Tata Motors Aims To Turn India Business Profitable By March

Tata Motors Ltd. plans to cut costs, focus on new launches and improve supply chain as the maker of trucks and passenger vehicles looks to turn its Indian business profitable after four straight quarterly losses.

The turnaround plan will be carried out over the next six to nine months, Guenter Butschek, the company’s managing director and chief executive officer, said at a press conference in Mumbai on Monday. It was deemed necessary because India’s largest truckmaker’s earlier efforts are expected to yield results only after 18-24 months, he said.

Tata Motors reported a standalone loss of Rs 467 crore in the quarter ended June. It was largely due to the “double whammy” of pre-buying of medium and heavy commercial vehicles in the previous quarter, and purchases being deferred ahead of the Goods and Services Tax, said C Ramakrishnan, group chief financial officer.

The company has identified commercial vehicles as its immediate area of focus as it looks to boost market share by 5 percent. It’s share in truck sales fell to less than 50 percent in the year ended March, according to data by the Society of Indian Automobile Manufactures.

There are signs that commercial vehicle sales picked up in July, Butschek said. The sales, however, declined nearly 18 percent in the three months ended June over the year-ago period.

Apart from the cost reduction efforts, Tata Motors has also identified areas to improve its profit by Rs 1,500 crore in the current financial year, said Ramakrishnan.

Earlier this year, Tata Motors reduced its headcount by around 1,500 as it restructured its middle-management to streamline operations. A significant portion of the workforce was relocated to the company’s global delivery centre for better utilisation.

There are no other plans to reduce the workforce, Butschek said, though fresh hiring has been put on hold for now.