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N Chandrasekaran-led Tata Sons has restructured the conglomerate into 10 verticals such as consumer, trading, IT and investments. Representatives from the company will be heading the verticals and ensure they run in sync with each other's businesses, sources told The Economic Times.
This move may help the 100 companies operating under Tata Sons coordinate operations and will also help pare down costs. Managing Tata's consumer and retail verticals was a challenge because of the diverse listed units like Tata Global Beverages, Titan, Voltas and Croma.
There is a 'travel and tourism' vertical, which clubs together Tata's Indian Hotels with its aviation joint-ventures: Vistara and AirAsia. The IT vertical will have Tata Consultancy Services and Tata Elxsi. The financial services vertical will have Tata Capital, Tata AIA Life, Tata Asset Management and Tata AIG.
Moneycontrol couldn’t independently verify the report.
A top executive told the paper the vertical head may not be a member of the Tata Sons board. "But the person will be someone with deep sector knowledge and the capability to ensure benefits of scale," the person added.
This rejig will boost the group's efficiency, according to fund managers. "Verticalisation will bring in operating efficiency by helping similar businesses cash in on the collective wisdom and synergies of a vertical. But the consolidation and focus on this scale should ensure that it doesn't affect the operational freedom of individual companies," A Balasubramanian, CEO of Birla Sun Life Asset Management is quoted as saying in the report.
Calling it a 'work in progress', a Tata executive said this will take a few months to put into effect, but the companies have a clear sense of direction. Another executive said Tata Sons has spent Rs 70,000 crore in 2018 on this restructuring exercise. Tata Group has 100 operating companies, of which 30 are listed and has over 1,000 subsidiaries.
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