N. Chandrasekaran: I want to simplify Tata Group

Interview/ N. Chandrasekaran, chairman, Tata Sons

50-n-chandrasekaran N. Chandrasekaran | Sanjoy Ghosh

Natarajan Chandrasekaran has been at the helm of India’s largest business group for more than a year now. In an exclusive interview with THE WEEK, he speaks on a variety of topics—from the efforts of consolidation in the group and its history and heritage to his growing-up years in his village and his fitness regimen. Excerpts:

We have a strong plan to create a digital overlay on every business, whether it is steel or auto. That work is going on. We are creating all the ecosystems that are required.
There are three big companies which are on their own—auto, steel and IT. Then we need to have one consumer retail, one financial services, one infrastructure and probably one tourism and one telecom.

It has been more than a year since you became chairman of Tata Sons. How would you describe your journey?

It is a very overwhelming experience and it is a mammoth responsibility. And I don’t mean it in terms of the business, but in terms of the heritage of the group, the people who have been chairmen before and what they have done. Expectations are high. People have a huge amount of trust in the brand. Also people expect that we will always do more and more. That is a positive sign. And that gives enormous amount of power in a way because people are behind you, people want you to succeed. People feel [they are] part of the brand, part of the organisation, whether they work for you or don’t work for you. Actually everyone thinks that it is their company. It is a positive thinking.

In any role, you will have things you like, and things you don’t like. Things which will pleasantly surprise you, and things which will [make you] say ‘Oh my God!’ It is true in any new experience. Even if you visit a place, you say ‘I never realised this was so beautiful’. But I knew when I came here that there were a few things which I needed to address, a few things which I needed to leverage and a few things I just did not have to look at. I kind of quickly compartmentalised. I felt that I needed to put a strong team at Tata Sons. So I focused on that. And, wherever in the operating companies I needed talent, I needed leadership talent, I needed to make changes, I went ahead with that. So talent is one big thing.

The group has a lot of power, but I needed to fix the negative things in terms of balance sheets. I needed to get all the balance sheets to be great. See, leverage always pulls you down. It is like when you run a race you want to run fast. But you can run fast only if you are fit. So a company can produce a good profit and P&L (profit and loss statement) only if the balance sheet is strong. If balance sheet is weak, P&L will never be strong. So I wanted to fix the balance sheet. Tata Teleservices was losing money on a monthly basis, and there was no way they could have revived. If we wanted to revive it, I should be willing to put another $10 million into the business; fresh amount of capital. And, all of it was equity because the debt was already very high. It had a huge amount of debt. Rs 34,000 crore of debt and Rs 9,000 crore of spectrum liability. Already Rs 42,000-43,000 crore. On top of that we had DoCoMo payment of Rs 8,000-9,000 crore. A huge amount of outflow. So it was an easy call. We were not going to put another $10 million into the business because if we put that, we needed to build a 4G network and everything else. So I set a deadline internally to go after that. Either we find a solution in three months, a forward-looking solution, or we were going down.

Deep roots: Chandrasekaran at Mohanur village in Tamil Nadu, where he grew up | Bhanu Prakash Chandra Deep roots: Chandrasekaran at Mohanur village in Tamil Nadu, where he grew up | Bhanu Prakash Chandra

From a Tata Steel perspective, it was tough because the European debt was very high. Putting money every year to the tune of Rs 5,000 crore to support that business and paying interest on the debt. So we took a call. We got a right deal with Thyssenkrupp; it satisfied financially and also from a brand perspective. We did not want to be seen as throwing in the towel. So we wanted to make a one-year commitment. We had commitments with employees, unions, so on and so forth. We wanted to make sure that they stay on board. We wanted the construct to work.

I felt Tata Motors was losing domestic market share. So focus was in terms of market. I think it is coming up very well.

Then we wanted to simplify the group. How do you rally the troops so it can offer this simplified synergies and scale? The whole group spends revenues of about $107-108 billion. We make about $4.5 billion profit. The spend is more than $100 billion across all the lines; whether it is a top line, tax line, doesn’t matter. If I take 1 per cent efficiency it is $1 billion. $2 billion, $3 billion, $4 billion, $5 billion, I don’t know what I will do. But I think I have some target in mind. Simplification is key for that. Simplification has multiple dimensions. You live in a house for 15 years and after that you have to move house, you will have to simplify because you don’t take everything. That is the only time you will re-look at everything.

The heritage and history always add to the complexity. That is the law of nature. Since I am coming in new, I have a fresh pair of eyes. I feel, before I get used to the system, I need to simplify. So we are looking at simplification from structure, number of companies, talent, processes, hierarchies, every which way you look at it. If we simplify, it will increase agility. At Tata Group there are 4-5 core things; integrity, trust, care, society, philanthropy, care for people. But at the same time we have to be agile. People may get upset when I say this, but people outside will always say Tata Group looks royal. It is a fact of life. We have to accept that. People get a little bit rattled, when I say that. But I think we need to fix that. And that will get fixed the moment you simplify and energise and empower people. So I am very keen on that.

People close to you talk about your confidence and how grounded you are. They say you are not a person who takes shortcuts. How do you get these attributes? Were you born with it? You learnt in the course of time?

I don’t know.

Actually this was said by your brother and your classmates.

I really don’t know. I did not expect to be here. I did not expect to be at the helm of TCS. I am a person who enjoys and who lives the moment. I can’t recall any time in my life where I have thought about ‘I have done that, I should have done this’. So I always try to maximise. And I want clarity. I see a little bit into the future. I see the art of possible and then I work my way out. I just like to see where it can get. I like to always see how big it can be. How much fun it can be. But I don’t really break it down too much. I can see the work can go very, very fast, so we should be careful. We should work our way and kind of build it up.

How does fitness play a role in how you function and work?

Most important, most important. If you are not fit you simply cannot put in—I won’t say hours—the effort that is required. Because your level of concentration, attentiveness, patience, perseverance, everything is affected. I can tell you I was a very impatient guy in the early days. I have become a lot more patient today only because of running. There is no other way. I have become a lot more patient, more observant. If you want to be as attentive at 7:30 in the evening as you are in the morning you need to be fit, always moving.

What all do you do?

Yes, run and strength, I mix it up. And I don’t miss any day. If someday I don’t feel [up to it] in the morning, then in the evening I will squeeze it in.

How do you keep links with Namakkal?

I grew up there in a village called Mohanur. I enjoyed that upbringing. My parents were fantastic. All the core values come from parents. Both of them worked very hard and were very grounded. Teachers were fantastic. I still remember my maths teacher, science teacher, I still remember the equation on the board. I still remember the exact math class, 9th standard, 10th standard, where I was sitting, everything was just absolutely green. Whether it is calculus, whether it is physics, my history teacher, everything. I even remember my answer sheets. They were so good. I don’t remember the same about my college days. So I believe my roots go back because I lived there only. I never travelled anywhere. I used to walk to school, come back, play all the games. The school had a huge ground, we had three football grounds, two basketball courts and a cricket ground, a softball ground, two volleyball courts.

What have you learned from Ratan Tata?

See, you learn from everybody. And learning does not happen consciously. From Mr Tata, I think, the greatest thing you can learn is his humility. He is extremely humble with everybody. It is very hard to be.

You think alike on most things, I am sure.

No. To be very frank, when I was in TCS I did not have much opportunity to work with him because he was my chairman. We went public in 2004. Since then till his retirement, every board meeting I used to attend. I used to interact with him along with Ram (S. Ramadorai) during those 7-8 years. We went and explained the team and then he wanted to know something. And you want to run it past him, and he would ask, ‘Do you want to do this?’ He always left it to the team.

You have always delivered outstanding results and consistent quality at TCS. You have taken giant leaps overseas. You have had a lot of balls in the air at the same time. How did you manage to juggle all of these?

I had a lot of people. Good people handling all of that. I had a great team. Still have a great team there. And I think we had a process. We met two days a month where we criticised everything, all of us together every time. Some people reached out to me every day, some people reached out to me once a week. But the point is, I had a very reliable team. First I created the bandwidth and then I started the initiatives. See, it is like keeping wickets. Let’s say you are in the nets keeping wickets. One guy is batting, 10 people will be bowling. Every time you catch a ball, you have to give it to somebody, otherwise next ball will not come. You can’t hold a ball. You need to immediately pass it on. You want to have people to pass it on. How do you do it? I think it is just so critical that whatever you want to do, you need to know what is the bandwidth. For that bandwidth you have to create the talent. And that is aligned first and then talented. Talented and not aligned is dangerous. This is what is direction and velocity. First you have to attack the direction. Then you can increase the velocity. Increase the velocity and you are lost with direction, you are finished.

The H-1B visa situation in the US—how is TCS handling it?

Regulations and changes to regulations are a way of life. It has been a way of life ever since I started running the business. It is a cost of doing business. You just have to see what the change is and adapt to it. I don’t read too much into this.

There is so much talk about Tata Group trimming down segments and narrowing them down. Can you throw light on what plans are afoot?

We are a listed company, we have regulations. We can have ideas but everything has to go through the process. So I can’t talk too much about it. But there are ideas, some come from us, some come from outside. There are three big companies which are on their own—auto, steel and IT. Then we need to have one consumer retail, one financial services, one infrastructure and probably one tourism and one telecom. That is what we are left with. So we have got to see how to optimise.

The market is also rife with rumours about you entering the dairy space.

When we look at the consumer portfolio, we have to narrow down. So there are lots of possibilities. It is not only dairy. Dairy is one. There are many possibilities. There is a huge opportunity in the consumer space, retail space, financial services space with a digital physical interlink. So we should look at the group as consumer, retail and financial services all with a digital physical linkage. We have a big play. How we will attack it, what sequence, time will tell. But we are playing all this in a big way.

What is being planned to increase the revenue systems of the digital businesses and analytics?

We have a strong plan to create a digital overlay on every business, whether it is steel or auto. So that work is going on. We are creating all the ecosystems that are required. Second one is the entire consumer segment—how will it play a digital physical interface? It will also create new digital platforms. So you should see our digital play in 2-3 dimensions, actually four dimensions. One dimension is the B2B companies—what does it mean? Second one is, what does it mean for digital physical interface in a consumer space. Digital distribution, for example, and omni channel. Many things that can be done. All that will happen in the consumer space. Third space is, we will create new platforms and we are discussing that. The fourth space is, how will we use digital in the social sector, either for profit or non-profit, whether it is health care, whether it is creating jobs? We are working on all the four dimensions.

What is Tata Group’s strategy in an era of artificial intelligence and digital revolution? Is it going to affect the employees?

I don’t think so. It will empower employees.

People say that it is going to replace jobs.

I believe that the whole digital, artificial intelligence in India context will create new jobs and will significantly enhance the productivity and capability of the existing employees.

There was some talk of Tata being interested in Air India. Have you given up on that for good?

I have been around long enough not to give definitive answers to any questions. Never say never. I think it didn’t make sense for us so we did not bid. You have to be careful in all these things. Nobody knows the future. I did not expect to be here.

We have been reading so much about the Nano being on a little bit of a rocky terrain.

I cannot understand why there is so much discussion about one car. It is unbelievable, the amount of coverage. To my mind Nano is the most brilliant thing that could have happened because it showed the art of possible. It kind of pushed everyone. Whether it is a commercial success or not, it is an innovation success. It created a shift in the mindset of people. There are a lot of positives to take out from that. And I am not close enough to Nano or to the auto business or the time it occurred to tell you why it was successful or why it is not a success. We can do a study. But every product has its cycle. And many companies at some point in time decide to either go with the next cycle investment or not. For example, in 2019-20 all the emission standard upgrades happen. So at that time Tata Motors had to take a call. It is purely a business call that Tata Motors team had to take. How much is the additional investment we have to make? In order of that, we make the decision. I don’t know if that answers your question.

I just wanted to know about the future of Tata Motors.

Actually I have seen all these news reports. But we are looking at every portfolio. Tata Motors, as I said, is in a huge transformation programme when it comes to both commercial vehicles and in the personal products. And so they are coming up with new models. Some models will continue and some models will go in the e-way route, some models will not go. So all these things will be pure business calls. Somehow people like to write only on that.

You have always had your finger on the pulse of the evolving technology and have taken steps to enter newer areas like aerospace and defence. How easy or difficult has it been for Tata, as a new entrant, standing side by side with big players in the market?

All this was done before me. Mr Tata had taken a lot of interest. I have worked with Boeing, I have worked with Airbus, I have worked with other players like Bombardier and many other players in my earlier job, providing engineering, technology or IT services to all of them. So I have some background to all these industries. But I think it is a huge opportunity but it is long term. So we can’t move the needle in a year. But I think it is something which is required for India. So we are building capabilities. We already have a team with a lot of capabilities. We need to build more capabilities in order to become much more self-reliant. So we have a long way to go. I think more partnerships will be required. [We need to] consolidate everything. So our ability to take a strategic view of every sector within the defence and aerospace becomes a lot stronger.

Tata is one of the largest employers of women. How do you ensure they are empowered?

I think there is a long way to go. I think the group has always supported women. I think from Jamsetji’s days, they created the first crèche and so on. But I think still a lot more needs to be done to empower women. Even we do not have the right mix at the leadership level across group companies. A lot more needs to be done in terms of focus on leadership development and team opportunities. I think the best way to do this is empowerment and really, really try to look for diverse talent and empower women and promote. I feel there are a lot of talented women out there. Some of them are on the fence because they are not sure if they can commit in terms of time. You need to encourage them. Some people are not on the fence and they are ready for opportunities. I think we need to consciously drive them. Many other things can be done but I think the core is this. I don’t think people need unfair help. People need a fair chance.

What is your message on the 150th year of Tata Group?

First of all, we are grateful and thankful for the enormous support we get in India and outside. I think Tatas have demonstrated and lived by a set of principles which are remarkable principles. Whether it is doing the right things, we call it ethics, we call it integrity, we call it trust. But doing the right thing in business, in every walk of life, in business, in society, with shareholders, with employees, with customers, whether it is with excellence in quality of service, quality of product, that is the focus. I think our job is to keep pushing the envelope and set new benchmarks. And today they call it responsible capitalism. Tata demonstrated it before the term was formed. Economic growth, value creation and purpose in terms of social good all came hand in hand. And that is what we do.

Could you please throw some light on the Tata-Mistry saga.

I will read [about it] in your magazine.