Chandrasekaran asks Tata firms to brace for demand slowdown, margin pressure in wake of West Asia conflict

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Top group executives were also informed about the need to enhance cyber security readiness and network resilience, run cost improvement programmes with clear targets.

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N. Chandrasekaran, Chairman, Tata Sons
N. Chandrasekaran, Chairman, Tata Sons | Credits: Fortune India

Tata Sons chairman N Chandrasekaran has asked over 30 CEOs and managing directors of group companies to brace for a tougher business environment, as the war in the West Asia is disrupting supply chains, sources said.

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At a review meeting on the war's implications on Thursday, Chandrasekaran told top executives that more than 10,000 Tata employees are based in the region, including those from Voltas, Tata Consultancy Services, Indian Hotels Company Limited, and Titan Company (including Damas), and outlined steps to facilitate their return, according to a person with direct knowledge.

During the assessment, a common theme that emerged was that supply chain disruptions and rising commodity prices would weigh on demand while pushing up operating costs, resulting in margin pressure, the sources said.

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For many of the companies, it would mean that production yield is likely to be less than capacity. For other companies, either in infrastructure or building capacity, delays in supplies will have implications both to timelines and to people on the ground not being used to full capacity while some companies are highly exposed to oil.

"The chairman advised companies to be prepared for a tougher business environment marked by demand slowdown, project delays driven by supply chain disruptions and cost increases due to oil price, shortages, currency movements, logistics costs, among others," the source said.

Chandrasekaran also recommended measures that need to be focussed on conserving and managing cash carefully and judiciously.

He also advised careful choosing of start time for projects and "if necessary, have a relook at the timelines".

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Top group executives were also informed about the need to enhance cyber security readiness and network resilience, run cost improvement programmes with clear targets.

Moreover, he also stressed on the need to "take care of employees, including temporary employees".

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"Further, we need to immediately address anxiety and stress-related issues of our employees and their families in the region," he said.

Briefing about a number of specific measures that the group has undertaken, Chandrasekaran said the group has assisted in enabling travel back home of employees and their families in transit in the UAE through Air India.

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The group has also facilitated in enabling Saudi Arabia visa through Indian Embassy for employees in Qatar, while also supporting the movement of employees from Doha to Riyadh through land border crossing.

He urged the executives to be prepared for the post-recovery scenario once the conflict is over.

"You must be in a state of readiness -- be agile; do not lose momentum," Chandrasekaran is understood to have told the top executives.

(Except for the headline, Fortune India has not edited the content of this PTI report.)

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