To keep production close to the retail demand Tata Motors will now sell stock directly to its dealers, for which it will shut down an 11-year-old distribution subsidiary.
TML Distribution Company (TDCL), which is a 100-percent subsidiary of Tata Motors that manages about 6,600 touch points of passenger and commercial vehicle sales and service across India, will close operations soon.
TDCL provides distribution and logistics support for the distribution of Tata Motors products throughout India. TDCL has set up stocking points at some of Tata Motors’ plants and at different places throughout India.
Speaking to analysts, P B Balaji, CFO – Tata Motors said, “Tata Motors distribution legal infrastructure, that entity is now being wound down. We sell directly now from here on, that will consolidate stockholding into Tata Motors and it will also simplify operations.”
With a share capital of Rs 225 crore, TDCL clocked profits of Rs 46.5 crore on revenue of Rs 3,389 crore last financial year, as per disclosures made by it in the 2018-19 annual report.
“We are rationalizing our distribution organization to consolidate stock holding and simplify operations. We have not announced any closure yet. To rationalize our distribution, we will send stocks to dealers directly,” said a Tata Motors spokesperson responding to a query sent by Moneycontrol.
The decision to wind down the distribution company is recent, given the fact that the company spoke in favour of having such a subsidiary in the latest annual report.
Tata Motors believes that TDCL has improved the efficiency of its selling and distribution operations and processes. The company uses a network of service centres on highways and a toll-free customer assistance centre to provide 24-hour roadside assistance, including replacement of parts, to vehicle owners, said Tata Motors in the 2018-19 annual report.
“TDCL helps us improve planning, inventory management, transport management and timing of delivery,” the report further added.
Tata Motors has switched to reporting retail numbers as the company is trying to focus on pushing retails. While the wholesale numbers declined by 30 percent during the April-June quarter, retails declined by only 7 percent for the company.
“I think our focus is going to be on strengthening the brand in the innovation intensity stemming out of the two architectures that we have, and again focus on dealer profitability and shift the focus to retail. There was a new passenger vehicle showroom that has the new brand image of Tata Motors. The first one got launched on July 23,” said Balaji.
The employees of TDCL will most likely get absorbed within the Tata group including Tata Motors group companies.
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