N Chandrasekaran. (Photo: PTI)

Tata Sons Chairman N Chandrasekaran Hints At More Collaboration Among Group Firms

Tata Sons Chairman N Chandrasekaran Thursday said there has been some improvement when it comes to group companies working together, but there is room for more collaboration between them.

Addressing the annual general meeting of Tata Consultancy Services Ltd., the cash-cow of the salt-to-software conglomerate, Chandrasekaran said group companies work at an arm’s length and there is full transparency, but exhorted the need to work together more.

“We have seen some improvements, but we need to improve a lot more,” Chandrasekaran said.

It can be noted that since taking over in February 2017, Chandrasekaran has embarked on a strategy for increased integrations between group companies, which includes getting companies from a particular vertical together like defence, and also merging companies—as he did with Tata Chemicals and Tata Global Beverages.

The $100-billion plus group is working on a comprehensive plan to get down its water usage and carbon footprint, he said.

Chandrasekaran, a career Tata employee who rose to the top of the group, said there is a case for senior employees at the largest software exporter to be paid more.

Replying to shareholders’ queries on a rise in the number of employees drawing a salary of Rs 1 crore and above, he said the staff cost is only 53 percent of the revenue, which is very low compared to the peers.

To a specific query on his brother and TCS Chief Operating Officer N Ganapathy Subramaniam getting an extension, he said all the related party decisions are done at the appropriate foray.

Chandrasekaran said while TCS has adequate women representation on the board and 36 percent employees are female, there is a need for more diversity among the management team.

On the massive rise donations to political parties by the Tata Trusts, he said all group firms contribute for the trusts ahead of an election every five years and the combined pool is split between political parties as per their strength in the Lok Sabha.

It can be noted that the Tatas gave around Rs 600 crore in political funding in the 2019 hustings, which is over 20 times of what it had given for the 2014 polls. Of this, as much as Rs 220 crore was contributed by TCS.

The company has thousands of patents, but those are largely to claim rights over new technologies such that they can be deployed for customers, he said, adding TCS is not looking at licensing the patents now.

He said it is the shift to digital which is at the core of driving the business and that the company has invested in retraining all employees in the past few years.

“We are seeing beginning of a new cycle, demand environment will be strong. TCS is in for a multi-year cycle, help customers and grow its revenue,” he said.

TCS Managing Director and Chief Executive Rajesh Gopinathan said digital revenue has been growing at 50 percent annually and constituted over a quarter of the overall $20 billion revenue in FY19.

He said the company was able to close new deals of over $21.9 billion in the last fiscal.

On the demand situation, he said it continues to be robust structurally but there are “lingering issues” on various fronts like Brexit or trade wars, and added that technological investments are high.

There is volatility in deal pipeline, but the overall trend is strong, he said.

The company expects the new finance minister to present a growth-oriented budget and re-ignite the digital India initiative with investments in technology, he said.

Watch TCS Chairman N Chandrasekaran's address to shareholders at the AGM: