TOKYO -- Tata Group patriarch Ratan Tata has come out strongly in support of Natarajan Chandrasekaran, the former Tata Consultancy Services chief executive who took the group's reins as chairman in February.
In his first interview with a foreign media outlet since the ouster of Cyrus Mistry, who served as chairman for four years, Tata praised Chandrasekaran as a fast mover. Tata said he has a close, "informal" working relationship with the new chairman and expressed confidence in his leadership of the $103 billion salt-to-software conglomerate.
"In the last six to eight months, the leadership has taken actions that were not taken in the previous four years, although the problems were the same," Tata told the Nikkei Asian Review on the sidelines of the Nikkei Global Management Forum in Tokyo on Tuesday. "The new leadership is much more action-oriented in dealing with the problems." Still, he added, Chandrasekaran's plans for restructuring and refocusing the group have yet to crystallize.
Before Chandrasekaran was handpicked for the top job, under Ratan Tata's interim chairmanship, he had turned Tata Consultancy Services into a crown jewel of the group and a bellwether for India's information technology sector as a whole.
Tata offered four examples of how Chandrasekaran's productive stewardship has carried over. One was sorting out a payment dispute between Tata Group and Japan's NTT Docomo, which had moved to withdraw from a foundering telecom joint venture. In March, the Indian conglomerate agreed to rescind its objection to an international arbitration court's decision to award Docomo $1.17 billion in compensation.
Since Chandrasekaran took the helm, the group has also managed to sell its consumer telecom operations to bigger rival Bharti Airtel. In addition, management arranged a joint venture between Tata Steel Europe -- a troubled regional unit of U.K.-based Tata Steel -- and Germany's Thyssenkrupp. This, Tata said, saved jobs.
The fourth example was Tata Motors' headway in stopping a market share decline.
There is more to be done, stressed Tata, who now serves as chairman of Tata Trusts -- the philanthropic body that owns 66% of group holding company Tata Sons. Chandrasekaran "has some rationalization, restructuring in mind. We will have to wait and see how his short- and long-term ideas [take shape]."
The new boss will "have to make a decision on regrouping certain smaller companies and changing their area of focus," Tata added. "I think there will have to be some realistic exits."
Tata sounded pleased that Chandrasekaran is open to discussing the group's direction with him, both formally and informally. Formal communication "was starting to be the only way we were communicating with Mr. Mistry."
"I hope we don't go to formal-formal communication as the normal communication [with Chandrasekaran] as we look into the future."
Tata Motors' future
After Chandrasekaran's appointment, which came less than four months after Mistry's eventful ouster, Ratan Tata returned to the chairmanship of Tata Trusts. This charitable entity, run by retired Tata executives and the family, influences decision-making at Tata Sons by nominating one-third of the holding company's directors.
Individual group companies need approval from the Tata Sons board to carry out major plans. And since the nominated directors wield veto power, it is important for Chandrasekaran and Tata Trusts to be in sync.
When it comes to Tata Motors, the patriarch said he is open to discussing a restructuring with Chandrasekaran if "he desires." "What he has in mind, I don't know, but when he [proposes a plan] it will be subject to discussion and consensus."
In August, Tata Motors CEO and Managing Director Guenter Butschek said the company plans to spend 40 billion rupees ($625 million) over the next few years to boost its domestic market share in both passenger and commercial vehicles. Butschek outlined key profitability initiatives including cost reductions, organizational streamlining, elimination of product delays and improved supply chains. There are also plans to monetize noncore assets to fund growth.
Butschek has courted unpopularity by letting go of some senior executives to create a "lean, accountable" organization and created a "war room" to monitor performance.
Chandrasekaran, meanwhile, is working to streamline the group's complicated shareholding structure, hoping to unlock value at subsidiaries and reduce its massive debt load. Group companies have begun selling stakes in one another to the main holding company, simplifying the labyrinth of cross-shareholding arrangements.