A PROJECT ON REPORT
TO SINHGAD INSTITUTE OF BUSINESS ADMINISTRATION AND RESERACH BY P.G.D.M (Mktg.) Roll No. AM-27 2009-2010
SIBAR PUNE- 411048
CERTIFICATE This is certifying that the project title Mr.
“TATA MOTORS” is a bona-fide work done by
NISHANT KUMAR AKELA in the partial fulfilment of requirement for the award of PGDM [Autonomous] of SINHGAD BUSINESS SCHOOL [SIBAR]. He has worked under our guidance and direction. His work is found to be satisfactory and complete in all respect. ………………….. Director Date: PLACE :- PUNE Guide Date:
The sole efforts of any Individual are not sufficient enough to complete the Project. The completion of a project involves the effort and interest of many people. Same is the case with our project. There are many people whom we have to thank who directly or indirectly helped us a lot in completion of our research. The goal was fixed and we began with a determined resolved and put in ceaseless sustained hard work. The higher the summit, the harder is the climb. There were times when the goal looked beyond reach but all difficulties were accepted as challenges. Greater the challenge, greater was the effort to overcome it. We would like to acknowledge sincere thanks to our college for giving an opportunity to work on this project and providing the necessary informations. The credit goes to Our faculty members. Their constant guidance ensured that we come out of the woods whenever any difficulties were encountered. Above all there was and is and will always be the love of all the professors for what is written in this report and has been the fruits of experience that they taught us. Finally thanks to my parents and friends. It was due to their support, motivation and encouragement.
1 2 3 4 5 6 7 8 9 10 11 12 Certificate Acknowledgement Indian Automobile industry TATA TATA Motors Marketing Strategy of Xeta & NANO Financial strategy of TATA MOTORS HR strategy at TATA MOTORS Operational strategy at TATA Motors TATA Motors sales in figure Conclusion Refrences
2 3 5 9 10 12 20 28 32 37 37 38
INDIAN AUTOMOBILE INDUSTRY
The Indian automobile sector is growing at a rate of about 16% per annum and is now going to be a second fastest growing automobile market in the world. In the Indian automobile industry, SUVs today account for only 15 per cent of the total market unlike western countries where it is almost 80 per cent. Small car segment which contributes to more than 60% of the total car sales will remain a key segment in the Indian car market. As of 2006, small cars made up more than two-thirds of India's passenger car market. Currently India is the second largest manufacturer of small car, second only to Japan. • India ranks 12th in the list of the world's top 15 automakers. • Entry of more international players. • Concentrated in regions. • Market size estimated to be of Rs.225 Thousand crores ( $45 Billion) • Contributes 5% to the GDP. • Production of four wheelers in India has increased from 9.3 lakh units in 200203 to 23 lakh units in 2007-08. • Targeted to be of $ 145 Billion by 2016. • Exports increased from 84,000 units in 2002-03 to 280,000 units in 2007-08.
SHARES OF INDIA IN GLOBAL AUTOMOBILE INDUSTRY
MARKET SHARE BY SEGMENTATION FOR CARS
Market Share (%) Economy Mid Size (2007-2008) Premium Luxury
CHALLENGES IN INDIA’S AUTO SECTOR.
Personnel - competition for talent is increasing, attrition rates are increasing, labor reforms are overdue, unions add political risks and staff costs are rising Socio Cultural - expect un-kept promises and / un-met deadlines, short term thinking and actions Bureaucracy - slow decision making, hierarchy, political interference, rampant Corruption Others - delays in Infrastructure, cultural divide in poverty, key reforms are slow in coming and shortage of electrical power.
The Tata Group, a business conglomerate with a presence in over 80 countries and a work force of around 290,000 people. The Tata Group comprised 98 companies of which 27 were publicly listed. In 2003, the Tata Group had a presence in seven key industry business sectors materials, engineering, energy, consumer products, chemicals, communications and IT, and services. The group consisted of some 80 companies. The materials business included basic steel products, tubes, bearings, and agri tools. The engineering business included passenger cars, utility vehicles, trucks and buses, construction equipment, industrial machinery and commercial cooling equipment. The energy business included hydroelectric power projects. The consumer products business included the group's tea, coffee, food products, home appliances, watches and clocks, jewellery, garments and home security solution, ceramics, water coolers and air conditioners. The chemical business included agri products like insecticides, fungicides and herbicides. The IT and telecommunications business included the group's software, telecommunications, other IT-related services, and automation and control system offerings. The services business included the group's financial services, mutual funds, hospitality, publishing and export offerings.
Tata Motors, previously known as Tata Engineering and Locomotive Co Ltd (TELCO) (Telco to tata motors in july 2003) is one of the largest companies in the Tata Group, and one of India's largest business houses. Tata Motors is India's leading commercial vehicle manufacturer and the third largest passenger car manufacturer. The company is the sixth largest truck manufacturer in the world. Tata Motors, the largest automobile company in India. The history of Tata Motors, earlier Tata Engineering & Locomotive Company Ltd. (Telco), can be traced back to the early 1920s. The Telco plant at Jamshedpur, originally belonged to Peninsular Locomotive Company (Peninsular), which was established in 1923. In 1927, Peninsular was taken over by East India Railway to manufacture passenger carriage underframes for the Indian Railways. In 1945, Tata Sons purchased the plant from the Government of India and used it to manufacture steam locomotive boilers and other engineering products, under the name Telco. It tied-up with Daimler-Benz in 1954 to produce commercial vehicles (CV) and later manufactured the same independently, after the tie-up ended in 1969. Telco (Tata Engineering and Locomotive Company Ltd.) began production of medium commercial vehicles in 1954. The company started manufacturing heavy commercial vehicles in 1983 and light commercial vehicles in 1986. TATA Motors entered car market by launching Tata Sumo in 1994 and Tata Safari in 1998. Variants of these models are also available in the market. The company launched the compact Tata Indica in 1998, the sedan Indigo in 2002 and the station wagon Indigo Marina in 2004. The next car that was rolled out was Nano, in January 2008.
TATA MOTORS PERCENTAGE OF SHARE IN INDIAN AUTOMOBILE INDUSTRY
MARKETING STRATEGY FOR TATA INDICA AND TATA NANO
Tata Indica V2 Xeta: Competing in the Indian Small Car Market
In January 2006 the company launched the Indica V2 Xeta Petrol (Xeta) car as a refurbished version of its existing petrol car Indica V2 Petrol MPFI. According to the company, Xeta was to benefit the customer by better meeting their needs compared to existing options in the market - specifically by rendering better fuel efficiency at a competitive price. Indica was an umbrella brand under which Tata Motors had developed both diesel and petrol cars.
"The Tata Indica story resembles the fable of the ugly duckling in some ways, with one crucial difference: the country's first indigenously designed and manufactured passenger car never looked less than pretty. But, like the duckling of the fairy tale, it has emerged stronger and more beautiful than ever after overcoming global competition and a recessionary market."1 - K. A. Ananthram and Mohini Bhatnagar, independent columnists, in October 2000. "Tata Motors has always been known as a diesel carmaker, despite the fact that they know petrol too. Tata now wants to shake off that image and plant the Indica firmly in the minds of petrol punters too. And this is precisely the reason for the new Xeta variant."3 Siddhraj Singh, an auto-analyst with Autocar India, in 2006.
TELCO entered the passenger car market, introducing three multi-utility vehicles, "Tata Estate" and "Tata Sierra" in 1991-92 and "Tata Sumo" in 1995-96.
Indica: More Car Per Car
Tata Motors has the unique distinction of giving India its first and only indigenously built passenger car - the Tata Indica. The Indica launched in 1998 reached the 2,50,000 sales mark within 52 months of launch. In December 1998, Tata Motors launched the first indigenously developed compact car, the Indica. The model was displayed at the Auto Expo'98 . To underline the "Made in India" image, the Tata Motors stall at the exposition had models and organizers dressed in Indian attire. At the inauguration function, which was attended by the then Union Industry Minister Murasoli Maran , hundreds of children waved the Indian flag. The Indica project was named Project Mint (short for Mini Telco), when it was commissioned. This car was partly designed and developed by Tata Motors, the original design being that of the French car manufacturer Peugeot.
TATA Motors entered into the compact Car segment with Launch of India’s first Indigenously developed car INDICA Basic Concepts of new Car • Space • Easy entry and exit • Safety • Economy of diesel • Price • Contemporary design India’s Car, India’s Pride • A car exclusively for the middle class Indian. • A car designed for India rather than a car adapted for India • More car, per car • Value for money • Pre launch promotions and brand building exercises “We give you value for your money. Coming up shortly, so wait for it ”
First Year – 55758 cars • Cumulative sales for Indica were growing by 37% 13
• Target Audience – Middle class family man – Young working Executive • Loyalty Programme – Indica Club
RATIONALE BEHIND THE LAUNCH OF INDICA V2
The Xeta was developed by Tata Motors as a pre-emptive move to fight competition, mainly from MUL and HMIL in the passenger car segment. The Xeta's "eXtra Efficiency Torque Advantage" according to the company, was proffered as an answer to the market demand for fuel-efficiency at a competitive price. Xeta was a refurbished version of the company's Indica V2 Petrol car. Analysts said that through Xeta, Tata Motors intended to create a unique brand identity in the mind of the customer for the petrol variant of Indica. The company intended to make a major impact in the petrol driven compact car segment with the Xeta. For the Indica, although the diesel-engined version continued to ring the cash registers, the sales of the petrol variant (Indica V2 Petrol car) failed to gather momentum in spite of the engine having seen refinements since it was commissioned. This, analysts said, could possibly be attributed to two factors: Tata Motors' lack of experience with petrol cars compared to other small-car manufacturers with established credentials in this segment, and the fact that the 'big and powerful' tag is not necessarily a positive attribute for a petrol car in the extremely fuelefficiency conscious small-car segment.
MARKETING STRATEGY FOR LAUNCH OF XETA
POSITIONING Through Xeta, the company intended to create a unique brand identity in the customer’s mind for the pertol variant of indica. Car was targeted at young buyers, PRODUCT AND PRICING - EXTRA EFFICIENCY ADVANTAGE Tata Motors strove to improve and refine its product continuously but customer feedback was not always positive in all respects. The Indica V2 Petrol's 1.4 litre engine had become a handicap as it was the biggest in the small car segment. Also, it shared the same block as its diesel counterpart, making it inherently heavy. Xeta was to bought the customer specifically by rendering better fuel efficiency at a competitive price. The Xeta's "eXtra Efficiency Torque Advantage" according to the company, was proffered as an answer to the market demand for fuel efficiency at a competitive price. Tata Motors had launched a new range of the Indica V2 Xeta with a 1.2-litre engine option at an introductory limited period discount of Rs 25,000. and also various bank loans so that even the common man can afford it. The range is available in four models — GV, GVE, GVS and GVG and comes with maximum power of 65.3 PS @ 5,000-5,200 rpm and maximum torque of 10.2 kgm @ 2,600 rpm. TECHNOLOGICAL ADVANCEMENTS TATA Motors was the first Indian automobile maker in India to launch the first indigenously developed car “Indica”. It highlighted it technological advancement PROMOTIONAL STRATEGIES Xeta was promoted through various media: television, print, and the Internet. The television campaign 'You Gotta Be Dumb' was conceptualized by FCB Ulka. M G Parameswaran, Executive Director, FCB Ulka, said, "The creative team looking after Indica had a leap idea, that not looking at Xeta is like refusing to have a good time with four lovely women. When you see an advertisement like the Indica Xeta, you instantly remember the scene from Dumb and Dumber and it's this that the advertisers are aiming for. Now every time you think of Dumb and Dumber, you'll be thinking of the Indica Xeta as well."
social media They believed that the biggest potential of the medium is in the area of "social media" applications -- user generated content, virals, contests and word of mouth, for instance. The Xeta Shootout Contest is an attempt to leverage this social media aspect of the web.
RETAIL NETWORK SUPPORT Tata Motors' sales and distribution network in India consisted of 720 dealer outlets which were supported by eight regional offices, 28 regional sales offices and 38 sub-regional offices. Most of the dealers were exclusive dealers. The company had a presence at over 2,000 locations in India, including after-sales and vehicle servicing outlets. Tata Motors entered into an agreement with MG Rover U.K for manufacture of Rover branded Tata Indicas in U.K and continental Europe. Touted as the high point of Indian manufacturing industry , the deal of tata motors with city rovers to sell 100,000 Tata-made cars under the brand name - CityRover - over five years. Tata Motors launches CityRover – Indicas fashioned for the European market. The first batch of CityRovers rolled out from the Tata Motors stable in Pune on September 16, 2003. Rover launched the car in October 2003 in four versions, priced at £6,495-8,895. SUBSEQUENT MODIFICATIONS In November 2006, Tata Motors launched a new 1.2-litre engine option for the Xeta range at an introductory limited period discount of Rs 25,000. The new variant followed the reduction in excise duty (16 per cent excise duty vis-à-vis 24 per cent for the petrol model with a 1.2-litre engine,) in the Union Government's Budget 2006-07.
Immediately after the launch of Xeta in January 2006, the passenger car business unit of Tata Motors reported a growth of 15 percent over January 2005 by selling the highest number of passenger cars till then. The Indica brand grew by 18.7 percent which was attributed mainly to the launch of Xeta. In January 2007, it was reported that Tata Motors Limited (Tata Motors) beat close rival Hyundai Motor India Limited (HMIL)4 to capture the second position in the fast-growing passenger car market in India, behind market leader Maruti Udyog Limited (MUL). In December 2006, Tata Motors' car sales stood at 12,665 units against HMIL's 11,049 units. 16
The growth for Tata Motors came in the compact car segment, primarily driven by the strong performance of the Tata Indica (Indica) range. In January 2007, the Indica reported its highest ever monthly sales since launch, at 14,466 units, a growth of 14% over January 2006. Industry analysts said that this growth was mainly due to the launch of the Indica V2 Xeta (Xeta) in January 2006, and subsequently its revamped version in November 2006.
In 1998 , Ratan Tata announced his dream of giving a car for one lakh. Mr. Ratan Tata is quoted as having said he was motivated to develop an inexpensive car when he saw, “the father (riding) the scooter, his young kid standing in front of him, his wife seated behind him holding a little baby.” The project to make the cheapest car in the world started in 2003. It was reported that right from the beginning, the designers were asked to be as frugal as possible to maintain the low price of the car. In India, owning a car was considered to be a luxury. Most of the people opted to drive two-wheelers, as cars were not affordable. Tata Nano was targeted at the segment of two-wheeler drivers who wanted to buy a car if it was available at an affordable price.
LOW COST AND QUALITY
The launch had raised thousands of questions about the quality of the car and the performance. But the look of the car silenced many critics. Tata proved that cheap does not always mean bad quality. Nano looks better than most of the small cars that are there in the Indian market. According to the company, the Nano also meets all emission and safety norms, including (frontal) crash test norms in India. Its fuel efficiency is expected to be in the range of 18-20 kilometres per litre.
On the technology front, the Nano certainly epitomises India’s progress in innovation, packed as it is with several firsts. Tata Motors has filed over 34 patents for the car.
The new brand Nano will do two major changes in the Indian markets: a. It will open up a new segment in the Indian Four Wheeler Industry b. It will inspire many Indian entrepreneurs to have grand vision. The 1700 crore investment that Tata made in this project will be an eye opener to many who are reluctant to put their money in R&D. I think Nano will redefine the pricing in the Indian small car market. Either companies like Hyundai , Maruti may have to cut the prices of existing small cars or they have to comeout with a similar priced car. Nano will be making cars an affordable luxury for many Indians. To a limited extend it will affect the two wheeler segment but only to a limited extent. The reason is in the running cost and maintenance of four wheelers. At the current oil prices, Cars are still expensive to run & maintain. It cannot in the near future replace the functionality of a two wheeler until cars match the fuel efficiency of two wheelers.
The $2,000 Nano went on display in showrooms across India on April 1 , 2009 and buyers will be able to make reservations for what has been dubbed "The People's Car" from April 9. The car will be available in three variants – one basic version and two deluxe versions. The on-road price of the basic model (with manual transmission and without air-conditioning, electric windows and power steering) after registration, taxes and insurance will be around Rs125,000 whereas the deluxe models will cost around Rs150,000. The firm could sell just up to 50,000 Nano cars in the first year, with production limited because of a violent land ownership dispute that forced a shift in production from West Bengal state to Gujarat in the west. The first Nanos will roll out from existing plants, until the new Gujarat plant opens late this year or early next.
MARKETING STRATEGY FOR TATA NANO
Tata will sell its ultracheap new car through its own retail and electronics megastore outlets as well as auto dealerships. It will opt for "cost-effective and innovative use of media. To make the car more easily accessible to people, the Tata Motors team will sell the Nano not just through Tata car dealerships across the country, but also through conventional retail outlets like Westside and Croma.
Westside is a lifestyle retail brand and Croma is an electronic megastore. Both are owned by the Tata group. Westside and Croma outlets will display the Nano and also take bookings. Also available will be a whole range of Nano merchandise like baseball caps, T-shirts and key chains, among others. Tata Motors will share promotion of the Nano brand with its multiple PSU bank partners. These PSU financiers will promote the Nano brand during booking jointly with Tata Motors and on their own. . Unlike most small cars, Nano won't be big on advertising. There will be no TV campaign, only innovative use of print, radio and other media, particularly the web. The Tata team is working on Nano news in papers, Nano breaks on radio, Nano appearing in the form of messages or ticker news on TV, online Nano games, Nano chatrooms on the Net, Nano pop-ups on major websites and Nano conversation on Facebook, Orkut and blogspaces. It will be also depending on word-of-mouth campaign.
FINANCIAL STRATEGIES OF TATA MOTORS
1. TATA MOTORS FINANCIAL STATEMENTS
TATA MOTORS SHAREHOLDING • Indian Promoters : 33.7% • Foreign collaborators : 0.0% • Indian inst/Mutual Fund : 14.2% • FIIs/GDR : 32.8% • Free float : 19.3% • Shareholders : 221,403 • Listed on BSE: 500570 (scrip no.) NSE: TATA Motors NYSE: TTM
COMPARATIVE BALANCE SHEET OF TATA MOTOR For the year ended 31st march 2008
2. MERGERS AND ACQUISITIONS
The company had chalked out a globalization strategy in early 2003, and had created a merger & acquisition (M&A) team to look out for acquisition targets. In 2004, Tata Motors, a part of the Tata Group, completed its first-ever global acquisition - that of Daewoo Commercial Vehicle Company Limited (DWCV) in South Korea. In July 2006, major Italian automaker Fiat Auto S.p.A. (Fiat Auto), and the Indian
auto major Tata Motors (TM), signed a Memorandum of Understanding (MoU) to form a joint venture to produce passenger cars, engines, and transmissions in India. These products were intended both for the Indian and the international market. Earlier, in January 2006, the two companies had signed a marketing and distribution agreement under which TM marketed select models of Fiat cars through a few of its dealers. This event was followed by the acquisition of British brands - Jaguar and Land Rover (JLR) from Ford Motor Company (Ford) in June 2008. On March 26, 2008, Tata Motors entered into an agreement with Ford for the purchase of JLR. Tata Motors agreed to pay US$ 2.3 billion in cash for a 100% acquisition of the businesses of JLR. As part of the acquisition, Tata Motors did not inherit any of the debt liabilities of JLR - the acquisition was totally debt free. The company had acquired Jaguar and Land Rover (JLR) from the US-based Ford Motors for US$ 2.3 billion in June 2008. To finance the acquisition, Tata Motors raised a bridge loan of US$ 3 billion from a consortium of banks. By the end of January 2009, Tata Motors was yet to pay around US$ 2 billion towards the bridge loan. Moreover, JLR needed further investments, that too quickly, to keep the operations running.
MAJOR MERGERS & ACQUISITION BY TATA MOTORS
1993-TATA Cummins Ltd. 1994-TATA Holset Ltd. 1994-Mercedes-Benz India Ltd 1997-Concorde Motors Ltd. 2004- Daewoo commercial vehicles comp. 2008-Jaguar Land Rover
Ford, a leading automaker and one of the largest multinational corporations in the global automobile industry, acquired Jaguar from British Leyland Limited in 1989 for US$ 2.5 billion. Ford bought Land Rover in 2000 for US$ 2.7 billion from BMW. Over the years, the operations of both Jaguar and Land Rover were fully integrated. The Jaguar Land Rover business employs some 16,000 people, predominately in the UK, including some 3,500 engineers at two product development centres in Whitley, Coventry and Gaydon, Warwickshire. Jaguar was involved in the manufacture of high-end luxury cars, while Land Rover manufactured high-end SUVs.
Financing the deal
Tata Motors raised US$ 3 billion, about 30% more than the agreed acquisition price of US$ 2.3 billion. The additional funding was meant for engine and component supply, for which Tata Motors had entered into a separate agreement with Ford, for any contingencies and requirements that may arise in the future, and for the working capital requirements of JLR. POOR OUTCOME The company was able to repay only US$ 1 billion by the end of 2008. Tata Motors was required to repay the entire amount of bridge loan by June 2009. Due to adverse financial conditions and credit freeze, Tata Motors announced that it was planning to roll over the bridge loan, which was estimated to further add to the debt burden of the company. The automotive sector in India suffered severe contraction in demand, arising from major financial and other market upheavals. This exacerbated the lack of liquidity and unavailability of consumer finance."
REASON FOR ACQUISITION
1) The management of Tata Motors was of the view that the acquisition of JLR, which had a global presence and a repertoire of well established brands, would help the company become one of the major players in the global automobile industry. Both Land Rover and Jaguar have the one thing Tata’s vehicles can barely boast of—a premium tag—and that might be the one reason Tata is willing to put an all-out bid even though the units are loss making. Mergers and acquisitions is perhaps the only quick way to build a brand. To do from scratch requires a lot of time and investment. 2) The acquisition offer seemed to open up possibilities for strong synergies like expansion of the product line, good R&D capabilities and new markets. Prior to Acquisition 78 percent of Land Rovers produced in UK was exported to 169 countries and 70 percent of Jaguars exported to 63 countries, with sales to customers conducted principally through franchised dealers and importers. 3) The initial response from the employees of JLR toward the Tata Motors-JLR deal was positive. An internal survey carried out in early August 2008 showed that the employee satisfaction was at 78% as against 41% during the preacquisition days.
4) It also gave Tata Motors the opportunity to de-risk its business by countering domestic market cyclicality through overseas expansion. 5) Tata Motors was poised to gain because of its low-cost quality manufacturing at close to European standards. Tata Motors’ vehicles meet international norms like Euro III emission for Passenger cars, Euro II for Light Commercial Vehicles including pick up vans and European standards for frontal and side safety impact for passenger cars. It has a series of quality systems in place including ISO accreditation from Bureau Veritas Quality International (BVQI). 6) Owning luxury brands will also help firms tap into the growing demand for such products in India. India is now home to more than 83,000 millionaires, people with more than $1 million in net assets, according to a 2006 report by finance company Merrill Lynch and consulting firm Capgemini. This has seen the entry of luxury brands such as Gucci and BMW. 7) Tata Motors was interested in acquiring JLR as it would reduce the company's dependence on the Indian market, which accounted for 90% of its sales. The company was of the view that the acquisition would provide it with the opportunity to spread its business across different geographies and across different customer segments. 8) In December 2002, Telco had signed a manufacturing and supply agreement with the UK-based MG Rover Group . Under the agreement, Telco was to supply the Indica, suitably modified to meet the applicable regulatory standards, to MG Rover, which would then sell it in the UK and in Continental Europe as the City Rover. Telco also planned to simultaneously market the Indica in Europe through its own distribution network. This helped TATA Motors in marketing its Indica car in UK. 9) Tata Motors has been short-listed for South Africa’s "Taxi Project" in which the government will provide an entirely new transport system in that country Though Land Rover sales have been softening in some markets especially in Europe, on a six month basis Land Rover sales have gone up over 2007 globally, mainly because of higher volume of sales in Russia and China. In June 2008 Jaguar was sold 3836 units in West Europe as compared to 2924units sold in June 2007. It was a 31% increase.
THE ROAD AHEAD
One of the major problems for Tata Motors could be the slowing down of the European and US automobile markets. It was expected that the company would address this issue by concentrating on countries like Russia, China, India, and the Middle East.
HR STRATEGIES OF TATA MOTORS
Tata Motors, part of the Tata Group, one of the largest business conglomerates in India with a presence in over 80 countries and a work force of around 290,000 people. In 1938, JRD Tata was appointed as the head of Tata group. In 1956, he initiated a programme of closer "employee association with management" to give workers a stronger voice in the affairs of the company. Five core values - Integrity, Understanding, Excellence, Unity, and Responsibility directed the group's growth andbusinesses. Currently, automobile sector in India is retaining around 10 million employees and is expected to employ more people in near future. Unorganized sector in employing 67% people while, organized sector is employing only 33% people, which is a major drawback for automobile sector. With this rapid expansion and coming up of major players in the sector, the focus is more on the skilled employees and the need of human resource development has increased. The companies are looking for skilled and hard working people who can give their best to the organization. Various companies are opening training institutes to train interested ones in this sector, like Toyota has recently opened Toyota Technical Training Institute (TTTI) near Bangalore that will offer 4 courses in automobile assembly, mechatronics (a combination of mechanical and industrial electronics), automobile weld and automobile paint. TTTI will provide both a high standard of education and training in automotive technology as well as employment opportunities.
HR PHILOSOPHY AT TATA MOTORS
• • • Caring, show respect, compassion and humanity for colleagues Work cohesively with colleagues across the group Encourages self-sufficiency
The following diagram shows the overall HRM process at TATA Motors
HR at TATA Motors
1) Building cross functional teams of high performing professionals with clear career paths for individuals. 2) Started PEP (Performance ethic programme) to promote young dynamic personnel to higher positions to replace the policy the policy seniority based promotions and to create new socially vibrant neworks. 3) Revamped its PMS (Performance Management System) by aligning KRAs (Key Result Areas) with business strategy at all levels. Compensation and rewards were linked to performance. They made performance and reward system transparent and fair within the organization boosting the employee’s initiative to succeed. 4) Selective hiring 5) Job fitting 6) Better training and development for all and one 7) Providing better working environment 8) Motivating people to work hard 9) High retention of skilled employees 10) Institutionalized tailored management development program for officers 11) TATA Motors gave high value project involving risk to its young minds. E.g., Small truck project “Ace”. 12) Tata Motors encourages self-sufficiency with the aim to improving the confidence, morale and lives of its employees and their dependents. Employees' relatives at Pune have been encouraged to form various industrial co-operatives engaged in activities such as re-cycling of scrap wood into crates and furniture, welding, steel scrap baling, battery cable assembly etc. The Tata Motors Grihini Social Welfare Society caters to employees' women dependents'. The women folk make a variety of products, ranging from pickles and uniforms to electrical cable harnesses etc. 13) Executive Selection Scheme (ESS) ESS is a fast track programme for accelerated growth of high potential professionals. This facilitates their early advancement to challenging and visible assignments through a very systematic procedure. Candidates selected gain a huge lead in terms of promotion and learning. They are promoted to Manager's level thereby saving almost 10 to 13 years of work time. The successful candidates are 30
relieved from their current jobs and put on various project based training programmes under the guidance of senior managers in the Company. If the candidates do not possess management education, they undergo a 4 months MEP at IIM, Ahmedabad. After successful completion of training the candidates are mandatorily rotated across departments to acquire general management skills.The ESS is a jewel in Tata Motors overall profile as it provides a platform for every employee of the Company to perform and achieve maximum potential. The HR-Training Division of Tata Motors has also bagged the prestigious and internationally recognized “Golden Peacock National Training Award” in the category of ‘Large Employer’. 14) TATA Motors acquisition of the Daewoo truck unit in korea highlighted the big gap between the productivity levels of Korean and Indian workers. About 600 workers in Korea make trucks that are stronger than what 1,000 workers in Jamshedpur make. Thus TATA Motors had been more conscious on providing training and development to its workers in order to raise the productivity.
OPERATIONS MANAGEMENT AT TATA MOTORS
A comprehensive quality improvement and cost cutting initiative in September 2000, has played an important role in the company's turnaround, from a loss of Rs 500 crores in the year ended March 2001 to a profit of Rs 28 crores in the first quarter of 2002-2003. In 2003, Tata Motors recorded net sales of Rs.9093.2 crores and a net profit of Rs.300 crores. If you introduce a new vehicle, for example, and the management cannot adequately determine what the market wants, the company is in trouble. Theoretically, the top managers of a company should take up the role of that ideal customer. They should be driving their competitors' vehicles, they should be driving the best-of-breed vehicles, and they should be making cost comparisons. "While a top manager should be the ideal customer, he should also be the greatest critic of his company's products. If the CEO compromises, or is only looking at the margins, then even if he is successful, the company's success will be short lived. - Ratan Tata, the Chairman, Tata Group
Tata Motors had all along believed in developing strong in house design, engineering, and manufacturing capabilities. Tata Motors performed a large part of its manufacturing activities in-house. It had installed facilities to manufacture engines, gearboxes and transmission mechanisms, body panels, castings and forgings and important components & sub-assemblies. It even manufactured its own machine tools, dies and fixtures, in its machine tools division. Tata Motors owes its leading position in the Indian automobile industry to its strong focus on indigenization. This focus has driven the Company to set up world-class manufacturing units with state-of-the-art technology. Every stage of product evolution-design, development, manufacturing, assembly and quality control, is carried out meticulously. Our manufacturing plants are situated at Jamshedpur in the East, Pune in the West and Lucknow in the North.
Established in1945, the Jamshedpur unit was the company's first unit and is spread over an area of 822 acres. It consists of 4 major divisions - Truck Factory,
Engine Factory, Cab & Cowl Factories, and the Novus. The divestments in March 2000 hived off the Axle and Engine plants into independent subsidiaries viz. HVAL &HVTL, respectively. The Truck Division boasts of two assembly lines. The main assembly line, measuring 180m in length has 20 work stations with a vehicle rolling out every 8 mins. The other line is dedicated to special purpose vehicles and for meeting the requirements of the Indian Army. Tata Motors, Jamshedpur, plays an active role in serving rural communities surrounding its Works through various community centres. While striving to create a culture for self-help amongst the local populace, it has made significant progress in community and social forestry, sustainable development of wastelands, road construction, rural health and education, development of rural industries, water supply and family planning. A signatory to the UN Global Pact, it also takes various initiatives in human rights protection, labour standards, environmental issues, modern effluent treatment facilities, sanitation drives, soil and water conservation programmes, tree plantation drives, etc.
The Pune unit is spread over 2 geographical regions- Pimpri (800 acres) and Chinchwad (130 acres). It was established in 1966 and has a Production Engineering Division, which has one of the most versatile tool making facilities in the Indian sub-continent. It houses a Vehicle manufacturing complex which is one of the most integrated automotive manufacturing centers in the country producing a large variety of individual items and aggregates. It is engaged in the design and manufacture of sophisticated press tools, jigs, fixtures, gauges, metal pattern and special tools, as well as models for the development of new ranges of automobile products. Its capabilities have enabled Tata Motors to introduce new products and improve existing ones without resorting to imports of dies or fixtures. Four assembly lines have been established, one each for MCVs and HCVs, LCVs, Utility vehicles and one for Passenger Cars (Indica and Indigo). The shops are fully automated ensuring that there is minimal chance for error in the manufacturing processes. After the car is completely assembled, it goes through several checks like wheel alignment, sideslip test, brake test, shower test, and a short test run before it is ready for dispatch. All systems such as materials management, maintenance and other activities are computerized, enabling smooth operations and minimum inventory needs.
Tata Motors Lucknow is one of the youngest production facilities among all the Tata Motors locations and was established in 1992 to meet the demand for Commercial Vehicles in the Indian market. The plant, rolls out commercial vehicles and is specialized in the designing and manufacturing of a range of modern buses which includes Low-floor, Ultra Low-floor, CNG & RE Buses. Our plant, rolls out commercial vehicles and is specialized in the designing and manufacturing of a range of modern buses which includes Low-floor, Ultra Lowfloor, CNG & RE Buses.
The company has set up a plant for its mini-truck Ace and the passenger carrier Magic (based on the Ace platform) at Pantnagar in Uttarakhand. The plant began commercial production in August 2007. This is the company's fourth plant, after Jamshedpur (commercial vehicles), Pune (commercial vehicles and passenger vehicles) and Lucknow (commercial vehicles).
The company was in the process of constructing a plant in Singur, West Bengal , but due to continued agitations and hostility at Singur, TATA Motors decided to shift the NANO Plant at Sanand in the state of Gujrat on 3rd Oct 2008. The integrated project manufacture of the Nano in Sanand will have an initial capacity of about 250000 cars per annum.
2) PRODUCT DEVELOPMENT
Sumant Moolgaokar, Chairman Tata Motors, from 1970 to 1988, had played an important role in shaping Tata Motors's R&D philosophy. Moolgaokar once commented: "We spend a lot of money, Rs.10 to Rs.12 Crores (US$7 to 8 million at prevailing exchange rates) on R & D. It is our strong point...in a manufacturing industry research and development is a series of mistakes by which you benefit. It gives our people excitement and real knowledge. My singular contribution has been to build a team. We regard our whole operation as one big training facility". Tata Motors’ Engineering Research Centre has over 900 scientists and engineers dedicated to product and process development, technology upgradation and new product introduction. Besides, the Company works with leading international design and styling houses. Tata Motors has over 1400 engineers and scientists in six R&D centers in India, South Korea, Spain and the UK.
The company's R&D facilities include India's only crash-test facility and a hemianechoic chamber for testing of noise and vibration. The company draws on the expertise of leading international design and styling houses such as the Institute of Development in Automotive Engineering and Stile Bertoni in Italy. TATA Motors starts working on new products that would be required by the market after 3-5 years.
3) VENDOR MANAGEMENT
In 1997, Tata Motors promoted Tata Autocompsystems Limited (TACO) with the objective of forming joint ventures with international auto component manufacturers and giving a special thrust to vendor development.
4) COST CUTTING
To cut costs, Tata Motors tried innovative techniques such as zero-based costing. The company's engineers re-worked the cost of components all over again. For example, earlier, Tata Motors paid for its forged components on a cost-plus basis as claimed by a vendor. Under the new system, it paid a price depending on the weight of the forging, leading to savings of 25%.
5) QUALITY MANAGEMENT
Tata Motors started a comprehensive quality improvement initiative in September 2000. The initiative played an important role in the company's turnaround, from a loss of Rs.500 crores in the year ended March 2001 to a profit of Rs.28 crores in the first quarter of 2002-03. Every year, about a quarter of Tata Motors' workforce went through training courses, which were rated highly in the Indian engineering industry. Personnel were trained before building workshops. In case of imported machines, engineers and workers were sent to the foreign manufacturer's facilities to receive training well before the arrival of the machine. TATA Motors is focused on Improving Product Quality and upgrading product features.
6) Acquisition for inorganic growth
1993-TATA Cummins Ltd. 1994-TATA Holset Ltd. 1994-Mercedes-Benz India Ltd 1997-Concorde Motors Ltd.
2004- Daewoo commercial vehicles comp. 2008-Jaguar Land Rover
7) CUT IN ENERGY CONSUMPTION
Energy Cost as % of Manufacturing Cost has come down. This resulted in saving of Rs 10.7 crores in energy during 2003-04.
8) DISTRIBUTION NETWORK
The new subsidiary company TATA Motors had formed, which is the TML distribution company, which will be a central focal point for sales and distribution operations and logistics operations for Tata Motors. 9) The Tata Indigo was declared the best value for money car at the prestigious CNBC Auto Car Auto Awards 2003. Tata Indica had also received the voice of the customer award for the best diesel small car at NFO Automotive India 2002. In October 2003, Tata Motors received the Balanced Scorecard Collaborative Hall of Fame Award for having achieved a significant turnaround in its overall performance
10) The Bureau Veritas Quality International (BVQI) for ISO 9001:2000 Quality Management System (QMS) as well as ISO 14001:1996 Environmental Management System (EMS) recently certified Tata Motors' passenger car unit, Pune.
TATA SALES IN FIGURES
(31ST MARCH 2009)
Tata Motors’ domestic sales for the month of March 2009 were 52,686 nos. The company’s total sales (including exports) were 54,485 vehicles. March 2009 domestic sales nos. were 13% lower than that of March 2008. The company’s sales (including exports) for the fiscal 2008-09 were 498,581nos, 14% lower than 582,390 nos. sold in the 2007-08.
Commercial Vehicles The company’s sales of commercial vehicles in March 2009 in the domestic market were 29,006 nos., 24% higher than that in February 2009 but 19% lower than 35,993 vehicles sold in March 2008. Passenger Vehicles The company’s sales of passenger vehicles in March 2009 in the domestic market at 23,680 nos. were the highest this fiscal, 24% up over February 2009, but 4% lower than 24,737 vehicles sold in March last year. The March 2009 passenger car sales of the Indica and Indigo range put together at 18,642 nos. were the highest this fiscal, surpassing February 2009 sales of 15,524. The Indica range sales at 13,678 nos. were 5% higher than March 2008 and the highest this fiscal. The Indigo range sales of 4,555 nos. were 8% higher than February 2009, but 11% lower than March 2008. Exports The company's sales from exports at 1,799 vehicles in March 2009, were up 36% over February 2009, but declined by 69% compared to 5,765 vehicles in March 2008. Jaguar & Land Rovers sales In 2007 Jaguar sales were 20,600 and in 2008 (oct) they are 24,600, so there is an increase of 4000 as per Jaguar is concerned. As far as Land Rover is concerned there is a reduction from 76,000 to 60,000.
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1) CASE FOLIO: ICFAI JOURNALS AND MAGAZINES 2) MARKETING MANAGEMENT; KOTLER