CHIEF executives in the West share some familiar gripes: quarterly-results-obsessed analysts who make it impossible to think about the long term; activists pressing for change before investments come to fruition; and sluggish economic growth. How envious they must be of Cyrus Mistry, the boss of the Tata Group, India’s largest conglomerate. Its central firm, Tata Sons, is unlisted. Tata Trusts, the charities that own two-thirds of Tata Sons, think in terms of decades, not years. India is the world’s fastest-growing large economy. Given such favourable circumstances, Mr Mistry’s peers might well look at the uninspiring financial performance of much of his group since he took over in December 2012 and conclude they could do better.

The firm is rightly admired at home. Founded in 1868, it has long embodied the notion of corporate social responsibility. Employing nearly 700,000 people, it operates in a wide array of industries, among them table salt, IT, steel, watches, power plants, leather goods, a slew of shopping chains, tea, trucks and buses, undersea cables, mobile telephony and luxury cars and hotels. It has not relied on political favours to grow, unlike many rivals. Its expansion abroad, for example with its purchase in 2000 of Tetley, a maker of tea, and in 2008 of Jaguar Land Rover (JLR), a carmaker, filled many Indians with pride.

Many people had nonetheless expected Mr Mistry to usher in change. He is only the sixth group chairman in nearly 15 decades. He is also the first from outside the Tata family, hailing from a construction dynasty that owns the only substantial stake in Tata Sons that is not owned by Tata Trusts. The expansionist strategy of his long-standing predecessor, Ratan Tata, which increased the group’s revenues from around $6 billion to $100 billion over two decades, had expanded the firm’s girth but dented returns in some parts of its business. A period to take stock of Tata’s portfolio of businesses would hardly have been controversial. Expand-then-refocus cycles are routine at multinationals.

But there is little sign that Mr Mistry is inclined that way. Tata remains active in 100 different business lines, many of which are themselves diversified. Far from slimming down, Tata is eyeing still further expansion: defence, infrastructure and financial services are the latest targets. There is a growing sense that it lacks the “refocus” gene altogether. Nearly four years into Mr Mistry’s tenure, the listless performance that could once have been blamed on things like slowing Chinese demand seems to be entrenched. One former adviser to several Tata CEOs says that “the risk is that Tata uses its long-term emphasis and ethical way of doing business as an excuse to tolerate underperformance.”

The results of only two of its main businesses stand out: JLR, which Tata rescued from a period of mismanagement by Ford, and Tata Consultancy Services (TCS), an extremely well-run IT-services firm. Last year this business generated profit of 244 billion rupees ($3.7 billion); Tata’s total profits are probably not far north of 300 billion rupees (the figure is not public but can be estimated). TCS’s share-price surge in the past decade is responsible for roughly 80% of the growth in value of Tata Sons’ holdings in Tata’s listed operating companies (now worth $65 billion) in that period.

The rest is a mixed bag. Seven of the nine-largest listed Tata entities in terms of capital employed have negative economic value added, meaning that their earnings before interest and tax translate into a return below their overall cost of capital. Roughly six in ten rupees deployed by Tata are in businesses yielding returns below its cost of funding, up from three in ten rupees eight years ago.

When TCS is included, Tata claims a decent-enough 12.5% return on capital employed. Without it, the figure for the major listed companies dips into single-digits. The Tata Trusts might be accepting a trade-off: lower returns in exchange for the Tata Group behaving in a socially responsible fashion. But they have not said this.

The steel business eats up about half of the capital that earns low returns. Tata catapulted itself onto the global stage with its $13.1 billion acquisition of Corus, an Anglo-Dutch rival, in 2007. A turn in the commodity cycle from 2012, along with Chinese industrial overcapacity (see article), has hit it particularly hard. Corus was at one point reportedly losing £1m ($1.3m) a day. Most other groups would have long ago taken action to stem the losses, such as closing down the firm’s operations in Britain. But that is not the Tata way. Having sold part of the British business for £1, it is belatedly exploring a joint venture to share the pain of the remaining losses.

Several other of the group’s big businesses are visibly struggling. A power-generation unit guzzles capital but emits little profit. A sub-scale mobile-telecoms operator is in a costly row with NTT DoCoMo, a Japanese joint-venture partner; Tata is disputing a $1.2 billion arbitration award against it. Its hotels subsidiary, which operates the Taj brand at home and beyond, is a perennial lossmaker. The domestic automotive business, which makes half of all India’s trucks and cheap passenger cars, has long struggled. There are dozens of other smaller businesses, but they hardly affect the conglomerate’s bottom line.

Tata’s sprawl is made possible in part by its structure. Although Tata Sons, the parent company, is not listed, most of the operating companies are—and they are usually majority-owned by outside shareholders. So Tata Sons owns just over a quarter or so of Tata Steel, for example, or of Tata Motors. Those businesses own small stakes in each other and, jointly, 13% of Tata Sons. Such cross-ownership means that while understanding what is happening at individual Tata companies is fairly easy, judging (and managing) the direction of the entire group is fiendishly hard.

In theory outside shareholders could push for changes, for example divestments. Small spin-offs occur but rarely anything sizeable. In practice shareholders nearly always defer to Tata Sons, which has a great deal of say over who goes on the subsidiaries’ boards and grants the right to use the powerful Tata brand. Many are big Indian institutional investors with little appetite for taking on Tata.

Nirmalya Kumar, Tata’s head of strategy, argues that the group’s set-up (which is common in India and other emerging markets) is ideally suited to business houses building new ventures. Tata’s heft has indeed been useful in the past for entering markets. Size helped it raise capital when it was scarce and to lobby government. At the same time, the presence of outside shareholders brings at least some market discipline.

But the structure also adds another layer of bureaucracy to a group that scarcely needs it. Tata is “deliberate in its thinking in a way that can feel like obstructivism”, is how one business partner of the group puts it. According to a former senior employee, the aim is to move steadily forward while avoiding difficult decisions.

The structure also makes it harder to enjoy the benefits of being a diversified group. Silos are hard-wired into it. Because they are owned by different sets of shareholders, Tata’s telecoms and cable arms are unable to offer a lucrative “triple play” of services, for example. Three different Tata companies have large Indian retail networks (it is a partner of Zara, a clothing group, and of Starbucks Coffee in India, as well as running its own shops). But as these are separate legal entities they cannot jointly negotiate cheaper leases or merge their supply chains. At least seven different Tata companies vie for defence contracts but must do so separately. Some Tata companies openly compete against each other: Tata Technologies, a division of Tata Motors, is increasingly in the same business as TCS, for example.

The companies cannot co-operate financially, either. Tata Group presentations advertise healthy overall financial metrics, such as net debt levels that are barely higher than equity. On the face of it, the group’s companies certainly generate enough profits to pay creditors. But that assumes the net cash on TCS’s balance-sheet can be used to service, say, Tata Steel’s debt. Outside shareholders make that impossible.

As a result, there are pockets of financial strain inside the group. One gauge of stress is the proportion of net debt held by units that are highly leveraged relative to their profits. Five years ago, 37% of net debt contracted by major listed Tata companies was held by entities whose net debts were more than three times EBITDA (earnings before interest, tax, depreciation and amortisation). Now the figure is over 90%.

Bits of Tata pay big risk premiums to borrow while others have oodles of spare cash, an approach that makes no sense, especially in India, where capital is expensive to begin with. Most bankers who lend to Tata firms do expect that Tata Sons would ultimately bail out creditors to a company facing default even absent a formal guarantee. But Tata Sons insists it would not. Such uncertainty may raise the cost of capital across the entire group.

Tata higher-ups make another argument: that the success of TCS shows the merits of diversification. True, but the group’s reliance on its star performer goes beyond merely flattering group-level financials. TCS’s dividends, instead of being paid out to Tata Sons’ shareholders (including the charities), are mostly retained there and finance much of the conglomerate’s growth, including capital calls from other listed entities that have performed poorly.

And what if, as many expect, the IT outsourcing industry gets tougher? TCS is not invincible. Its growth has slowed in recent years. Annual increases in sales dropped from an average of 30% in 2011-13 to half that in the past two years. Further slowing is expected: the firm’s shares dropped by 5% on September 8th because it gave a gloomier outlook for future results. Some analysts now factor in revenue growth below 10%, and compressed margins to boot.

Will Indian ingenuity hold the fort?

Part of that is cyclical: global banks and insurance firms, which are big customers, are cutting costs where they can, for example. But there are structural factors at play too. The business model that propelled TCS and its rivals to their current heights—using lots of skilled but cheap Indian IT engineers to install and maintain international companies’ computer systems—is evolving rapidly as clients turn to automated solutions. TCS’s sheer size also makes further growth harder.

If Tata did wish to put more emphasis on shareholder returns—it says that it is only one metric it uses to gauge success—the next steps are obvious: it would flog some businesses, concentrate on improving the returns of others, and use the resulting proceeds to buy out outside shareholders in its operating firms. The group could then function as one entity, taking advantage of synergies among the different business lines. With the exception of JLR and TCS, which have proved their worth abroad, it might also refocus its attention on fast-growing India, where just a third of its turnover now comes from.

It is possible that Mr Mistry knows this, and is biding his time until he has fully grasped how different bits of the group work. Mr Tata regularly spoke up for his company and for Indian business, but his successor is retiring, inside the firm and out. A quarter of his time each year is swallowed up by around 700 hours of chairing meetings with the boards of the major operating companies. “He’s very analytical, a numbers guy, but if he has a grand vision he hasn’t shared it,” says an employee. He has not given an interview to the media since taking over. But in a statement on September 13th he did speak of Tata companies needing “to earn the right to grow”.

That the revered Mr Tata still chairs the Trusts that bear his name may make it trickier for Mr Mistry to be his own man, however. Upon retirement, Mr Tata publicly called for his successor to target $500 billion in revenues by 2021, a figure that group executives say is still on the cards. Mr Mistry has shown some signs that he knows what needs to be done. For the moment, however, he appears dangerously content just to sit atop what has grown into an impressive but lumbering pachyderm.