When Guenter Butschek took charge of Tata Motors in January 2016, the biggest challenge for him was to change Tata Motors into a profitable business and restructure the company’s operations to ensure new products are more aspirational and appeal the younger buyers. Fast forward 2018, Tata Motors has just announced that the company it has saved Rs 1,900 Crores in its passenger vehicle business alone by its Improvement by Actions (ImpACT) Initiatives. During the financial year 2016-17 the company reported a loss of Rs 2,800 crore despite a good sales turnover of Rs 49,199 crore. In the fourth quarter of the FY 2017-18, the company’s loss narrowed to Rs 500 crore as against Rs 806 crore a year back.
The top-down structural reforms implemented by the company has proven to be successful, the company first reduced the number of suppliers drastically to save costs and internally introduced an employee stock ownership plans (ESOP), through which Tata Motors is trying to align rewards with performance. This, in turn, will bring about a healthy competitive, consistent and cash accretive growth in the long term.
Improvement by Actions (ImpACT) initiatives at Tata Motors has not just helped the company to cut down its losses, but has seen introduction of new platform, effective use of its plant’s capacity utilisation and the new design language on its vehicles like the Tata Nexon, Tata Tiago and Tata Tigor cars have connected with the right buyer of every age.
Tata Motors focused on enhancing its sales and bought in different car/SUV segment models – from small hatchbacks to SUVs to cater to a wider customer base. All this while ensuring constant improvement of its dealer network and intensified marketing strategy.
Tata Motors’ manufacturing plants met its capacity utilisation as the company had set individual targets for all products and plant locations to meet the enhanced requirement of capacity utilisation. Currently, Tata Motors (PVs) have a total annual capacity to manufacture 2.25 lakh vehicles at its plant in Pune which also houses a design studio. The capacity at company’s Sanand, Gujarat plant is 1.5 lakh units based on three shifts, however, the plant currently is running only 2 shifts and also the Electric Tata Tigor is being rolled out of Sanand as per the EESL tender. The company also has a plant in Ranjangaon with an annual capacity to rollout 65,000 vehicles and can be expanded to build 1 lakh units as and when required.
To further save costs, all future Tata Motors cars/SUVs will be based on two new modular platforms – Optimal Modular Efficient Global Advanced (OMEGA-ARC) and Agile Light Flexible Advanced (ALFA-ARC). The company is geared up to launch these new platforms by 2019. Tata H5X and Tata 45X concept cars based on this new platform where showcased at the Auto Expo 2018. The company says that ALFA-ARC will bring about high commonality across architecture for both hatchback and sedans. The OMEGA-ARC is a proven architecture for Land Rover and is suited for long SUV to a full-size sedan.
Tata Motors Pune plant will be the base of company’s new vehicles based on the new Omega-ARC platform starting with the Tata Harrier (H5X Concept) that is scheduled to launch during the first quarter of 2019 (CY). Bringing in more efficiency requires some strong stance and Tata Motors is bringing about many structural changes to optimise operations that will allow faster decision-making and overall execution of the annual production plans.
Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.