Tata Motors has set itself an ambitious target of turning around its standalone operations by the end of this financial year even entailing its board members to review progress of every project on a monthly basis.
The Mumbai-based company, which is also India’s biggest automotive firm, is executing a major strategic and operational transformation for significant and sustained improvement in overall business and financial performance.
Last year, the company recorded its second-largest net loss (Rs 2,480 crore) since its inception 72 years ago. Market share in the commercial vehicle segment — its cash cow — was at its worst last year (44 percent) compared to previous years. In the passenger vehicle segment, its market share slumped to a third (5 percent) compared to its best period.
“The board proposes to review the agreed actions pertaining to the turnaround plan on a monthly basis with the management monitoring the same at various levels on a daily basis,” said the company.
Tata Motors’ board met twice in the final week of May to critically review the financial performance the company for FY17 which led to some major leadership and organisational changes. Less than a week after the May 31 board meeting concluded, Executive Director (commercial vehicles) Ravi Pisharody resigned from the company.
It is understood that managing director and chief executive officer Guenter Butschek along with the newly-appointed chief operating officer Satish Borwankar who are a part of the core team (Excom) will lead the transformational plan with a solid focus on getting the company back in the black in the next 1-2 years.
This transformation initiative under their leadership will cover all areas of operations - strategy, platform and product strategy, manufacturing, supply chain, employee and managerial productivity, cost reduction and efficiency improvements, improved effectiveness in sales and marketing and customer satisfaction / relationships and breakthrough improvements in achieving world class quality standards.
The company has over 100 individual initiatives on which various cross functional teams of high performers across the organisation have been identified and deployed.
It is further understood that commercial vehicle projects will be under review and tight scrutiny even as the approved passenger vehicle (PV) projects will move ahead as scheduled. The company, however, has decided to put at least one PV project on the back burner.
“The board did not feel the need to go ahead with an expensive project like the Racemo and it did not fit into the overall strategically critical objective of achieving a financial transformation. Internally we have set the turnaround target date to be 2018”, a Tata Motors senior executive told Moneycontrol.
Unveiled at the Geneva Motor Show in March, the Racemo is a two-seater sports car developed by TAMO (a step-down unit of Tata Motors), which was to be launched commercially next year.
Tata Motors may even revisit capital allocation to projects as there is now greater focus on cost control and cost efficiency, said a company source. Tata Motors sets aside Rs 4,500 crore every year as capital expenditure for the commercial and passenger vehicle business at the stand-alone level.
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