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46-min read

Tata Group Not Ruling Out Bid for Air India, Chairman N Chandrasekaran Indicates

In this interview with CNBC-TV18, Chandrasekaran dwells on his strategy for the company, group firms such as Tata Motors and Vistara, on the Tatas’ interest in bidding for government-owned Air India, among a raft of topics.

Shereen Bhan | CNBC TV18

Updated:November 4, 2019, 4:37 PM IST
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Tata Group Not Ruling Out Bid for Air India, Chairman N Chandrasekaran Indicates
File photo of Tata Sons Chairman Natarajan Chandrasekaran.(Reuters)

New Delhi: In June 2019, the $100 billion salt-to-software Tata Group named veteran insider Natarajan Chandrasekaran as the new chairman of its holding company, Tata Sons. Chandrasekaran, who was previously chief executive of IT outsourcing giant Tata Consultancy Services (TCS), took charge at a time when profits of several companies in the conglomerate were under stress and strain.

Chandrasekaran, a former Tata Group intern, widely known as Chandra, joined the group in 1987 and rose through the ranks. He is a masters degree holder in computer applications, an avid photographer, music aficionado and is known for his passion for long-distance running, who regularly participates in marathons across the world. In this wide-ranging interview with CNBC-TV18, Chandrasekaran dwells on his strategy for the company, group firms such as Tata Motors and Vistara, on the Tatas’ interest in bidding for government-owned Air India and the group’s finances, among a raft of topics.

Here are edited excerpts from the interview:

Let me start by talking to you about Bridgital Nation first. Why the decision to turn author?

It is not a decision to turn author or anything. Throughout my life, I have worked in the tech industry. I have been thinking about this for the last five years. I have seen all through my life, at least the professional life, where technology has made an impact in solving many problems, more situations in business but also in a lot of large-scale public service deliveries.

I am also acutely aware of the challenges we have in India. So, when I was reflecting on it, I felt that primarily our problem is pretty unique because we have huge access challenge, and then we can either say huge jobs challenge or we can say we have a lot of talent. So, we seem to have both the demand and the supply but do not seem to know how to get it together. So, I thought that with the help of technology some of this can be bridged. Then we seriously took up some projects, multiple pilots, some of them on a very large scale and then I kind of felt that we are finding the right mix, right balance. If you deliberately use AI and machine learning and IoT and Cloud, you can successfully bridge the access challenge and in the process not only create jobs but significantly promote the skill levels of people. Then I did not know how to go about writing it.

How long did it take you to put it together?

The whole concept of Bridgital, though I did not coin it as Bridgital, was in my mind three years ago. Then, when I was thinking about writing it, I felt that I could not do it alone. I thought I will engage somebody to help me write it. Then I was talking to Roopa Purushothaman. I asked her whether she would be interested to work on this project. Then she got involved and we said that we will take our time; so it took two years.

Let us address the twin challenges that you articulate in the book and that is the access challenge as well as the jobs challenge. They are obviously linked with each other. Your thesis through the course of the book is that the idea of Bridgital Nation is really to get the two Indias to converge. If a country is running on two tracks, one is high productivity and another on low productivity, how do you actually get these two tracks to converge? The idea of creating Bridgital clusters, the idea of investing in sectors like the care sector which doesn’t just help the jobs issue but also gets women into the workforce. So, a lot of the inter-linkages come through very clearly in the solutions that you have pointed out in the book. How crucial is it to come up with a comprehensive and an inclusive strategy and is that where we are going wrong that we are addressing these issues in silos?

If you make fundamental statements, there are certain statements you can make with a lot of certainty. Access is a challenge and that is because we do not have the capacity. So, we have got to value every single capacity we have. If you take healthcare, whether it is a hospital, whether it is experts, we need to be extremely considerate and be careful about maximising that resource.

The same thing is there in infrastructure, the same thing in education and we neither have the time nor the capital to be able to do this in a short period of time if you just want to increase capacity. So, we have got to figure out how to maximise this capacity by an order of magnitude.

Second is, if you take talent, we have a lot of talent, but we have a lot of people at the top really who have the expertise and then we have a lot at the bottom, and then the missing middle. Currently, what is happening is that the missing middle is getting filled by people who are at the expertise level either coming down or people who are not the experts but doing Indian jugaad to fill the middle, and that is why most of the jobs become informal jobs in our country. So, all of this has to be formalised. So, these two we have to match.

You also have to realise that any skilled people who can come into the middle...you have got the leverage that is where this whole x-factor is. If you get more talented women who are not really gainfully deployed, if we can also get them in the mix, that also adds to it. So, I think there are very definitive statements about what is the real access challenge and the fact that we have a lot of talent and not only pure talent, but talent with very high aspiration. We just have to give them the tools, the method, the formalisation of the jobs and if you just put it all together, then you have the solution.

So let us address the jobs challenge first. In the book, you wrote about how India’s unemployment problem is often misunderstood. Without getting into the argument of what the number is and what the data suggests, you argue for the fact that India doesn’t just need more jobs, it needs better jobs which is where the move towards formalisation is – the argument that not just you, but several others have been making as well. Your remedy is creating more Bangalores, your remedy is entrepreneurship – a part of that.

There are multiple themes and it is one of the themes.

That is one of the themes – how important is that and how important is it to really unshackle the SME sector because there is a lot of data in the book where you talk about how the Indian SME for instance or the average Indian firm employs about 2.5 people which is far below the global standard and the global norm. So, how do you create scale and how do you create better and more productive jobs?

What we have done in each of these cases, we have really given a real story. Each one of those stories is very real. We have spent a significant amount of time studying that story. So, you asked about entrepreneurship. On the entrepreneurship, there is really an important need to address that segment which is not either big or not too low.

Microenterprise?

If they can be given the right credit support, I think it will just unleash the power in that segment.

Will that have to be the responsibility of the government?

None of this is the responsibility of one party. One problem we have in our country is that we like to switch on and off. Either, we blame the government or we want from the government. For example, what are the norms, what is the role of banks, what is the role of non-banking financial companies (NBFCs) and what is the role of other forms of credit? Maybe they cannot do it; I also do not know every nitty-gritty. But if you really describe the problem as there is a section here, which has got a huge potential, if only they can be supported with capital and not get into the conventional form of ensuring all the KYC norms and everything else is ticked.

We have a duty to solve that problem and it is not going to be solved by one policy, it needs the banks to get involved, the policymakers to get involved, the government to get involved and entrepreneurs to get involved. Even people like us to get involved. Everybody does the same thing; what is the point in everybody trying to address the same market.

One of the themes that you spell out in the book is the need for the use of technology to create new markets and not just disrupt existing markets.

It is not about addressing the market; it is creating the market itself.

One of the markets that you have talked about, for instance, is the care industry and it is a low-hanging fruit. One would imagine that this would be the obvious thing for India to invest in and that brings me to the question of how do we get more women into the workforce as that is a significant part of your thesis for growth and for unlocking value for the economy. It is an interesting statistic that you have there, double the size of South Korea’s population – that is the number of women in India who have a secondary education at least but are not part of the workforce.

Yes, absolutely. We have the women participation in work coming down year after year even when we were coming up with these problems. We were trying to find solutions. If there is a missing middle, what are we going to do to get more people employed in that middle so that the experts can do only the jobs that they can only do. So, when we studied women, it is not only coming down: the number is about 23 per cent, which is one of the lowest anywhere in the world. So, I think there is an estimated GDP uplift of close to $0.5 trillion if we are going to address that. This is based on studies. However, leave the exact number, somebody can argue it is not 440, it is 400 or 480. But the point here is that you have the resources; that is why we came up with this term Antarlapika, because a lot of solutions are within ourselves, we just need to put this all together.

Antarlapika is Sanskrit for a puzzle or a riddle and Chandra’s argument is that India is like a puzzle or a riddle which holds the answers within itself. How many women are currently employed by the group? What are you doing to ensure that you actually see more women at the top of the Tata Group?

I don’t want to give you a number that we will be this percentage or that percentage, I think our group companies, all of them, have to go toward a more diversified workforce. I think some of the companies we have by their nature, they attract a lot of women. For example, TCS has a high percentage of women primarily because that industry also supports that kind of skill naturally. So I think over the years it has gone up, I think the number maybe 35 per cent.

Our financial services, services sectors, in general, I find there is a lot of participation of women but not necessarily in other sectors. So, we have a diversity programme and we need to improve across the board. If we start looking at how many women are there in each of the group companies, I think we need to improve.

Do you have a target that you have set for the group?

Targets are easy to set but more importantly, it is the journey and we have got to get there.

Since we are talking about the marriage of hardware and software so to speak, capital with technology and how that can address some of these challenges, the fear and the concern is that as we move into much more of an industry 4.0 world, where automation, robotics, artificial intelligence (AI), machine learning – none of which is new but the scale at which the adoption is taking place is certainly far different from what we have seen previously – what is that going to mean in terms of jobs, what is it going to mean in terms of new jobs and what is it going to mean in terms of the pipeline to address those jobs? How are you looking at that in the context of where we stand in India?

AI is here to stay. Artificial intelligence, machine learning, Cloud and what other terminology you want to use, industry 4.0 is going to make a big impact in every business, in every society and in every country. In some businesses, it will get adopted faster, in some, it will get adopted slower. In some markets, the rate at which things get implemented again can accelerate and in some others, there will be a lag effect, but it is going to happen and it is going to happen everywhere.

Second thing is that, for many reasons this fear is totally unfounded that AI will take away all jobs. First of all, there will be a lot of political policies etc, then there will be a lot of social implications. But leave all that, fundamentally machines are good at doing some things and humans are very good at doing some things. It is never going to be machines or humans. Again, it is another problem we have in our minds, we always like either or, we can never say this and that. I think it is going to be machines and humans, as humans are in charge, especially in the Indian context, can deliberately accelerate the use of AI in the way it empowers and equips humans; that is Bridgital nation.

So basically use technology as an enabler?

More than an enabler. It is also to lead sometimes, but in a way, it is desired to lead.

How are you seeing the approach change especially when we talk about things like digital governance as the big theme is not just the ease of doing business improving but also the ease of living seeing an improvement as well and that is where the focus is on being able to empower the citizen through digital technology and so on and so forth. You have had experience of working with the government on several big-ticket projects including the transformation that has happened on the passport side. What have been the learnings from there and what should we take forward?

All those things have played in my mind when we came up with this whole Bridgital Nation because today we get used to passport and some of us who appeared for the first passport 20 years ago or 30 years ago, it was just a nightmare. You had to fill so many forms, you did not know who to talk to and there was no way to track etc.

I think not only the passport delivery: if you look at income tax filing, for example, there are many examples, many cases in India itself but these are all things we have done to improve public services delivery but we can do a lot more. These concepts especially AI and IoT can be used very effectively. For example, India has got a big programme on water. If water is going to be supplied to 18 crore citizens with the help of IoT, you will pretty much be able to say what is the quality of water, what is the availability of water, many things you can address. The same thing is there in healthcare. Every single large-scale problem; actually technology is primarily good for large scale problems. Technology’s impact on small problems is a waste of time, so you should be using it for large-scale problems. Take Tata Steel, for example. Even within the group, on the one hand, you can say that what are we going to do with AI in a steel company? If you look at the whole digital initiative that we are doing at Tata Steel, we launched it about a year and a half ago and if you see from workers safety to mining, to steel making, to maintaining a plant, to understanding the customers sales and marketing, the entire value chain can be transformed and they are on that journey. When we come out on the other side, when we complete the project may be in a couple of years from now, you will see an enormous impact in the way that company looks at technology and that requires mindset, that requires talent upgrade and everybody working together and we have got to do that.

Since you spoke about how technology has an impact if it’s addressing large-scale problems, one of the other issues perhaps with the manner in which technology has been leveraged is to think of technology as the end in itself, it has to have a context. You quote the example of the Aakash computer in the book that you give out these computers, but then at the end of the day, there is no ecosystem to ensure that it actually delivers on the purpose itself. So, what would you think are the big challenges in getting technology to actually work for people?

The most important thing is to understand the problem. Technology is meant to be able to address that problem. Even in healthcare service delivery, what are we talking about? Take primary healthcare, we are talking about establishing primary healthcare centres which are all connected. Why cannot we have primary healthcare centres available in any region, address that region and all the people? We have the data about all the citizens and we can have health records. The expertise needed to do 90 per cent of the work is really not high-end medical sciences – you will need people who will collect data, you will need nursing skills, many skills that are required are not really high-end doctors. Then you have the doctors connected, we call it the nerve centre. But, whatever is the terminology and if this is all connected with the help of IoT and we have machine learning which is what we did in the pilots, we have enormous amount of data, you exactly know even to the extent that who is the patient in this village, in this house, who should be taking this medicine, whether that person has taken that medicine or not, even the follow-ups can be done. Not only the impact but addressing the whole problem is absolutely possible. However, we have issues because somebody will say healthcare is a state subject, so you have to work with multiple states. We have a lot of implementation problems because something is not a central subject, so how do you work? Where do you start? Then, when you need to start somewhere, you need to showcase it and then how do you make the business model viable even when one is not interested in making tonnes of profits but the business model should be sustainable.

Since you spoke about, for instance, health and the need to have digital records which are accessible and are able to address the challenge of bridging the access deficit, what about privacy, what about confidentiality and how crucial is that? Is that really something that now has to be addressed on a war footing if we truly want to be a Bridgital nation?

In fact, one of the things in the book, we make a statement saying that the data privacy will be one of the foundations on which this whole thing can be built as you don’t want to tackle this on the backend. So in the design of the solution, you want data privacy totally integrated, and it can be done, it is not that it cannot be done. Data privacy can be ensured and you got to be most conservative in terms of laying down the principles, but if you go about addressing this, it will also give rise to a number of other industries. For example, medical devices. We are importing all of that and the whole industry can be created. I think that there will be a knock-on effect in the positive sense where it will spin off not only the jobs in the care sector but related to that sector.

What is the expectation that you have of changes on the policy front? I mean you give one example, for instance, on how we are dealing with 17 definitions of workers and 22 definitions of wages and this adds to the complexity of doing business in India, starting businesses in India. So outside of cutting down on regulation and so on, what is it that you would like to see by way of policy intervention and also the role of public-private partnership in being able to address some of these large challenges?

We are where we are and many times we are where we are because of a lot of history and there is no point in saying that throwing some data, saying that the purpose of the data is to show the complexity. So sector by sector, if you take healthcare, education, there will be policy interventions required, there will be standardisation of definitions that will be required, there will be changes in the education system required. But we have to work through that and I do not think any of this is rocket science and I feel that this government listens and if you go with the right ideas, if there are government interventions required, they will be the first to adopt it, support it. However, it will not only be the government; there will be a lot of stakeholders and we may not know while we have spent a lot of time in each one of the cases that we have written and we have consulted people. If we are writing about healthcare, we have consulted the best people in healthcare. If we are writing about something else, we have consulted people in that sector so that our clarity of thought is correct. But as you detail out the solutions, there will be changes required and we need to work through that and we should do it.

Speaking of feedback, and the Prime Minister launched the book and I know that in the past whether it’s NITI Aayog or various arms of the government, they have sought feedback from you on the changes that are needed or how do you take some of these ideas forward. What is the conversation been focused on and where do you see action being taken on some of these specific issues that you may have discussed?

On the Bridigital Nation, I have not discussed.

So that’s a conversation that’s yet to start?

Yes, because I think the whole idea of the book is to come about with a strong point of view and show how this can be done. So now, we will have to think about what projects can be done and I hope to have that conversation and some of which may be involved and some of it may not be involved.

What you are going to spearhead as part of the Tata Group?

We are thinking through that. The Bridigital Nation, the whole theme is applicable to business as well as public services and some of these projects which are public services can also be a business by themselves. So we need to work through that and definitely we are interested in many sectors, we are interested in healthcare, we are interested in water, we are interested in any of the large-scale problems and what role we will play, I do not know. Some places we will play a good citizen though….

Will it be beyond CSR?

Some will be a business opportunity, some will be a good citizenship role. We do not know yet.

By when do you think you will know?

I will have to think through this. You will be the first to know.

Let me then talk to you about how businesses looking and…

People approached me after they read the book.

And they say that?

We should do this, we should do that, both within the group and outside.

What are the ideas that they want to take over?

They are saying, we should really do something in healthcare because there are a lot of examples of healthcare in the book.

Is that something that you would want to build on?

I don't know yet.

It could be?

I think I would like to see whether I want to build on it or not. I would like to see this addressed because when we went to Silchar, when we went to Meghalaya, it was heartbreaking, it was really heartbreaking when you see at Dr Das’s hospital, the way the surgeries are performed, the way patients were thronging to get a little bit of treatment and you will be shocked at the budget at which that hospital operates – that hospital has 5,000 patients every year, they do 1,500 surgeries every year.

Let us now talk about the state of the nation today and the state of the economy today. You have got your finger in pretty much every pie. The Tata Group is almost a proxy for the Indian economy. What is the sense that you get about where things are and how soon we can expect a return back 8 per cent?

I think the fact that the economy has slowed down, as it has been talked about quite a bit, I think as of today if you really see, still, some sectors are under stress. We need to see them come back. However, at the same time, we see certain sectors showing improvement, but we have got to give it a little more time. If you take the month of October, the retail sales in the passenger cars have been very good, but whether it is only October because of the festive season or it is going to pick up, but the retail sales in passenger cars are doing very well. I also feel that the improvement in terms of liquidity has been much better.

Currently, whether it is commercial vehicles or passenger cars, there are no credit issues and that used to be a big issue in the past. Then, if you look at diesel consumption, that is going up. So, there are signs, indicators that we are seeing and also the freight charges are also gradually going up. So, we are seeing these trends.

However, we have still not seen an improvement in the commercial vehicles (CV). Commercial vehicles pickup is still not happening and both the payload increase and also the reduction in the stock because of the impending BS-VI affected the commercial vehicles and still, it has not lit up. So, that is something that we look for. Maybe scrappage policy can help. So, we need to see when there is a pickup in the commercial vehicles and that is a very important thing that we are looking at.

The steel demand is impacted because auto demand is impacted and if construction demand is impacted, obviously, it will show in the steel demand. So, we are exporting more steel than before, but we still largely sell in the domestic market. Also, steel is linked to some of the global prices. So, steel is a little bit of a difficult industry where you can predict everything based on domestic sentiment.

However, on the consumer segments, I think things are okay. Whether it is the tea, jewellery, Titan or any of these other sectors, or our apparel companies, all the consumer product companies have been doing well.

So consumption you believe is holding up and the hope is that commercial vehicles sales and steel sales will also start to pick up as well?

I think commercial vehicle sales is important as that is a good indicator and then we would like to see the real estate sector getting fixed. However, I think we are on that path. I cannot tell you whether it will be this month or next month, but I would like the October performance to get improved in November.

For you to be able to say whether we are truly out of the woods or not yet?

Yes.

Let us address each of these businesses and since you have spent a lot of time talking about the auto business, let's talk about Tata Motors. The street has rewarded the results that you have just announced, fabulous gains that we have seen especially on the stock. Also, the decision to put in another almost a billion into the business. What is the outlook now specifically for Tata Motors? I will come to Jaguar Land Rover (JLR) in a second, but for Tata Motors, what is the aspiration? What do you want to do with that?

I think I have been very clear, but you keep asking the same question every time we speak. To my mind, it is an important business for the group and I think we are going through a phase of transition. There are two factors, one is an external factor and another one is the internal factor.

If you take the whole of Tata Motors, both JLR and domestic CV market and domestic passenger vehicles (PV) market, on the JLR front, it is a huge transformation due to electric vehicles (EVs) and shared mobility, and also the impact of Brexit and China. All of these are external factors.

Internally, we said that we have to optimise as our capex requirements continue to be high because of all of the investments we have to make for EV and other things. So, we ran a programme to optimise our operating cash flow and also to take the cost down. We have been doing it for year or year and a half now and the impact of that is what you have seen.

So, the EBIT levels have gone up and frankly the market was quite surprised. We have been saying that our cash flows will improve and our EBIT will improve, but still, the sales have to pick up. Still, I am not comfortable to say that everything is fine because at the cost-structure level and at the cash-flow level, I think a number of actions have been taken, and more actions are being taken. We will continue to improve.

But at the demand side?

Demand side, China has done better in the recent past, but that is of a lower base. So, we need to see their pickup continuing and if you can sell a few more cars and a few more Range Rovers, things will be good.

I almost stopped breathing when you said if we can sell because you know what the rumour is on the street which keeps repeating every few months.

We think we are on a path of coming back. I think I am happy with where we are in terms of all the operational improvements we are doing, but we need to get the sales up. We have to get China pumping again and I think then we will be in a much better place.

In the domestic market, I think we have run a lot of tightness programmes. In fact, we did a fantastic job last year where we delivered excellent profits and free cash flows on commercial vehicles. Unfortunately, the most important segment which is the medium and heavy commercial vehicles (MHCV) has really fallen off the cliff. I think we just have to wait it out while we continue to be very prudent and frugal and everything in terms of our operations and managing cash flows, working capital, inventory, everything else we still need to wait for the MHCV.

On the passenger cars, I think we will bet big on electric vehicles. We are making investments and the margin profile is getting better. But we are too small and we need to ramp up. I do not know what we will do, we may get partners – we are evaluating all options. However, the point is that as far as the passenger car in the domestic market is concerned, we need to scale, we need to significantly improve our market share.

Let me address this issue of partnership that you spoke of and let me once and for all get you to clarify on the rumours as I said that keep coming back on JLR and whether you are looking at putting JLR on the block. Is there any truth to that?

I have said no.

Not to us.

I have said no to anybody who has asked me. In business, you have to be careful. It is very dangerous and imprudent for you to make any categorical statement. However, I have clarified with a lot of clarity and certainty that we are committed to Tata Motors and JLR business. We are on a path of transforming that company because that company has got great brands, very successful products, and at the same time it has to invest capital. We need more products and at the same time, we have to get into electric vehicles and also we have to think about future business models.

That is the journey we are on, but we are trying to at the same time conserve capital. We are trying to be very efficient in our capital allocation and all we are trying to do is whether we can keep the capex under the operating cash flow. We have shown that in the last three or four quarters; we said that we would take actions and the management has taken those actions and that is why you have seen the performance improvement which came about this quarter. This is not one-off, this is not about gains here and gains there, this is primarily due to a lot of hard work. For us, it is important to get the sales going and what partnerships we will do, I cannot tell you. What form and manner it will look at, I cannot tell you.

Have you spoken with anybody, have conversations happened with one or many people?

In the auto industry, every original equipment manufacturer (OEM) talks to every other OEM.

So you have spoken with one or many?

People reach out to you and people talk to you. We all exchange notes but whether we have any deal construct with anybody, no.

When you talk about partnerships, is it going to be one partnership or will it be one partnership for JLR and a different partnership for the domestic market?

Don’t know. We will have to do what is right. If you see what is our goal, our goal is that this company has got a great future and the next 2-3 years from JLR point of view especially is going to be very tough because of the capital that is required and the moment a little bit uptick happens in sales, things can change dramatically. From the domestic market point of view, from a CV business, we have got an excellent business. We just need the CV market especially the medium and heavy commercial vehicles (M&HCV) to come back as their demand has halved, sales have halved. From the passenger car point of view, we have a lot of work to do as now, we have some models which everybody is appreciating. The last 2-3 models have received a lot of traction from the market but still, we have a long way to go as we are operating on a very low market share and we also have to now make a bet on the EV, so it’s a lot of work to be done.

If I were to read between the lines of what you are saying...

You can read straight. You don’t have to read between the lines.

I will read it straight then that - a) you are going to bring in a partner...

No.

You are evaluating that?

We will always evaluate.

Partner or partners – that option is also open.

That will be always there. For example, we did something with BMW. So some people will say that it is not a partnership, some people will say, are you going to bring a partner in this construct. We do not know those things.

What would the thinking be today and I am not saying that….

The thinking is very simple. We have to optimise…

Will it be a product partnership or will it be equity?

What are we trying to do here? We are trying to see whether we can optimise our capex investments. We need to get more bang for the buck and there are things that we can do in sharing platforms or their synergies in engineering or their synergies in procurement or their synergies in technology. In an auto, there are 4-5 segments in which you can have and that’s what we are looking for. The issue here is not another billion dollars – that is not the problem. Our problem is not capital. One of the reasons we put this close to billion dollars is because that is what the company required and we wanted to send a message that we trust, we have a complete focus on this company, this company has a complete backing and so we definitely wanted to. It’s not that we couldn’t have got money from somewhere else. We are not looking for some capital. But if we are able to achieve our objectives and if it is going to be in the form of capital as that is the way the construct to work out. But the point is that we are not just chasing, okay I need to bring in 3 billion, 2 billion – that’s not what we are looking for.

Is there some visibility by when you believe that this should...

We are not in a hurry. We have to just keep evaluating. Any proposal that comes to us, if somebody approaches, we will evaluate and at the same time, we are on a path of improvement. At the end of the day, if you look at JLR, it has a lot more value, Tata Motors group has a lot more value than the stock price indicates, but the market has its own way of showing rewards and confidence. You said that we had a huge rally in the last 3-4 days. Yes, we had a huge rally but still, it is nowhere near its peak price. So you have to worry about the stock price but you cannot make decisions on the stock price and definitely because we are not here to sell the company and get out. We are building this company. So I have patience and I will navigate this.

Since you are talking about patience, on the EV side of the business and if that is going to be the focus especially for the passenger vehicle business in India and also for JLR, it hasn’t taken off so far despite the policy changes. FAME-II has also been implemented and rolled out. We haven’t seen the needle move.

At the end of the day, how many products do we have? So at the end of the day in the auto sector also one of the things which we need to figure out is how to fix it, at least I would like to see that fixed. Every time there is a new product, it’s a 3-year game and at least Tata Motors now, in 2020, has 2 or 3 launches in EV vehicles. But the products take time. So we have seen all these policy changes, but how many products are there in the market. We do not have the products in the market. So we need more products in the market because we cannot sell just one electric vehicle model and then we can expect everybody to buy. So we have more products required, the charging infrastructure required. So now, I think, we are putting charging infrastructure in 25 cities and at least 3 models are coming out, but I would like to see more models faster.

And affordable EVs?

I think the benefits that have been announced by the government make it attractive. I have seen the indicative prices of the models, had some discussion. I think it’s going to be compelling.

Let’s now talk about what is happening on the steel side of the business and especially with what is happening in Europe. How much more patience do you have. Do you have a choice with what is happening with global steel prices currently? What do you intend to do now for the European steel business?

First of all, if you look at our Tata Steel business, it is healthy today even after the Thyssenkrupp venture that did not go through. As far as India business is concerned, we have really scaled up. Kalinganagar has scaled, Bhushan has been integrated and we bought Usha Martin. So the total capacity that we have created in India is significantly high. We were at 13 million tonne and now we will be, in another year or two, 23-24 million tonne. The EBITDA and the cash we generate, I am making this statement very carefully, in the Indian steel business at its low is higher than the EBITDA and cash we generate in the European business at its peak. So, this is a good thing that has happened. Therefore, as a result, while we are not at the best times in terms of the steel prices, I think Tata Steel is in a comfortable situation compared to where it was. From European business point of view, our immediate focus has been to take all actions necessary, which is ongoing, to get that business to cash neutral, that is we want to avoid pumping capital from India to Europe. So we want to do that and that’s the goal with which the teams are working. So we will see what we can do in terms of...

So further cost reduction?

Absolutely, capital reduction, cost reduction, all of that will happen as we have to do that at the end of the day. We have to arrest the bleed. So we are doing that.

Given the global commodity cycle, I mean this looks like it’s going to be a long-short before you are able to offload this?

I do not know yet. But at this point in time, the focus is that as long as it can service its debt, we do not have to put money for capital. We are still doing it but we have to get there and that’s the path we are on.

What about the debt reduction plan, Rs 92,000-odd crore in debt?

It’s okay. At the end of the day systematically it will come down. We, at Tata Steel, have a goal to keep reducing it. There are three numbers; you got the EBITDA, you got the capex and you got the debt. There is a clear plan to improve the ratios every quarter and how much we will repay will depend on how much cash we generate and even in the situation, the EBITDA levels of the Indian business compared to the European business are much better, and obviously it is not as good as last year. So we are calibrating the capex. So in terms of growth, in some of the projects that we are doing, we will delay that. We are not going to put all the money because we do not want to increase the debt and we want some money that’s generated, some of the cash that has been generated to go towards fixing the debt. So we have got a quarterly plan in terms of reducing the debt. You will see the debt level keeps coming down and sometimes it will come down faster, sharply.

Any restructuring possibilities on the steel side of the business, Tinplate, Sponge, Metaliks, anything?

Tata Steel in India, I think Koushik Chatterjee has communicated to the market clearly, there will be a simplification. There is a simplification programme going on. We will simplify the Tata Steel group structure significantly and there is a plan that has been approved by the board and I think it has been communicated to at least the analysts.

So, when do you hope to put this restructuring plan in motion?

Already started; the process has started. I think they have a timeline as all of these things take their own regulatory time. At least, strategy-wise, we are very clear and it has been blessed by the board.

Commercial mining, and that is an opportunity that now has been opened by the government. Of course, we are still waiting for the fine print on that, but is that going to be something that you will be interested.

Let the fine print come.

Speaking of the fine print coming, the expression of interest (EoI) for Air India should be up shortly is what we are given to understand. What we are also given to understand is that what was a stumbling block the last time around, one of the stumbling blocks, debt, perhaps the government is going to be far more aggressive in taking the debt off the table so that it is attractive.

Let the EoI come, let the terms come and then we will see it.

Have you had any conversations with the government as they have sought feedback?

No, I have not had any conversation.

But you are open to this?

Any opportunity at a group level, we have to look at it. Every opportunity that comes, we look at it, some we will give it a pass. We had a lot of opportunities in steel and we picked one. In power, there are lots of opportunities that came and we picked one or two. So, we will keep looking at every opportunity that comes definitely. As long as it can add value to our airline portfolio, we will take a look.

When you say add value to your airline portfolio, you have got Vistara and AirAsia.

It is not about Vistara or AirAsia. I think you should look at it as for whatever reason we have got companies, but eventually, we will have to see what those companies think. We need to have a discussion on does it add, what does it add and what are the pain points. We have to take a calculated call. It is not just an easy call to say that we will do it or we will not do it.

It is easy to say we do not want to do it because we have two airlines. It is also equal to say that you will get a lot of routes and a lot of slots, you can scale immediately. So, topline level there is an argument to say yes or no, but none of these decisions are taken with one line. Essentially, in my opinion, if we have a business, whatever be the business that we operate, all those businesses have to get efficient, have to get scaled, have to create value and we have got to look at that.

Speaking of value creation, the restructuring that happened for Tata Global and Tata Chemical, I think the big question is have you zeroed in on a CEO for Tata Global. Is it an insider, is it likely to be an outsider, and when do we find out?

We are working on that and it should happen sooner than later.

That does not say much: sooner than later means this calendar year, next year, this financial year?

We are a listed company, we have a process and once the process is complete, we have to go to the board.

I am not saying tell me the name, I am saying are you close to a decision?

We are in the process.

When we last spoke, one of your stated objectives was that you wanted to diversify the pools of profit for the group. While I remember you said that you are not apologetic about the fact that Tata Consultancy Services (TCS) continues to be the big driver in terms of profitability, but you would like the reliance on TCS to be not as heavily skewed in its favour over the next few years. Where you stand today, do you believe that you have been able to achieve what you were hoping to because it continues to be TCS?

I think not at this stage. TCS will continue to be a large pie. To me the most important thing is not how much is coming from TCS or how much is coming from other companies. I think what is important is to make sure that every company is generating profits and generating free cash flow and the growth of the profit pool from each of these sectors.

We will never have a situation that all companies are always doing well as if you take airline, for example, whether even you take AirAsia, Vistara, just the two portfolios, they will be in investment for the next five years. So, we are not going to see those companies generating profits or cash at least until 2025. So, there will be certain segments where we will be investing. But if we take all our portfolios, all our consumer product companies, hotels or steel, all of them are profitable today and all of them are generating free cash flow.

However, they need to generate more and the rate at which these companies grow, so that the overall pie when we look at it, the TCS share keeps coming down. I think it needs a critical mass. So, it is not something that I can tell you that in the next 12 months it will happen because of the size of the pool. However, I can tell you that the overall group profits and the overall group free cash flows will get better every year.

Since we spoke of the opportunities for the future, what seems to be an opportunity possibly that is going to open up for corporate India is the government’s move towards strategic disinvestment. I mean all kinds of companies from across sectors, engineering to defence are expected to be on the block for strategic disinvestment with management control been given to the buyer. Is that something that would interest you?

As I said, there are two kinds. There are companies that will come out in the sectors in which we operate and definitely, those individual companies we will look at and obviously with active involvement from us. If there are completely new sectors, we need to really think unless it is a very compelling case.

A part of the simplification, rationalisation sort of plan that you charted out when you took over, where would you say you currently are and how much more is left?

We are in the right direction but we need to increase the speed. I hope I will be able to give a better view in the next two-year time.

Next two-year time; so it’s going to take that much?

Because every time you want to simplify something, the whole process takes a year or year-and-a-half; say you want to close a subsidiary, you want to merge something, you want to diverge something, each one of those projects can take a year, year-and-a-half with all the regulatory approvals...

So the identification has happened? It’s a matter of execution?

Execution. Each of them is being done in individual companies. If you take steel, it has a very definitive plan. If you take power, we have a very definitive plan in terms of what are the things we want to do and let’s say, we want to sell something or we want to merge these five companies together – that whole process takes time. It is not like we just say and it happens.

I understand the execution will take time. So you are saying the execution will take two years?

Yes, currently we are in execution mode and even in Tata Motors, we are simplifying. Everywhere a set of things have been identified in each company, at least in the large ones. Don’t know about the small ones. They are all in various stages of execution and we will find new ones.

Let me end by asking you that we are at the end of this calendar year pretty much. How would you assess the year gone by in terms of all the parameters that you would set out for the group and what is going to be the big focus and the big priority as we start the new year?

There are two sets of comments I can give you. From the company’s point of view, overall the economy is important from Tata Motors point of view and Tata Steel point of view. We need to improve the operating performance of the European entity and if we get any strategic option at any point in time, we will look at it as far as European steel is concerned. Otherwise, it will be business as usual. The integration of Bhushan and all that has happened and we will optimise the performance.

In Tata Motors, we would like to see the sales pick up for Jaguar and the commercial vehicles turning back and then we need to announce what we want to do in passenger cars, how are we are going to address the scale challenge. In terms of power, a number of actions are going to be taken. We are still waiting for the resolution of Mundra.

Are you hopeful now with the elections out of the way?

I hope so. Post-election, hopefully, and after that, we have some restructuring plans which we have agreed and we will execute that over the next 12 months. In fact, starting later this year.

That’s specific to Tata Power or in general?

Specific to Tata Power. In the consumer business, hopefully, this integration will go through. We are waiting for the extraordinary general meetings (EGMs) to be over. Tata Chemicals is over, Tata Global Beverages EGM is going to happen soon and once that is done, we will have a new team and we will embark on that journey. We will be launching the Tata Digital First platform sometime in the middle of 2020. We will be launching our Tata Consumer platform which will be an interesting platform.

Can you give us a little more colour on what interesting means?

Maybe in another interview some other time.

When you say interesting, this is going to be a mix of e-commerce and…

Several things are embedded. So, we will wait for that. We have started building the platform now, so sometime in the middle of next year, we will launch it and all the other things; integration, consolidation of most of our businesses.

Do you have a good feeling about the year ahead?

Hopefully, it’s going to be a better year than the current year. I think the economy, hopefully, will start to come back and BS-VI will be behind us. So, there are things to look forward to.

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