Tata Motors to invest Rs 4k cr towards new products

Homegrown auto major Tata Motors on Monday said it will invest Rs 4,000 crore in the current fiscal to bring new passenger and commercial vehicles to the market as part of its turnaround strategy.

The company also expects to save over Rs 1,500 crore and add to the bottom line in its domestic business through various cost optimisation exercises and hopes return to the black in 2017-18. Besides, it is looking at “temporary hibernation” of some of its production lines across different plants in order to optimise manufacturing.

In line with its new approach, the company also unveiled its new brand promise with tagline ‘Connecting Aspirations’. Tata Motors Managing Director Guenter Butschek said the company has embarked on a turnaround programme with the next 6-9 months being critical as against an earlier planned business transition, to be achieved on the next two to three years. The domestic commercial vehicles business is the backbone of Tata Motors, and the focus of the turnaround is on getting higher market share of 5% in this segment and launching new products faster in the market, he said.

“For the CV segment we have earmarked Rs 1,500 crore for FY18,” Butschek said, adding that 10 new products have been lined up. Out of these six will be in medium and heavy CV segments, while four products are in intermediate CV category, he said.

When asked about passenger vehicles, he said the investment would be of Rs 2,500 crore but did not share product launch details. Tata Motors will launch compact SUV Nexon next month. By 2019 it plans to launch the first product from its AMP platform which can have four body types, he said.

Commenting on the company’s ongoing turnaround programme, Butschek said the company has suffered last fiscal due to a combination -- of market volatility and its inability to respond quickly to the changing environment. Butschek said Tata Motors has undertaken a lot of initiatives to improve operation, which could potentially help it save Rs 1,500 crore and add to the bottomline. On a standalone basis, Tata Motors posted loss of Rs 467.05 crore for the June quarter of 2017-18 fiscal. It had registered a profit of Rs 25.75 crore in the same period of 2016-17. As part of the overall plan, he said Tata Motors is looking at manufacturing footprint optimisation.

Speculation annoying

Meanwhile, terming speculations over his future as Tata Motors MD and CEO in the wake of the changed leadership in Tata Sons as “annoying”, Butschek said that he was hired purely on professional merit and not personal loyalty.

Butschek, the former COO at Airbus, was appointed to lead the homegrown auto major in January last year by ousted Tata Sons chairman Cyrus Mistry. There has been speculations over his continuation after the change of guard at Tata Sons, with some high-profile appointments by Mistry, including Rakesh Sarna of IHCL, leaving the Tata Group.