Karl Slym in exclusive interview to FE said, Tata Motors to invest Rs 9,000 crore over next 3 years

Written by Roudra Bhattacharya | Updated: Jan 27 2014, 01:27am hrs
Karl Slym
Almost a year after a major top management rejig, Tata Motors is busy reinventing itself. Indias largest automaker with consolidated revenues of $34.7 billion has seen its share of troubles with both volumes and market share slipping sharply over the past two years. In an interview with Roudra Bhattacharya, Tata Motors MD Karl Slym talks about the challenges faced by the domestic industry, and how overseas expansion will be a focus going forward. He explains how Tata Motors is gearing up to reclaim its position among the top three carmakers in the country.

What measures has Tata Motors taken to weather the tough times

Last year was one of the toughest ones for the Indian automobile industry. The Indian auto sector saw a slowdown in FY13, which has further continued in FY14. The major challenges faced by the industry in FY13 have been the slowing economic and infrastructure growth, coupled with negative consumer sentiment. Contrary to expectations, the industry hasnt picked up. The commercial vehicle (CV) industry as a whole continues to be about 30% lower than last year, which came after a similar drop over FY12. While this industry is prone to cyclicality and all those who have been in the industry long enough will have witnessed one downturn or the other, what is particularly concerning about this one is the lack of visibility of a recovery plan. In the passenger vehicle (PV) industry, growth has been flat.

In 2013, we introduced a slew of changes that apply either to the entire company or are specific to our two businesses in India. While the Indian auto market has become intensely competitive, our goal is to enhance our market leadership in CVs and move to a strong podium finish in the PV market. In June 2013, we announced the launch of Horizonext, a customer-focused strategy based on four key pillarsintense product focus; world-class quality manufacturing; enriched customer purchase experience; and consistent, robust after-sales service. We are also deepening our customer engagement levels, providing enhanced purchase experience with a revamped dealer and service network for our PV business including world-class showroom ambience, purchase experience and after-market service. We launched 11 new service offerings to further provide best-in-class service to our customers.

The challenges for the industry have been even greater in the CV industry where transporters are deferring purchases while there has been a more stringent financing regime. For our CV business, we have continued to bring industry-leading products and launched initiatives such as helping build tangible customer value through better fuel efficiency, enhanced and best-in-class vehicle uptime, enhanced offerings around warranty and insurance matched with lowest maintenance costs.

How do you see 2014 fairing

We expect 2014 to be a challenging but interesting year as the industry brings in new products and Tata Motors will certainly look to surprise the PV industry with new benchmarks in product and service excellence, while continuing to lead from the front in the CV industry. We have a well-defined product portfolio finalised till 2020. The company is on the cusp of taking the next leap with state-of-the-art petrol engines for its PVs, which will meet consumer needs of drivability and fuel efficiency. We expect to launch exciting products through the year, some of which will be showcased at the Auto Expo.

What do you think the market trend in PVs would be over the next few years

In the PV market, we will continue to see growth in entry level hatchback and in sedans, especially the compact sedan segment. With customers expecting more value for their money, it is going to be imperative that we offer a holistic package of great design that drives well. Connectivity is becoming an increasingly key feature of passenger cars and we will look to bring in industry-leading features for this.

For us, this year is all about more global products for India that merge design and performance in an increasingly connected world. We will adopt innovative ways to reach out to our customers from our own touch-points and, in the virtual world, we will continue to innovate with technology. This could be across conventional or alternative fuels, with newer human-machine interface, for an exciting customer service. We want our customers to expect more from us in 2014.

Tata Motors aims to become the second-largest domestic carmaker by 2020. What is the companys strategy for that

We launched our Horizonext strategy in the middle of last year and at the Auto Expo you will see us showcasing some of the new-generation technologies and design language that will play a significant role in our drive towards market leadership. With the recent launch of the Nano Twist, our new year already got off to a great start.

CV volumes have seen the longest down cycle recently. When do you see the recovery happening

In the CV industry, in particular medium & heavy CVs, demand has dipped sharply to levels lower than in FY11. Transporters are deferring purchases owing to poor investment climate and poor operating economics on the back of overcapacity and stagnant freight rates, combined with diesel price increases, low resale prices for used vehicles and other such macro-economic factors. Then, risk aversions and more stringent norms from financial markets have affected the segment. It is difficult to predict a turnaround in sales, with the market not showing any early signs of recovery. We will maintain a cautious watch.

For growth in the CV segment to get restored, the investment sentiment in the economy needs to drastically improve. There is a need for steps to improve the investment sentiment first and then serve as a catalyst for overall economic growth, not just the auto business. These include steps towards infrastructure, construction, mining, clarity on investment in different segments, speedy implementation of policies and schemes and the like that strongly position India within the emerging markets. Government interventions including excise and tax stimuli, procurement and developmental schemes, speedy implementation of such schemes and certain policy and regulatory changes will be required to provide this impetus. Over the next three years, we plan to invest about R3,000 crore each year for both CV and PV businesses and half of that will be towards the CV business.

What plans does Tata Motors have for expanding Jaguar Land Rovers (JLR) presence in India

Despite challenging market conditions, JLR sales grew by 22% in calendar year 2013. JLR has increased its distribution network and operates 19 dealership outlets across 17 cities in India. The network expansion is ongoing with a target of 23 outlets by the end of the financial year.

Which are the markets where you plan to set up assembly or manufacturing operations

We are pursuing a strategy of growth in markets across Asean, Asia, Africa, Middle East and Russia-CIS countries with a wide range of CVs. The new range of products including the Prima, Ultra, Super Ace and Xenon are ideally suited for many of the global markets.

You are of the view that quadricycles will be a regressive step for India as they do not meet the stringent safety and emissions norms. Now that the government has decided to create the new category, will you also consider a product for the segment

We remain committed towards people safety as well as rigorous emission norms that impact our environment. Our stand on these issues is based on the belief that there must be a careful evaluation to consider transport needs with the right degree of safety and emission norms as well as ensure fair participation from all stakeholders. These should include not just auto companies but also traffic police, government bodies, safety regulators and those involved in the future of Indian mobility to form a holistic long-term roadmap. The Nano and Ace (including Magic Iris and Ace Zip) platforms are advanced platforms and are engineered to meet the stringent safety and emission norms required for cars and CV N1/M1 regulation norms.