Ratan Tata back at the helm moves fast to fix his house in order
Mumbai: Ratan Tata, back at the helm of India’s biggest conglomerate for just over a week, has started getting his house in order.
The interim chairman of the $100 billion Tata Group is taking steps to repair a soured relationship with NTT Docomo, its partner in an Indian wireless venture. Tata, which has been locked in a legal battle with the Japanese company, has restarted discussions with NTT Docomo on resolving the dispute outside the courts, people with knowledge of the matter said.
The 78-year-old chieftain has made his first task finding a way to end a spat that’s tarnished India’s reputation as a place to do business. Last week’s abrupt ouster of Tata Group Chairman Cyrus Mistry followed Ratan Tata’s mounting displeasure at his handling of the NTT Docomo case, people with knowledge of the matter said earlier. Mistry’s stalling was seen as an erosion of the Tata ethic of honoring commitments, according to the people.
"Ratan Tata has hit the ground running ever since assuming the charge of interim chairman,” Arun Kejriwal, founder of advisory firm Kejriwal Research & Investment Services Pvt, said by phone on Thursday. "He is acting fast in repairing the troubles created by Mistry.”
Group holding company Tata Sons plans to reapply to the Indian government for permission to pay a $1.17 billion arbitration award to NTT Docomo, the people said this week, asking not to be identified because the information is private. The country’s central bank had previously signalled such a payment would violate foreign-investment rules, and Mistry was letting the matter play out in court.
Shares of Tata Teleservices Maharashtra, a listed arm of the Indian conglomerate’s venture with NTT Docomo, declined 1.5 per cent as of 10:56am in Mumbai on Friday.
Ratan Tata may need to tap his connection with Prime Minister Narendra Modi to help resolve the impasse. His relationship with the premier dates back to at least 2008, when Modi was chief minister of one of the wealthiest Indian states and became a supporter of Tata’s efforts to build the world’s cheapest car.
NTT Docomo Chief Executive Officer Kazuhiro Yoshizawa said last week the Indian government will need to take action to resolve the disagreement. The two companies believe Modi is keen to resolve the spat, according to the people with knowledge of the matter. India’s government, which previously rejected a Tata Sons request to pay the arbitration award to NTT Docomo, would be willing to consider a new application, one of the people said.
"Ratan Tata is now busy mediating the Docomo issue in the most amicable way by involving the government too, instead of a hostile manner adopted by the previous chairman,” Kejriwal said.
Tata Sons and NTT Docomo hope to find a solution as soon as this month, according to one of the people. Legal representatives from both companies plan to meet soon to discuss a friendly way to resolve the dispute, another person said.
Representatives for Tata Group, NTT Docomo and the Indian finance ministry declined to comment, while the Reserve Bank of India didn’t respond to a request for comment.
Next on the agenda for Tata will be figuring out how to revamp Tata Steel’s troubled European operations. Analysts from CLSA Asia-Pacific Markets and Nomura Holdings have said the conglomerate’s leadership changes may delay efforts to fix the business, which was acquired during Ratan Tata’s previous run as chairman of the group.
"There’s clearly been a change in the way the management is addressing the Docomo issue after Ratan Tata’s return,” said Abhimanyu Sofat, vice president of brokerage India Infoline in Mumbai. "It’s important to resolve this issue as for Tata, they can move on to more core issues.”