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TaMo steers CV growth to boost profits

Guenter Butschek says that the next 6-9 months are going to be very crucial as the “new Tata Motors” is going to be much faster in its response to the competition

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Guenter Butschek
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Tata Motors, in its attempt to halt the sliding market share in the commercial vehicles (CV), plans to potentially add over Rs 1,500 crore in the segment, with an aim to improve the bottomline and reap recurring benefits for future years.

The homegrown automobile major has set a target to turn profitable on the standalone basis this fiscal.

Talking about 'acceleration' in company's turnaround strategy, Guenter Butschek, MD, Tata Motors, said that the next 6-9 months are going to be very crucial for the company as the “new Tata Motors” is going to be much faster in its response to the competition.

“We will be aggressive in market and bring speed and urgency in actions, thereby accelerating our turnaround plans” said Butschek.

The company's announcement of its new revival plans comes in the backdrop of chairman N Chandrasekaran voicing serious concerns over the continuous decline of CV sales in the company's annual report which was released in July.

Tata Motors's market share in the CV segment has fallen to 44.4% from a high of 59.4% in FY2011-12. Chandrasekaran attributed it to overall delays in new product launches as well as lack of adequate responsiveness to the competitive environment and an unsustainable cost structure. Ravindra Pisharody, the then executive director (commercial vehicles) resigned from his post in June, citing personal reasons.

Butschek said that the management realised its shortcomings, which had led to the fall in company's market share and financials. The company's immediate objective, therefore, is to have zero tolerance on product launch delays, bring rigorous cost reduction across all categories and functions, fill product gaps, eradicate all supply constraints to meet prevalent demand, etc. According to Butschek, the company will be launching at least 10 new products in the CV segment across all the categories.

In the passenger vehicles (PV) segment, the company, as part of its platform-based strategy, has already committed an investment of Rs 2,500 crore for future programmes. When asked about the rumours of shelving sports car Tamo Racemo, Butschek clarified that the project is merely put on hold till the company addresses its core issues.

Giving some picture about the working of a new turnaround plan, Butschek said that a 'war-room' has been created and Board is appraised about the developments periodically.

Also, the company is planning to raise funds through divesting of its non-core assets like the recent partial stake sale of Tata Technologies for about Rs 1,200 crore.

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