Fiat India, the maker of Linea sedans and Grande Punto hatchbacks, has undergone a restructuring of its board, with two directors leaving, three joining and another three getting extra responsibilities. The board-level changes at the loss-making company, a 50:50 joint venture between Fiat SpA of Italy and Tata Motors, are seen as a prelude to a planned restructuring of its operations.
Giovanni Bartoli and Harald Jakob Wester have stepped down from the company?s board. Bartoli?s exit is seen as significant since he is No 3 in Fiat SpA and one of the seniormost board members of Fiat India. Fiat SpA has nominated Ezio Barra, Giovanni Sella and Silvia V Blina ? all senior officials at the company?s Turin headquarters ? to take their place. Gianni Coda, Alessandro G Baldi and Alfredo Altavilla, who are currently serving on the board, have been given additional responsibilities.
A company official said the changes aim to bring greater synergies with the parent firm. ?This is the first major reshuffle since the company started its Indian operations in 2006. Fiat has a plan for the Indian markets, which has not taken off. Perhaps the board reshuffle will bring like-minded individuals to chart the company?s course in India,? an official said.
Fiat India?s troubled Indian journey found mention in a JD Power interview with Tata group chairman Ratan Tata last month. Tata indicated to the market research firm that the five year-old JV had to be critically examined, adding his good personal rapport with Fiat CEO Sergio Marchionne had not translated at a company level.
?…I have to admit that so far, the venture with Fiat has not been as active as we had thought,? Tata had said.
This year, Fiat India invested Rs 150 crore in the company by issuing fresh shares, in an attempt to make good part of its 2009-10 losses of Rs 290 crore. Deepak Dalal, a Delhi-based automobiles expert specialising in corporate restructuring said that board rejigs often infuse new life into a company. ?There are several examples in the West of companies undergoing major board reshuffles to bring about a turnaround in operations,? he said. Dalal added that board members play a critical role in making key decisions. ?If they are aggressive, it reflects in the company?s operations as well,? he said.
An email sent to Fiat India?s spokesperson on Monday did not receive any response till the time of going to press.
A senior official of a European car maker which competes with Fiat abroad said the Fiat board recast is expected to empower the company?s India?s operations. ?Unlike in other single-owner companies, in a JV, the board plays a very critical role. It also speaks about the fact that Fiat is still committed to the Indian market which augurs well for the industry as well,? he said, requesting anonymity. In 2010-11, when the Indian passenger car sales grew 30%, Fiat India?s overall sales declined 15% to 21,066 units against 24,727 units in the previous fiscal. Fiat India has one manufacturing facility at Ranjangaon, near Pune.
