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New ratan at Bombay House
Cyrus to chase $500bn dream

Mumbai, Dec. 28: Ratan Naval Tata today retired as the chairman of the $100bn Tata group and passed on the baton to Cyrus P. Mistry, marking the end of a glorious era at Bombay House and ushering in a brave new one where Mistry has been tasked to pump up the turnover of the group five-fold in just nine years.

Mistry, 44, will be the second individual without the Tata surname to head the group after Sir Nowroji Bapuji Saklatvala in 1932.

He was chosen by a special panel last year and groomed for the job by Ratan Tata for a year, but what is being keenly watched is how he will carry forward the huge legacy of the Tatas.

Ratan Tata was at the helm of the group for 21 years; during his tenure, revenues grew 20 times, with the market capitalisation of around 32 listed entities at over Rs 4.5 trillion. He has already set a tough goal for the group to attain in the next decade — a turnover of $500 billion by 2021.

Corporate observers admitted that it was a challenging road ahead of Mistry, with the current slowdown in the global and the domestic markets making his job difficult.

While Ratan Tata banked on international acquisitions, which played an important role in steering the group to a turnover of $100 billion, the challenge for Mistry is how he will leverage these acquisitions to propel the next phase of growth.

The group is now present in seven key areas — information technology & communications, engineering products & services, materials, services, energy, consumer products and chemicals.

Among the listed entities, Tata Motors, Tata Steel and Tata Consultancy Services are the three largest in turnover.

Analysts said the toughest assignment for Mistry would perhaps be Tata Steel, which posted a consolidated loss of nearly Rs 364 crore in the second quarter of the current fiscal.

Weaknesses in the European markets have badly hit Tata Steel Europe, formerly Corus Group Plc, which was acquired by the group in 2007. Last month, Tata Steel announced that it was cutting 900 jobs in the UK as part of its drive to cut costs.

“While its domestic operations are doing well, the task is cut out for Mistry with regard to the European operations. It remains to be seen how he will turn around the European operations,” an analyst said.

JLR buy

Another key acquisition for the group was in 2008 when Jaguar Land Rover came into Tata Motors’ fold.

However, the acquisition has paid rich dividends. Auto analysts said it was the domestic slowdown that had hurt the company.

Small car Nano has not been able to fully realise its potential. Tata Motors has also seen its rival Mahindra & Mahindra overtaking it to occupy the third slot in the middle of this year.

At its annual general meeting in August, Ratan Tata said he was “shamed” and “saddened” that M&M had overtaken the company. Though Tata Motors later managed to reclaim the third spot, analysts said the steps taken by Mistry to consolidate and strengthen its position would be watched.

Star performer

On the other hand, Tata Consultancy Services (TCS) has been one of the star performers in the group and is now considered the IT bellwether. TCS, however, is confronting a global slowdown, where discretionary spending has remained tight.

“TCS has been successful in maintaining good margins even in a tough environment, but the challenge will be how it copes with the commoditisation of bread-and-butter business such as application development and maintainence and the tight spending,’’ avers Ankita Somani, analyst at Angel Broking.

 
 
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