Tata's semiconductor fab investment will be big: N Chandrasekaran

Tata Sons chairman N Chandrasekaran says that Tata Group's investment in semiconductors will be very big. The steel-to-software conglomerate is concluding negotiations to build a chip fabrication plant in Gujarat's Dholera.

"We have taken bets for the future, of course, Air India, definitely on electronics and semiconductors. We will announce the fab (semiconductors) very soon. It will be a very big investment. We will produce multiple nodes," Chandrasekaran says at an event in Chennai.

"But the job is not done. It's the beginning. We need to be laser-focused on execution because these are all big bets. As a group, in these five years, we have committed $100 billion of capital investment. So the moment you don't produce the returns, all these things become negative stories," Chandrasekaran says, emphasising the importance of execution.

While talking about Tata Motors, Chandrasekaran says the automaker is in the process of positioning its U.K. unit JLR as a luxury carmaker. "Our pricing has gone up...demand is there. But we have a job to do. This is an industry which constantly goes through change. It's in a state of huge transition," he says.

JLR halved its break-even volume threshold to 300,000 units in FY23 from 600,000 units in FY19 by betting on high-margin SUVs. Its parent Tata Motors outpaced India's largest carmaker Maruti Suzuki in terms of market capitalisation this year.

"Tata Motors has somewhere from the bottom become the number one automaker in market cap in India," says Chandrasekaran.

On Tata's hotels business, Chandrasekaran says Indian Hotels Company, the promoter of the Taj brand of hotels, has become a $10 billion company.

"Very proudly we bought back Air India. We have made bold calls and said no to many which didn't fit us," he says, adding that the group exited loss-making telecom business.

Chandrasekaran also shared his learning on 'values first, valuations next'. "I really don't understand the craze around valuations. It has become a needless distraction in my mind. Valuation is clearly an outcome. You can't work for it. You only have control over input. Executing a compelling strategy in a disciplined manner while giving primacy to governance and sustainable growth will deliver valuations but people talk about valuations very easily," he explains.

Tata Group has a tremendous reputation that has been built over 150 years, the Tata Sons chairman says. "If you ask me one fundamental task we have beyond anything else is to keep that," he adds.

"We need leadership which can think clearly, think at scale, think big, be bold but at the same time execute flawlessly. One wrong execution puts you back," he says.

There is tremendous opportunity for India, according to Chandrasekaran. "There is not a single Fortune 500 company which has not been in India in the last few months," the Tata Sons chairman says. In manufacturing, 45% of the non-oil exports from India are high-end manufactured products which was 20% before the pandemic, he says. Electronics exports were 2% before Covid-19 and have now gone up to 8%, he adds.