Abstract

Tata Motors, earlier called Telco (Tata Engineering and Locomotive Company) is upbeat, after a spectacular comeback in the past two years. Following a whopping Rs 500 crore loss (in 2001), its stock price had fallen from Rs 564 in 1996 to Rs 59 in 2001. The company now plans to expand capacity at its Pune factory from 1.5 lakh cars to 2.5 lakh cars by December 2004, to meet the growing domestic and international demand for its products. This is perhaps the first major capital investment by the company since 1999, when it had invested Rs 1,800 crore to design and manufacture its small car, the Indica. Just three years back, not many analysts had believed such a transformation could take place. The recovery has been led by the remarkable success of the small car, Indica. The larger and more recently introduced Indigo also seems to be faring well. The Tatas have made major forays into global markets. The acquisition of Daewoo''s commercial vehicles division in Korea for $102 million, is an indicator of the company's global intentions. There is also heavy speculation that Tata Motors is ready to develop a new car that will take on Suzuki's highly successful small car, the Maruti 800, which dominates the Indian roads. Do the Tatas have the capabilities and resources needed to implement such ambitious plans? That is the question uppermost in the minds of analysts in mid-2004, notwithstanding the optimism of chairman Ratan Tata and his colleagues.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

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Keywords

Tata Motors, Tata Engineering and Locomotive Company, TELCO, IRD Tata, Jamsetji Nusserwanji Tata, Tata Group, Ratan Tata, Restructuring, Commercial Vehicle Business Unit, CVBU, Globalisation, Indigo, Indica, Daewoo acquisition, Rajiv Dubey