After a rough patch during the crisis, Tata Motors now looks set for a smooth ride, at least if recent developments at both managerial and financial levels are an indicator. The country?s largest automaker proved its critics wrong with its strong quarterly performance since October 2009. The company had drawn flak from one and all?from shareholders, investors and analysts?for its ?high-cost acquisition? of Ford?s marquee brands Jaguar and Land Rover, which landed the company in losses after eight years of positive growth in 2009. But with a combination of sheer managerial capabilities, cost-cutting exercises, inventory control and de-risking strategies, the company has turned around its financials.
Despite poor market conditions and lack of financial options during most part of 2009, Tata Motors paid off its short-term loan of around $3 billion borrowed to part-fund JLR buy-out through various measures, thereby bringing down its debt-to-equity ratio.
By bringing in new faces such as Carl-Peter Forster as group CEO and Ralf Speth as head of JLR, Tata Motors has shown its intention to become a global automaker with presence across all the major markets either through JVs or by direct presence. With JLR showing strong performance by posting profits coupled with revival in the domestic auto industry, particularly on the passenger car side, Tata Motors is set for a comfortable ride.
In order to de-risk itself from mounting domestic competition and to give itself a global brand equity, Tata Motors took a strong decision to venture into markets such as Latin America, Vietnam, Myanmar, Middle East, Russia, Africa and Poland, apart from pushing Nano variants into the European markets in a big way.
Apart from Nano, Tata Motors has also decided to expand the reach of JLR to other European and global markets, including India. To prove the point further, the company successfully raised ?340 million from European Investment Bank to develop new cars and variants under JLR.
Tata?s pick-up vehicle in Thailand and Tata Daewoo?s commercial vehicle venture in Korea have been reporting encouraging results, which augur well for the company. Its construction equipment subsidiary Telcon is also set to benefit from increased infrastructure activities in India.
r.ravichandran@expressindia.com
