**Tata Projects Shifts Focus to Shorter-Term Contracts for Profitability**
Tata Projects, the engineering and construction division of the Tata Group, has established a strong reputation through its involvement in significant projects such as India’s new Parliament building, the Mumbai trans-harbour link, and the forthcoming Noida airport. However, the company has faced challenges, including project delays and cost overruns, prompting a strategic pivot towards shorter-duration projects to regain profitability.
In the fiscal year 2024-25, Tata Projects reported a consolidated net loss of ₹696.57 crore, a stark contrast to the consolidated net profit of ₹81.97 crore achieved in FY24. Revenue also saw a decline of 1.63%, totaling ₹17,470.59 crore. Looking ahead to FY26, the company anticipates a return to profitability, projecting double-digit revenue growth as it nears completion of its larger projects.
Vinayak Pai, managing director and CEO of Tata Projects, emphasized the shift in strategy during an exclusive interview. “The focus for Tata Projects will now be on short-duration and fast-track projects that can be completed within 12 to 24 months,” he stated. Previously, the company engaged in long-term infrastructure projects with average contract durations exceeding three years, necessitating a substantial backlog to manage operations effectively.
Currently, Tata Projects is concentrating on short-cycle initiatives, including industrial projects, data centers, 4G manufacturing, and power distribution and transmission projects, where the average contract period is significantly shorter. This shift is expected to enhance the health of its order backlog and improve revenue and margins.
Pai expressed optimism about the company’s financial outlook for FY26, stating, “We will be in a much better financial position,” with a primary focus on restoring profit growth and generating cash flow. He noted that once stability is achieved, the company could rapidly scale its top line.
Despite a profitable year during the peak of the COVID-19 pandemic in 2020-21, Tata Projects encountered losses in the following two years due to project delays and rising commodity prices, leading to significant cost overruns on key government contracts. The company has since completed most of these projects, with only a few remaining, and is targeting new project orders worth ₹10,000-15,000 crore to elevate its total order book to over ₹50,000 crore by the end of FY26.
The engineering, procurement, and construction (EPC) sector often faces inherent risks related to land acquisition and regulatory approvals, which can lead to cost escalations and project delays, as noted by Saket Mehra, partner at Grant Thornton Bharat.
In summary, Tata Projects is strategically repositioning itself to focus on shorter-duration projects, aiming to enhance profitability and streamline operations in a challenging market environment.
**FAQ**
**What is Tata Projects’ new strategy for profitability?**
Tata Projects is shifting its focus to short-duration and fast-track projects, aiming to complete contracts within 12 to 24 months to improve profitability and cash flow.