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Tasks ahead for Tata group's new boss

Tuesday, 21 February 2017
NT Bureau / Agencies

Chennai: After experiencing bitter months, the Tata Group will begin a new innings under the leadership of N Chandrasekaran, who was chosen to steer the group after sudden removal of Cyrus Mistry from the top position.

Chandrasekaran (53), who was the CEO and managing director of Tata Consultancy Services (TCS) would be the first non-Parsi chairman of the 148-year-old Tata group.

He takes over as chairman of Tata Sons, leaving behind a successful legacy at TCS. The Group Executive Council (GEC), which was operated under former chairman Cyrus Mistry , has been disambiguated. Chandra as he is popularily known, should bring a new strategy for the future of the group.

We can expect some decisions on many things as Tata Steel Ltd, Tata Power Co. Ltd, Tata Chemicals Ltd, Indian Hotels Co. Ltd and Tata Teleservices Ltd are all in trouble, earning sub-par returns or making losses. Tata Motors also reported a 96 per cent decline in quarterly profit.

Excluding TCS and the Jaguar and Land Rover operations of Tata Motors, the group reported a net loss of Rs 160.7 crore. The Tata group's growing pile of debt was one of the key reasons for Mistry's ouster. He tried addressing it by shedding assets, which didn't go down well with the board and the Trusts.

Chandrasekaran is likely to address the issue by allocating more capital to debt-ridden, underperforming businesses. The TCS buyback is an indication of the direction the new chairman will adopt. TCS has also appointed V Ramakrishnan as Chief Financial Officer. He succeeds Rajesh Gopinathan, who will take over as the CEO and MD of the Tata Group company tomorrow.

"The Board of Directors at its meeting held on 20 February appointed V Ramakrishnan as the Chief Financial Officer of the company with effect from 21 February ," the Mumbai-headquartered company said. Ramakrishnan joined TCS Finance in 1999, and served as the Finance Head of TCS North America for seven years.

"Ramakrishnan closely partnered with business in the rapid growth of TCS operations in the region. Most recently, he has been responsible for the fi nancial controllership of TCS subsidiaries and branches globally and various merger and acquisitions integration initiatives,' it said. Gopinathan will take over the reins of the USD 16.5 billion- company from N Chandrasekaran, who has been appointed as the Chairman of Tata Sons.

FIRST IN THE LIST

Chandrasekaran's first task would be to repair the damage caused to the Tata brand. Tighter H-1B visa rules and a $940-million lawsuit concerning US-based e medical records vendor adds to concerns at TCS. Another big task will be to reduce dependence on TCS and Tata Motors and to increase revenues from other businesses.

BIG BUYBACK PLANS

Tata Consultancy Services Ltd (TCS) has announced Rs 16,000 crore share buyback which is the biggest in the Indian capital market, as it looks to return surplus cash to shareholders. The decision comes at a time when India's largest software services provider is under pressure of losing revenue from its clients in the US, which accounts for 65 per cent of of the USD 155 billion industry, under President Donald Trump's protectionist measures.

TCS said in a stock exchange filing that its board approved buyback of up to 5.61 crore shares, or 2.85 per cent of its share capital, at Rs 2,850 apiece. The share buyback, if successful, will be India's biggest, surpassing Reliance Industries' 2012 share repurchase of Rs 10,400 crore.

"TCS Board of Directors has approved a proposal to buyback up to 5.61 crore equity shares of the company for an aggregate amount not exceeding Rs 16,000 crore," the company said in the filing. The board meeting is the last for N Chandrasekaran as TCS chief executive before he takes over as chairman of parent Tata Sons Ltd, which controls 73.3 per cent of the software developer. TCS has a cash pile of Rs 43,169 crore, which is nearly 10 per cent of the company's market capitalisation.

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