The Telegraph
Since 1st March, 1999
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Tata axe hangs on many subsidiaries

Calcutta, Sept. 12: The Tata group has decided to reduce the number of companies within its fold in order to consolidate and strengthen its core businesses.

Confirming the move, group director J.J. Irani said several subsidiaries do not add value to the group’s overall strategies.

“A guideline has been prepared for the group companies to look into the performance of their subsidiaries and restructure them where it is necessary,” Irani said.

Too many subsidiaries, he said, always create confusion and administrative problems. Hence, it is necessary to get rid of the excess baggage to streamline the entire operations, he said.

The group has three broad options before it—merger with the parent company, sale and closure—to reduce the number of companies.

“There are some companies which cannot be revived. We need to close them down after settling the dues with the workers and institutions. But in some subsidiaries, we need strategic partners while some of the subsidiaries can be merged with the respective parent companies,” Irani said.

All major group companies have been asked to identify their non-performing subsidiaries and restructure them according to the guidelines.

“In three to five years, the Tatas will emerge slicker and stronger and focused on core areas,” he said.

Irani also explained that the subsidiaries were born because of certain government regulations which are not relevant today. “The situation has changed now and what was imperative in the sixties and seventies no longer exists,” he said. The Tata group is now focussing on the emerging opportunities in the telecom sector.

“We are present in almost every facet of the telecom industry which has enormous potential. Our effort is to consolidate our operations in this sector,” he said.

Asked if Videsh Sanchar Nigam Ltd (VSNL) will be merged with Tata Teleservices, he said the possibility cannot be ruled out. “But as of now, there is no concrete decision on this issue.”

Tata Strategic Management Group has been appointed to undertake a detailed study and make recommendations on how the group should move ahead with its telecom mission. This apart, the group has also set up a high-powered committee comprising the top brass of its various telecom companies to take a look into operational integration.

“Although we currently have several companies dealing with telecom, some level of operational integration has already taken place. And we need to have further integration in due course of time,” he added. The Tatas, he noted, will have a strong presence across the telecom industry, be it international or national long distance telephony or basic telephony or cellular. “We will have all telecom solutions with us,” he said.

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