King-size headaches face new chairman, with no quick or easy solutions in sight
Chandra, who will succeed the ousted Cyrus Mistry, will have to take an immediate call on loss-making Tata Teleservices. The company requires fresh fund infusion of Rs 10,000 crore by the financial year starting April 1. This is apart from Tata Tele facing the prospect of losing another $1.2 billion to NTT Docomo, which has sued Tata Sons in US, UK and Indian courts to force the latter to buy back its 26.5 per cent stake in Tata Teleservices.
With the Reliance Jio launch and Idea-Vodafone merger, fringe players like Tata Tele would face more heat and Chandra will have to decide how much more of Tata Sons’ money should be poured into the company, said an analyst.
The legacy issues, noted by Mistry in several letters after his ouster to Tata Sons’ board members, would continue to dog the group in the coming years. There are no quick solutions for these, say analysts.
Tata Motors is another big hurdle, though the company is taking several steps to revive its passenger car business in India. A border tax promised by US President Donald Trump could upset the finances at its Jaguar Land Rover arm, as the company does not have any plant in the US, say analysts.
The good news for Chandra will be that Tata group numbers look good at the consolidated level. These are among the best financial ratios and one of the lowest leverage ratios in the country’s top family-owned conglomerates. The bad news is that if Tata Consultancy Services (TCS) and Tata Motors’ JLR are excluded, the picture becomes hazy for group finances| READ MORE..