Undoing what the current Tata leadership has done is neither easy. Nor fully reversible. The workaround has to be done quickly. And effectively. Removing anyone is easy. Implementing a strategy is also easy. What is not easy is figuring out what to do. And when ?!!
The verticals that Tata operates in are Technology, Steel, Automotive, Consumer, Infrastructure, Financial services, Defence, Tourism, Telecom, Trading, Investments. Except for technology and tourism, they are not a leader even in India in any of them. And there too, they operate in only one vertical – IT services and Hotels.
They don’t even consider Health, Energy, Space, Oil & gas to be part of what they do or want to do. This is a major mistake because there are several slots in these areas where there are no established leaders. And Tata can step in. But let’s leave that aside and look at what they have.
Company
Tata Consultancy Services (71.7%) hopefully worth Rs 10 lac crores. Tata Motors (40.2%) worth say Rs 1 lac crore. Titan Company (20.8%) worth Rs 0.7 lac crores. Tata Steel (31.8%) worth Rs 0.5 lac crores. Trent (32.5%) worth Rs 0.5 lac crores. Tata Power (45.2%) worth Rs 0.5 lac crores. Indian Hotels Company (35.7%) worth Rs 0.3 lac crores. Tata Consumer Products (28.7%) worth Rs 0.3 lac crores. Voltas (26.6%) worth Rs 0.05 lac crores. Tata Chemicals (31.9%) worth Rs 0.03 lac crores. Tata Communications (14.1%) worth Rs 0.03 lac crores. Tata Elxsi (42.2%) worth Rs 0.03 lac crores. Tata Investment Corporation (68.5%) worth Rs 0.02 lac crores etc.
Recent reports suggest cumulative investments by Tata Sons in some unlisted ventures are approximately: Tata Digital: ~₹22,900 crore; Air India: ~₹22,600 crore; Tata Electronics: ~₹7,000 crore; Tata Realty & Infrastructure: ~₹5,400 crore
Here again Tatas are not the leaders in anything. In financial services, telecom, trading and investments – one can at best call them a fringe player.
The combined effect of climate change, trustless systems, autonomous systems, human longevity and emerging frontier technologies like agi threaten all they have. And with time, the threat and its impact on valuation will get worse.
The answer is not to become the worlds largest contract manufacturer for Apple. Especially when Apple itself may become a victim of ai, cyber defence, regulatory action and business model obsolescence. Sure it will take a while to die – but in the end everyone dies. Latching onto a dying star is hardly wise.
The only answer is innovation and global leadership in a fast growing area. And ai is not the only such area. There are others. From battery manufacturing to cutting edge health interventions to high value categories like food. iTC has shown how to implement a pivot – and then ride boom sectors.
Nothing is achieved by having 323 subsidiaries under Tata Sons.
They have to choose 4 or 5 new areas and do the hard work of innovation. There is no short cut or partnership option that will solve it.
