Two years on, N Chandrasekaran has plenty of unfinished business at Tata Sons

In a mail to employees in December, just before the New Year, Tata Sons Chairman N Chandrasekaran remarked: "Our job is to run our marathon — not to be distracted by somebody else’s sprint."

Of all the Tata Group companies, the statement may hold true the most for Tata Steel. The steelmaker has given way to JSW Steel, which has now emerged the largest steelmaker in India. The Sajjan Jindal company has been aggressive - like a sprinter - in adding capacity in the domestic market, and also picked up two companies through the insolvency courts.

It is not known if the change in the pecking order bothered Chandra, as the Tata Sons Chairman is called, but he will take heart from the steps that Tata Steel has taken in its overseas operations. The steelmaker's proposed joint venture in Europe with thyssenkrupp is taking shape. And it has divested 70 percent stake in its units in South East Asia.

But even as the sale of these assets will help Tata Steel re-focus its resources in the domestic market, Chandra knows there is more the steelmaker needs to do when it comes to his 'three S' philosophy. The 3 S stand for simplification, synergy and scale.

For instance, Tata Steel has almost 300 subsidiaries and associate companies. Clearing this web will be important. Also, once it is nimble, can the steelmaker - the third largest company in the Tata Group - scale up and get back its crown from JSW Steel in the Indian steel marathon?

This is one of the many questions investors will seek to find answers to as Chandrasekaran completes two years at the helm of Tata Sons.

Many of the queries that Tata Steel faces, get repeated in other group companies.

"It is still work in progress for Chandra. For instance, much of the shareholder value still comes from Tata Consultancy Services," says Shriram Subramanian of InGovern Research, a proxy advisory and corporate governance firm.

In fact, the dependence on the IT giant, which makes up for three-fourths of the group's market capitalisation, has increased in the last two years.

All the more because of Tata Motors, which has shed half of its market capitalisation in the last one year. The company reported a net loss of Rs 26,961 crore  - probably the biggest for an Indian company - in the third quarter of this financial year. That the loss was due to the pain points in JLR, is a new headache for Chandrasekaran.

These are not minor niggles, and a marathoner himself, Chandra knows the importance of overcoming these discomforts before they blow up into major injuries, that can force a runner off the roads.

Setting a foundation

In his first year, Chandra did well to steer the Group away from the controversies that raged after his predecessor Cyrus Mistry was ousted from Bombay House, the headquarters.

He sold off the loss making consumer mobile business to Bharti Airtel, carried on the restructuring of Tata Steel Europe - which took off under Mistry - and made critical human resource tweaks. He brought in talent from outside and rejigged leadership at important group companies.

But since then how much has the Tata Group progressed on the three S-led One Tata vision that he had laid out in December 2017?

"The Group still has over 100 companies. If there has been a simplification of this structure, it is not visible yet," says a former senior executive from the Group.

Reports say work on bringing down the number of subsidiaries in group companies has started. While it will be a time-consuming process, the tougher one would be to bring synergy among the companies.

"It is not easy to have synergy in the Tata Group, as each company is a separate entity with its own independent board. It would have been possible if these were subsidiaries... While the three 'S' sound good, they can be superficial," says Nirmalya Kumar, former Tata Sons director, and now Lee Kong Chian, Professor of Marketing at Singapore Management University and distinguished fellow at INSEAD.

Chandra has got the man to drive the synergy efforts, hiring Shane Fitzsimons, a former GE executive, as the Group Synergy Officer. And one of the first attempts seems to be in the form of electric vehicles, where Tata Motors has joined hands with Tata Capital and Tata Power.

While Chandra had pointed out that similar programs have been put in motion, investors will be keenly looking for end results.

Aviation dreams

It's no secret that Chandra enjoys the backing of Tata Trust and its Chairman Ratan Tata.

"At the same time, he has to create a space for himself. It will be critical that he is able to convince the Trusts of his decisions," said the former Tata executive quoted above.

Tata Trusts is the biggest shareholder in Tata Sons and has an overarching influence over the whole group.

But when it came to Jet Airways' acquisition, which sources say Chandra was keen on, he may have not got the backing of Tata Trusts. The acquisition would have enabled the group to scale its aviation interest, which at present revolves around Vistara and AirAsia India.

"Aviation is a difficult market. Chandra has to either scale and make it profitable, or sell it. But can he do that? Jet Airways would have been an important acquisition for him," adds Kumar, who exited the Group soon after Mistry.

The Jet Airways acquisition would have been a tough call, which is something Chandra will have to deliver going forward, especially given the "omnipresence of Ratan Tata," says Kumar.

Adds a senior executive: "Make no mistake. Chandrasekaran is a fine leader. The second year may not have been very positive. But that is not to say that it was negative. Kaam bahut baaki hain."