Tata Group Companies Should Go Beyond Achieving Zero Net Debt, Says N Chandrasekaran
Debt reduction is increasingly becoming a priority area for Tata Group Chairman N Chandrasekaran. In the first three quarters of this fiscal year, the most indebted Tata group companies – Tata Steel, Tata Motors and Tata Power – significantly reduced their liabilities.
Chandrasekaran envisions a sustainable financial environment for every business and wants them to go beyond achieving net zero debt status. In an exclusive interview with Business Today, he said businesses should work to meet the changing aspirations of consumers, while digitally strengthening their ecosystem.
“There are several key trends that are going to be very important as we move forward in the future. The first is ‘Digital Everywhere’. Every business, whether it’s a manufacturer or a service business, B2B or B2C, will be driven by artificial intelligence, data analytics, cloud computing and machine learning, ”he said.
Over the past three years, up to March 2020, Tata Group revenue increased 15% to Rs 7,553,000 crore, despite the impact of COVID-19. Net profit rose to Rs 47,000 crore in March 2019, from Rs 33,000 crore in March 2017, although it fell to Rs 31,000 crore in March 2020. Net debt increased to Rs 1,960,000 crore against Rs 1,54,000 crore during the period due to acquisitions and extensions. However, the debt ratio fell to 0.96 times from 1.17 times.
Instead of the president’s lofty goals, the market capitalization of most of the Tata group companies soared during his tenure. The overall market capitalization of listed companies in the Tata group more than doubled to reach Rs 17.7 lakh crore in the first week of February 2021, from Rs 8.4 crore in March 2017.
Tata Steel is the group’s most indebted company with a net debt of Rs 86,170 crore, although it has fallen from Rs 1 lakh crore in March 2020. It has reduced the net debt by Rs 18,609 crore over the past few years. first nine months of 2020-21 and plans to reduce gross debt by Rs 12,000 crore in Jan-March.
Tata Motors has a net auto debt of Rs 54,700 crore and wants to reduce it to zero by 2025. Debt has fallen by Rs 7,000 crore in the past two quarters. Tata Power reduced the debt from Rs 7,552 crore in 2020 to Rs 36,363 crore. It aims to reduce it further to an overall crore of Rs 25,000 by creating an InvIT and selling a stake in it.
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