Tata chip intent remains ‘certain’ despite pressure for faster returns on investments

Tata Sons chairman Natarajan Chandrasekaran said the group will keep building what India and the world need, including semiconductor chips, even if these projects are slow to deliver amid a tussle with Tata Trusts, which are pressing for quicker returns.

The group’s semiconductor push shouldn’t be judged on whether it meets the numbers in two to three years, he said at Bloomberg’s New Economy Forum in New Delhi on Tuesday.

“Direction is certain, need is certain, ability to execute is certain,” Chandrasekaran said. Chips will be fundamentally required, and advanced manufacturing is here to stay, he said, adding that India has the talent, the market and the ability to step up.

His defence of nation-first projects — which has helped win Chandrasekaran the goodwill of the Modi government — comes as the group’s controlling shareholders, Tata Trusts, reassess capital allocation. Tata, the nearly 160-year-old group that posted $185 billion in revenue last fiscal year, has made a $120 billion bet on future growth, including India’s first chip-making unit seen as key to the country’s high-tech manufacturing push.

Noel Tata, chairman of Tata Trusts, has clashed with Chandra, as he’s widely known, in board meetings in recent times over capital allocation decisions and projects that can show returns on a swifter timeframe. Tata Trusts owns about 66 per cent of Tata Sons — the holding company of the sprawling group behind brands such as Jaguar Land Rover, Air India and Taj hotels.

Rough run

Tata Technologies, a Tata Sons entity, which is building India’s first large-scale chip fab or production plant, has faced operational and technology-access delays, people familiar with the matter have said earlier.

Chandra acknowledged a rough run, citing an air crash, a cyberattack and supply-chain disruptions, but said the group still delivered double-digit growth, with margins holding up. Past decisions have “all been proved right in the long term,” he said, and when things go wrong, “you course-correct”. On the path ahead, he said: “We can’t be reckless.”

He added a measure of caution, saying the group has to keep an eye on the balance sheet and see where demand is. On whether a bet is financially viable, he said the numbers won’t be tidy: “You need to feel the stones and cross the river. It is not that you are going to have a very clean spreadsheet in this uncertain world.”