The 150-year-old Tata Group is planning to reduce the number of its listed companies from 29 to 15.
It is not just a thought as the group is already working on it. This comes as a plan to make the country’s oldest conglomerate to make it future ready.
Tata will now the focus on investing more on the reduced number of listed companies so that the emerged, bigger entities can be made market ready.
Tata Steel Merger, Tata Coffee Merger
The Tata Group, in the last week, has announced the consolidation of its steel business by merging seven subsidiaries into Tata Steel.
As per executives who are privy to this development, this has been done in order to better focus on growth and scale and improve cashflows in the larger companies. Tata Sons has a $128 billion revenue and $255 billion market cap.
They also said that a lot of management time and effort that’s put into smaller companies will be reduced in case of reduced companies.
In addition to 29 listed companies, there are as many as five dozen unlisted ones and hundreds of subsidiaries in 10 sectors.
In order to unlock synergies and efficiencies, the merging of the conglomerate under the stewardship of Chandrasekaran is being carried out.
In the month of March, Tata Consumer Products also announced the merger of all businesses of Tata Coffee with itself.
One of the officials said that “The move is long overdue and needless overheads and costs in the system will be eliminated. Several such small entities were created and listed with some specific needs at that point of time. Today, scale and cost optimisation will help efficient deployment of capital and resources”.
Overall Tata Consolidation
In 2018, various businesses in the aerospace and defence were consolidated by Tata Sons into single entity-Tata Aerospace & Defence, post the appointment of Chandrasekaran as Tata Sons chairman.
In the year prior to this, CMC was merged with Tata Consultancy Services.
This leaves Tata group with three major companies in technology – Tata Consultancy, Tata Elxsi and unlisted Tata Digital.
Speaking of the automobile sector, the conglomerate has three listed companies–Tata Motors, Automotive Stampings & Assemblies Ltd, and Automobile Corp. of Goa Ltd.
Whereas the Tata Autocomp Systems is unlisted.
The group plans to bring Tata Projects, Tata Consulting Engineers, Tata Realty and Infrastructure, and Tata Housing under a single umbrella in order to create a larger infrastructure vertical.
When it comes to the airlines, by 2024 the group plans to consolidate AirAsia India, Vistara and newly acquired Air India under the Air India brand.
One of the top executives said that “The group is also betting on new areas of growth and future businesses, and efficient capital allocation is imperative to build large competitive companies”.
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