities:18708:1">Tata Consultancy Svcs Ltd (TCS IN)</a> , <a href="https://www.smartkarma.com/entities/216" target="_blank" data-smartkarma-citation="entities:216:1">Tata Motors Ltd (TTMT IN)</a>, <a href="https://www.smartkarma.com/entities/20934" target="_blank" data-smartkarma-citation="entities:20934:1">Tata Steel Ltd (TATA IN)</a>, <a href="https://www.smartkarma.com/entities/15618" target="_blank" data-smartkarma-citation="entities:15618:1">Tata Power Co Ltd (TPWR IN)</a>, <a href="https://www.smartkarma.com/entities/20892" target="_blank" data-smartkarma-citation="entities:20892:1">Tata Communications Ltd (TCOM IN)</a>, <a href="https://www.smartkarma.com/entities/17273" target="_blank" data-smartkarma-citation="entities:17273:1">Tata Chemicals Ltd (TTCH IN)</a>, <a href="https://www.smartkarma.com/entities/12630" target="_blank" data-smartkarma-citation="entities:12630:1">Titan Co Ltd (TTAN IN)</a>, <a href="https://www.smartkarma.com/entities/19924" target="_blank" data-smartkarma-citation="entities:19924:1">Voltas Ltd (VOLT IN)</a>, <a href="https://www.smartkarma.com/entities/5774" target="_blank" data-smartkarma-citation="entities:5774:1">Indian Hotels Co Ltd (IH IN)</a>, and <a href="https://www.smartkarma.com/entities/9534" target="_blank" data-smartkarma-citation="entities:9534:1">Tata Teleservices (Maharashtra) Limited (TTLS IN)</a>.While the Tata Group did evolve into an international conglomerate under Ratan Tata with the acquisitions of Jaguar Land Rover, Tetley Tea and Corus Steel, sub-optimal capital allocation decisions did mar the group’s performance.Cyrus Mistry’s tenure witnessed an improvement in the ten listed companies’ CFO margins, deleveraging and a limited alignment of investments with the group companies’ underlying viability. Legacy hotspots including IHCL, Tata Motors PV, Tata Steel Europe, Tata Power Mundra, and Teleservices were not adequately addressed. The Tata Sons board and Mistry himself are best positioned to opine on whether Mistry’s inability to address legacy hotspots was due to the existence of “alternative power centres without any accountability or formal responsibility” or if he was not nimble enough.But the multifold increase in investments in poorly performing entities like Tata Power and Tata Steel after Mistry’s departure and the unexplained reduction in the FY16 impairment of non-current assets in Tata Steel’s FY17 annual report are causes for concern.Was Cyrus Mistry’s ouster justified? Has the Tata juggernaut resumed rolling? Read the complete insight to find out.

The first part of my insight, “Has the Tata Juggernaut Resumed Rolling?” covered the developments since N. Chandrasekaran became the chairman of the salt to software Indian conglomerate, Tata Group. Key developments includeThe buyback of Tata Consultancy Services (TCS) shares that enabled 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 among others,The settlement of a three year dispute with Tata Teleservices Japanese telecom partner, NTT Docomo, 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 (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 and German steelmaker Thyssenkrupp AG agreeing to merge their European steel operations in a 50:50 joint venture to create Europe’s second largest steel manufacturer after ArcelorMittal. Tata Steel will transfer €2.5 billion (approximately INR188.48 billion) of its senior debt.Part 2 of the insight focusses on the performance of the ten largest Tata companies for the eight year period ending March 31, 2017. This eight year period includes four years each of Ratan Tata and Mistry being at the helm of the Tata Group. The ten listed companies covered in this insight are Tata Consultancy Svcs Ltd (TCS IN) , Tata Motors Ltd (TTMT IN), Tata Steel Ltd (TATA IN), Tata Power Co Ltd (TPWR IN), Tata Communications Ltd (TCOM IN), Tata Chemicals Ltd (TTCH IN), Titan Co Ltd (TTAN IN), Voltas Ltd (VOLT IN), Indian Hotels Co Ltd (IH IN), and Tata Teleservices (Maharashtra) Limited (TTLS IN).While the Tata Group did evolve into an international conglomerate under Ratan Tata with the acquisitions of Jaguar Land Rover, Tetley Tea and Corus Steel, sub-optimal capital allocation decisions did mar the group’s performance.Cyrus Mistry’s tenure witnessed an improvement in the ten listed companies’ CFO margins, deleveraging and a limited alignment of investments with the group companies’ underlying viability. Legacy hotspots including IHCL, Tata Motors PV, Tata Steel Europe, Tata Power Mundra, and Teleservices were not adequately addressed. The Tata Sons board and Mistry himself are best positioned to opine on whether Mistry’s inability to address legacy hotspots was due to the existence of “alternative power centres without any accountability or formal responsibility” or if he was not nimble enough.But the multifold increase in investments in poorly performing entities like Tata Power and Tata Steel after Mistry’s departure and the unexplained reduction in the FY16 impairment of non-current assets in Tata Steel’s FY17 annual report are causes for concern.Was Cyrus Mistry’s ouster justified? Has the Tata juggernaut resumed rolling? Read the complete insight to find out.

Has The Tata Juggernaut Resumed Rolling? – Part 2