Tata Group companies should go beyond achieving zero net debt, says N Chandrasekaran

Debt reduction is increasingly becoming a focus area for Tata Group Chairman N Chandrasekaran. In the first three quarters of this financial year, the most indebted Tata Group companies -- Tata Steel, Tata Motors and Tata Power -- significantly cut down their liabilities.

Chandrasekaran envisages a sustainable financial environment for each company, and wants them to go beyond achieving zero net debt status. In an exclusive interview with Business Today, he said the companies should work for catering to the changing consumer aspirations, while digitally empowering their ecosystem.

"There are several key trends that are going to be very important as we go into the future. The first one is 'Digital Everywhere'. Every company, whether it is a manufacturer or a services firm, B2B or a B2C, will be driven by artificial intelligence, data analytics, cloud computing and machine learning," he said.

In the last three years, until March 2020, the revenue of Tata Group increased 15 per cent to Rs 7,53,000 crore, despite the COVID-19 impact. The net profit increased to Rs 47,000 crore in March 2019 from Rs 33,000 crore in March 2017, though it fell to Rs 31,000 crore in March 2020. Net debt increased to Rs 1,96,000 crore from Rs 1,54,000 crore during the period because of acquisitions and expansions. However, debt-equity ratio fell to 0.96 times from 1.17 times.

In lieu with the aspirational targets of the chairman, the market capitalisation of most of the Tata Group companies has been soaring high during his period. The aggregate market capitalisation of listed Tata Group companies more than doubled to Rs 17.7 lakh crore in the first week of February 2021 from Rs 8.4 lakh crore in March 2017.

Tata Steel is the most indebted company in the Group with a net debt of Rs 86,170 crore, though it has come down from Rs 1 lakh crore in March 2020. It reduced the net debt by Rs 18,609 crore in the first nine months of 2020-21 and plans to cut gross debt by Rs 12,000 crore in January-March.

Tata Motors has net automotive debt of Rs 54,700 crore and it wants to cut it down to zero by 2025. Debt fell by Rs 7,000 crore in the last couple of quarters. Tata Power has reduced the debt by Rs 7,552 crore in 2020 to Rs 36,363 crore. It targets to cut it further to an overall Rs 25,000 crore by creating an InvIT and selling a stake in it.

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