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Focus on steady cash flows, don't chase valuations: Tata Sons Chairman tells entrepreneurs

Nov 24, 2022 / 10:27 PM IST

One must concentrate on the left side of a balance sheet, which is to raise the right amount of capital to create capabilities that will help the business return the benefits in the future, he said.

File image of Tata Sons chief N Chandrasekaran

Tata Sons Chairman N Chandrasekaran on Thursday advised young entrepreneurs to concentrate on steady cash flows and not chase valuations.

An entrepreneur should focus on building a purpose-led organisation which will make it a successful company and the valuations will naturally accrue, the head of the over USD 120 billion-group said.

Speaking at the Ascent Conclave, Chandrasekaran acknowledged that there is a tendency to create a euphoria in the market to drive valuations.

In the address that drew parallels between his favourite hobby of marathon and business leadership, Chandrasekaran said every business has to be essentially a cash flow run enterprise and "it is over" if there is an absence of it.

He said the bottom line is as important rather than just focusing on revenues, and founders have to detest chasing only revenues or operating profits.

One must concentrate on the left side of a balance sheet, which is to raise the right amount of capital to create capabilities that will help the business return the benefits in the future, he said.