Mumbai: Tata Sons, the tea to chemicals conglomerate, with over 100 companies under its umbrella, is eying big structural changes. The USD 104 billion group has revealed it is putting all companies in only ten verticals, according to a report in The Economic Times.
The move is aimed at avoiding “overlap” of many businesses in several markets and enabling “smooth functioning” of the group companies, the report added.
How will it impact the group?
The big change comes close on the heels of Jaguar Land Rover (JLR), Tata Motors’ UK based subsidiary, reporting an asset impairment charge of USD 4.07 billion. Tata Motors is Tata Sons automobile unit. An impairment of an asset is depreciation in market price of the asset as compared to the value in company’s balance sheet.
The company hopes it will manage to cut costs drastically and at the same time will be able to synergise companies’ operations. Representatives from Tata Sons, the holding company, will take charge of their respective units and will report to N Chandrasekaran, Tata Sons chairman. According to the report, consumer, trading, IT and investment will be among the ten verticals.
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It must be noted that business like Tata Global Beverages, Titan, Voltas and Croma are listed on the bourses whereas many other companies are not listed. Tata Sons the holding company is also not listed on the stock market.
Changed structure
After the change, the conglomerate will merge its hotels and airline businesses under ‘travels and tourism’ vertical, which will have in its kitty Indian Hotels and Vistara and AirAsia. Similarly, Tata Consultancy Services and Tata Elxsi will come under the ‘IT vertical’. Tata Capital, Tata AIA Life, Tata Asset Management and Tata AIG will come under ‘financial services’ vertical, according to the report.
Is listing on card?
A report on Bloomberg says this is the right time the holding company Tata Sons had gone public. “Had holding company Tata Sons been a publicly traded firm, it could have raised equity relatively easily to help tide JLR over,” the report said. JLR is burning a cash of USD 880 million on electric vehicles segment every quarter, which has influenced the luxury maker’s asset impairment charge.
According to the report the group company is eyeing a stake sale JLR to take the UK based luxury car maker out of troubled waters. The report also backs raising funds from market for rescuing JLR instead of selling stake in it. However, there was no word from the group on this, either in negative or in positive.
