 "Earn right to grow, Mistry tells firms")
In the interview to the group’s internal communication website, Tata.com, Mistry said the group was focused on enabling individual companies to “earn this right by building strong operational cash flows and looking at their capital structures.”
The group would be supporting the growth focus with required capital expenditure investments. In the last three years, it had invested $28 billion and about $79 billion over the last decade. “It was clear to me relatively early that one needed to confront the challenging situations facing some of our businesses, and ultimately this would entail hard decisions on pruning the portfolio,” said Mistry.
Highlighting the need for organisational speed and agility and an openness to change, he said organisational agility is crucially important in the context of turbulent environment. “We have organisations which have strong hierarchical structures and processes that actually mirror the structures. If we are not agile, I think we will be left behind,” Mistry said. “My approach is to ensure that we have a deeper understanding of the structural drivers for every stressed business and our presence in that context.
“We would then evaluate the leadership, strategy and operations of each business before we take any decision to exit,” he said in the interview, emphasising compassion for the employees.
The Tata group added value to its portfolio companies by nurturing them through greater synergies and helping them optimise their long-term performance, he said. The sharing of best practices was an example where platforms were created for the synergistic benefit of diverse businesses.
From a portfolio perspective, the group could take decisions with long-time horizons for value creation. This allowed, he said, the incubation of next-generation businesses with long gestation periods.
“We will try and balance our portfolio to ensure that at an aggregate level we are more insulated from business cycles. We will continue to invest in our strong business-to-business enterprises, where we have powerful drivers for long-term value creation. It is not necessary for all our companies to be global leaders, but they should aspire to be leaders in the markets they define for themselves,” he said.
The Tata group is looking at opportunities with a global landscape in mind as its international revenues are approximately 70 per cent of $103-billion turnover, said the chairman.
Mistry also said the strategy at the group level was to get closer to consumers and anticipate their needs.
“We are building a customer centri-city [sic] as a cultural pillar at Tata group of companies. We are not afraid of taking tough decisions for the right reasons,” he added.
The group is developing three companies in the digital space — Tata CLiQ, Tata iQ, Tata Digital Health.