Salt-to-software conglomerate Tata Group will invest $35 billion over the next three years and reconsider entering sectors like banking if regulations change, chairman Cyrus Mistry said on Tuesday.
The group will be creating new industry verticals and restructure and divest some existing business towards achieving profitable growth, Mistry said at an internal group conference. The Tata Group chairman elaborated on his plans for the conglomerate over the next decade, which he termed ‘Vision 2025’.
Mistry stated that he would like the conglomerate to be ranked among the top 25 companies globally by market value.
Mistry told employees that Tata Sons, the flagship holding company of the group, had invested $4.6 billion across businesses since 2004.
In a statement, the company said, “While we cannot share details of this internal event, we can only confirm the following: It is correct that the Tata Group has outlined its strategy of a) nurturing group companies by leveraging the parenting advantage of the group centre b) harnessing synergies to maximise the performance of companies and c) optimising its portfolio for sustained future performance.”
The Tata Group was keen on entering the banking sector and had submitted an application with the Reserve Bank of India. But it backed out in November after evaluating that the current model followed by its financial services business was best suited to support the conglomerate’s domestic and overseas business growth strategy.
For instance, around 65% of the business house’s revenues come from international operations and different operating companies need to provide financing solutions to customers abroad.
Since the Reserve Bank of India required all financing companies in a business group to be under a non-operating financial holding company, there could be a scenario where there was conflict between the bank and the operating companies in terms of classifying a country as priority market.
“We have a strong role to play in the financial services sector,” Mistry said. But he added that the regulatory environment wasn’t conducive at present and if the government changed its stance, the group may look at banking again.
Also, to ensure profitable growth going forward, Tata Group has created four business clusters — consumer and retail; financial services; defence and aerospace; and realty and infrastructure. Some of the immediate areas where the Tata Group is exploring opportunities are retail and e-commerce in particular, Mistry said.
Mistry said that the conglomerate will look at divestment, restructuring and consolidation to make companies achieve their business targets.