Tata Sons CFO Saurabh Agrawal: From little work to a lot on his plate

Investment bankers say he would have to fix Tata's telecom loss of Rs 4,612 cr for 2016-17

As Saurabh Agrawal, 48, gets ready to join Tata Sons as its CFO from July, he would hardly have any breathing time. Several of the Tata group companies, particularly power and telecom, are in crisis and would need handholding to put their finances back on track. Tata insiders say though the former investment banking head of DSP Merrill Lynch has not been inducted on the Tata Sons board as yet, it would hardly matter as he has an excellent rapport with Tata Sons Chairman N Chandrasekaran. 

This is the first time a Group CFO position has been created. Old Tata hand Ishaat Hussain was the finance director of the group before he retired from executive functions in 2012. Hussain, who is now a non-executive member of the Tata Sons board, steps down later this year after turning 70. 

Agrawal’s hands will surely be full. Take for example, Tata Teleservices, the group’s telecom company, has reported a massive loss of Rs 4,612 crore for 2016-17 and its net worth has been wiped off by a staggering Rs 11,652 crore. If Tata were to exit this business via fire sale or shut down, the cost would still be $ 4-5 billion.  And this would be in addition to the $1.2 billion paid by Tata Sons to NTT DoCoMo to buy back the latter’s shares.

Investment bankers say among his first priorities would be to sort out the telecom mess. The industry’s earnings are under an unprecedented squeeze, thanks to Reliance Jio’s inexpensive data tariff and free voice calls. To revive the company in this scenario looks difficult. It will be interesting to see how Agrawal chooses to cut the  telecom losses.

The financial services business of the group also needs mentoring. The bad loans of  Tata Motors Finance are reported  to have touched Rs 4,000 crore as the company extended credit with lax risk assessment. Tata Capital also requires significant clean up on account of bad loans to the infrastructure sector.

These are not easy problems and will require Agrawal, a graduate from IIT Roorkee and post-graduate from IIM Calcutta, to think really out of the box. Expectations are huge. “He brings deep capital markets knowledge and valuable cross-industry experience to this critical leadership role in the Tata group,” Tata Sons Chairman N Chandrasekaran said in a statement. “His expertise will help us in driving rigour and synergy in capital allocation decisions, investment management as well as consolidation and optimisation of the group’s business portfolio.”

Starting his career in 1995, Agrawal cut his teeth in both strategy and execution, covering a wide range of industries, including telecom, where he handled the sale of Spice Telecom to Idea Cellular as a banker with DSP Merrill Lynch.  Agrawal, who was heading the investment banking team, has taken many challenges and managed to strike many key transactions, says Hemendra Kothari, founder of DSP Merrill Lynch and Agrawal’s former boss.

“Both Chandra and Agrawal, at Merrill, have worked together on the TCS initial public offer and helped TCS in making acquisitions. Both are well-known to each other and put in 16 to 17 hours of work in a day. The Tata group has some known challenges and I hope Agrawal and his team will be able to meet these challenges well,” Kothari said. Agrawal will have to create a team and seek opportunities for takeover for the Tata group apart from selling assets, as and when needed, Kothari added.

Agrawal was reportedly part of the team that blew the whistle on Satyam founder Ramalinga Raju, who in 2009 had appointed DSP Merrill Lynch to find buyers for Satyam. 

Agrawal has also worked as head of corporate finance unit at Standard Chartered Bank in India and South Asia. He joins Tata Sons from the Aditya Birla group where, according to insiders, his mandate of consolidating Birla group companies was coming to an end. “Agrawal helped in the mega merger of Grasim and Aditya Birla Nuvo and successfully concluded talks on the Idea-Vodafone merger that will create India’s number one mobile phone network. From here, the legal team will take over the formalities,” says a Birla insider.