Tata hiring bankers to help sell units

Bloomberg

Nearly six months after his turbulent elevation to run India’s biggest
conglomerate, Natarajan Chandrasekaran is assembling a team of dealmakers to refocus some of the group’s biggest businesses, expand its financial services and consumer businesses and sell or merge dozens of smaller units, according to interviews with senior executives.
As many as one-third of the group’s 100-plus units could go as Chandrasekaran and his team try to balance the need to prune unprofitable businesses at the 149-year-old group with the Tata family legacy of social responsibility, according to officials who asked not to be named because the negotiations are private.
Chandra, as the 54-year-old chairman is called by his colleagues, has set his primary task to bring more focus to a conglomerate that assembles buses in Africa, serves kebabs at London’s ritzy Bombay Brasserie and sells cheap bags of salt in Indian supermarkets among much else. There are plans to merge consumer and retail businesses, bring infrastructure firms under one umbrella, club defense units together and combine technology firms, according to the people.
“Chandrasekaran is hoping to increase the efficiency of the conglomerate and exit from businesses which don’t fit the group’s priorities or don’t have the ability to scale,” said Harish H. V., partner at consultancy firm Grant Thornton India LLP.
“He is trying to simplify the complex conglomerate business structures, many of which were created in another era due to licensing and other regulatory reasons or the need to form joint ventures.”
A Tata Group spokesman said the company does not comment on such matters.
The six largest listed Tata companies account for about 90 percent of the group’s market capitalisation and total revenue, according to data compiled by Bloomberg.
To help broker the reorganisation, Tata Sons Ltd. in May hired former investment banker Saurabh Agrawal as chief financial officer, filling a role that had been vacant for five years. Agrawal was a key lieutenant of Kumar Mangalam Birla and helped the billionaire merge Grasim Industries Ltd. with Aditya Birla Nuvo Ltd. into a $9 billion industrial group, and IdeaCellular Ltd. with Vodafone Group’s local unit to create India’s largest wireless carrier. Shuva Mandal was picked to be the group’s legal counsel the same month.
Chandra also hired Ankur Verma, who was Bank of America Corp.’s head of India for deals in technology, media, telecommunications, oil and gas, and Nipun Aggarwal who specialises in metals and mining deals. More hirings from banks are expected, the executives said.
Chandra’s priority of restructuring Tata “is evident from the fact that the first set of core team members have come from investment banking and legal background,” Harish said.
The marathon-running chairman’s focus is on repairing the group’s balance sheet, in line with his fitness-before-performance mantra. He has asked top executives across companies to focus on profit and cash reserves, not EBITDA, a measure that doesn’t include interest payments on loans and other costs.
Total debt for 25 of Tata’s listed companies had swelled to $38 billion as of March 2017, compared to 1.75 trillion rupees when Cyrus Mistry took over as chairman from Ratan Tata in December 2012.
That doesn’t include about 350 billion rupees of debt at unlisted and unprofitable Tata Teleservices Ltd., which is high on Chandra’s list of urgent fixes.