N Chandrasekaran has earned second term as Chairman of Tata Sons. His appointment echoes the statement of trust which he carries as a leader and recognition of his leadership capabilities by the Tata Sons. Chandrasekaran was given the first term in Feb 2017 which is scheduled to end later in Feb 2022. His re-appointment will result in continuation & predictability of strategy and implementation of ideas, for navigating the $103 billion conglomerate.
His appointment matters not just for the Tata Group but also for the Indian Economy as well. India has a vision to be $5 Trillion economy and Tata Group will have to play an eminent and defining role for developing the future businesses like EV’s, Digital, Semiconductor, Defence etc. Chandrasekaran is expected not only to maximize value for Tata Group Stakeholders but support India in building niche in new businesses and play its part in making India a powerful economy.
Chandrasekaran has a proven track record for navigating the group during crises. In 2018 he decided to invest in increasing the capacities of Tata Steel through acquisition of Bankrupt Bhushan Steel, which added capacities of 5.6 MnTPA and by further acquiring Usha Martin steel business. The move was significant as prospects for Steel business was not as buoyance as it is today.
Under his leadership Tata Steel has become the second most profitable of the firm. During the Nine month ended Tata Steel has posted PBT above RS 30,000 Crore, little short of Nine Month PBT of TCS, Rs 37000. If the commodity momentum continues and steel prices does not soften. Tata Steel will soon surpass the profitability of TCS. Chandrasekaran wrote the cheques in tough time for Tata Steel, which are paying now and will set the foundation for future growth of group as a whole.
| Company | Revenue/PBT | FY | A | B | C | Total (A+B+C) |
|---|---|---|---|---|---|---|
| FY 2020-21 | 21-Jun | 21-Sep | 21-Dec | 9 Months Ending Dec 2022 | ||
| TCS | Revenue | 141363 | 38478 | 41839 | 43070 | 123387 |
| PBT | 40902 | 11020 | 13198 | 12879 | 37097 | |
| PBT/Revenue | 29% | 30% | ||||
| Tata Steel | Revenue | 65507 | 21063 | 32964 | 32244 | 86271 |
| PBT | 17795 | 8978 | 11600 | 10263 | 30841 | |
| PBT/Revenue | 27% | 36% |
Along with former TCS Chairman Mr Ramadorai, whom Mr Chandrasekaran regards as a mentor, Chandrasekaran is one of the chief architects in positioning TCS as one of the top three most valuable IT sector brands Globally. TCS under his guidance and leadership has become first Indian IT company, which has achieved the $100-billion market capitalisation landmark.
In the second tenure, Mr Chandrasekaran will have the responsibility for building Digital as well as Healthcare business. One of his priorities will be to build the platform of TataNeu under Digital Business vertical, focussing on the needs of the consumers. TataNeu app will be the next level of growth for the group and involve creating synergies by bringing existing business on one platform. Digital Platform will create a more vibrant interface for the existing consumer business by providing solutions of everyday customer needs e.g. grocery, electronics, holidays, flights and will bring Tata CLiQ, IHCL, bigbasket, Croma etc under common digital umbrella.
In 2021 under Chandrasekaran’s leadership Tata Digital acquired majority stake in BigBasket for building deeper capabilities in Food & Grocery segment. It invested US$75 million in CureFit. Indian fitness and wellness market is growing around 20% annually, expecting to reach $12 bn by 2025. Further acquisition of 1MG Technologies will help the group in distributing wide range of medicines, health & wellness products, diagnostics services & teleconsultation services to large number of customers. Due to continually increasing health awareness among consumers, overall market of $1bn related to 1 MG product is expected to grow at 50% CAGR and acquisition of 1 MG will help Tata Group’s Health Care ambitions for addressing the consumer needs in this segment. During the second term Chandrasekaran will be expected to justify the economics of the pillar which he has constructed during his previous terms. He will have the responsibility for putting Tata Group on health care map as a formidable player.
Scaling up the groups Automotive business i.e. Tata Motors and Green Energy Business i.e. Tata Power will be one of the key priorities. Turn around of Air India will be another big priority along with development of verticals focussed on Aerospace & Defence, Financial Services, Infrastructure, Travel and Tourism etc.
Born in 1963 to a modest farming family in the taluk of Mohanur in the Namakkal district of Tamil Nadu, N Chandrasekaransekaran earned his bachelor’s and master’s degrees from Coimbatore Institute of Technology and NIT Tiruchirappalli, respectively. He also attended Indian Institute of Management in Lucknow for studying Management.
Mr. Chandrasekaransekaran joined Tata’s in 1987. He was elevated to the position of CEO & MD of Tata Consultancy Services in 2009 and was further appointed as a director on the board of Tata Sons in 2016. He was named chairman of Tata Sons for the first time in 2017, when the conglomerate was dealing with leadership challenges following the ouster of his predecessor, Cyrus Mistry, by the company’s board.
Second term of Mr Chandrasekaran will be interesting to watch as both the Tata Group as well as Indian economy is at inflection point. Lot of Geopolitical changes are also impacting the market choices. US and European firms are creating alternatives for supply chain dependency away from China. India’s inclusion in Quad has also created opportunities for building supply chain of cutting-edge items e.g., Semiconductor towards friendly Nations.
During his first stint as a Chairman of Tata Group, Mr Chandrasekaran has laid the foundation of Tata Group’s future growth. India is at a sweet spot and so is Tata Group. Mr Chandrasekaran has a unique opportunity, unlike any of his predecessor to create indelible mark in the history of Tata Group, and history of Corporate India. Future belongs to India and Tata Group under the leadership of Mr Chandrasekaran will play a crucial role in making India a powerful future economy.
Author: Vivek Kishore
Vivek is an Entrepreneur and a self learned Finance Enthusiast. He has a deep passion for designs and structures and runs his firms http://www.fineredge.net.
He is reachable at vivek@fineredge.net