Presentation is loading. Please wait.

Presentation is loading. Please wait.

Building World Class Competence TATA Motors 21 April 2006.

Similar presentations


Presentation on theme: "Building World Class Competence TATA Motors 21 April 2006."— Presentation transcript:

1 Building World Class Competence TATA Motors 21 April 2006

2 1.Overview 2.Building World Class Competence 3.Results Contents

3 TATA Motors India’s largest Automobile company Strong Domestic PositionRobust Financial performance 2 nd largest company in Private sector Globally ranked as:- 2 nd largest Bus manufacturer 5 th largest Bus & Truck manufacturer Largest Indian Exporter of Automobiles Largest portfolio of products by an Auto major:- Mini, Light & Heavy Trucks Range of Buses & Coaches Passenger Cars & Utility Vehicles Indigenously developed & India’s 1 st Light Commercial Vehicle (1986) Sports Utility Vehicle (1998) Passenger Car (1998) Mini Truck – ACE (2005) Largest R&D network in India with offshore centers in :- Korea (Gunsan) Spain (Zaragoza) UK (Midlands) 1 st Engineering company to be listed on NYSE (2004) Market leader in Commercial Vehicles in domestic market with ~60% MS 2 nd largest player in Passenger Cars in domestic market with 16.5% MS Nation wide Sales, Service, Spare parts and Auto financing network with over 1,200 customer touch points Sales 400,000 vehicles Revenues USD 4.7 Bn ProfitUSD 0.3 Bn (Post Tax) (All figures are for FY 04-05)

4 Outsourcing Entry of MNC players Developed suppliers Product complexity Evolution of TATA Motors: Liberalization brings greater opportunity & challenges LOCOMOTIVESLOCOMOTIVES Collaboration with Daimler Benz Self Reliance Liberalization Stage 1 Stage 2 Stage 3Stage 4Stage 5 1 st vehicle rolled out within 6 months of contract (1954) Vertical Integration Very little outsourcing Protected environment Less developed supplier base Limited domestic competition Cyclical impact Protected Economy Economy opening Focused Vendor Dev Increase in Outsourcing USD 35.9Mn USD 1.8Mn USD 0.7Bn USD 0.05Bn USD 2.3Bn USD 0.2Bn USD Bn New Strategy

5 Secular long term growth trend Early stage of road development Dis-similar to Global CV Industry Cyclical Low Volume (in,000s) Similar with Global CV Industry Indian CV Industry CAGR: 6% Characteristics Cyclic nature of Commercial Vehicle Industry required de-risking of Company’s business model Domestic CV Industry Sales

6 Increasing intensity of competition required building World Class competencies Competition in LCV Market Competition in Passenger Car Market All Models Indian Foreign Indian

7 1.Overview 2.Building World Class Competence 3.Results Contents

8 Building World Class Competence 1.Offsetting cyclicality & de-risking business model 2.Increasing Competitiveness

9 1. Offsetting cyclicality & de-risking business model a. Entering new segments & increasing presence in less cyclical segments Personal transportation - Passenger Car Size of Zen Interior space of an Ambassador Economy of a Maruti 800 Fully Built Buses & Coaches Controlled market Less fluctuation in sales Explosive growth projected in demand due to improvement in road infrastructure TML Passenger Car Market Share Bus Industry growth % 10.7% 14.7% 16.9% 16.5% Small Buses Large Buses 22,300 35,300 43,500 45,500 50,300

10 2. Increasing Competitiveness Technology & Quality Gap Cost Gap International Players Maintain Reduce TATA Motors Competitive Advantage:- Providing vehicles with Highest Life-cycle Profitability to customers TATA Motors Reduce Maintain Being competitive with International competition in domestic & International markets

11 Building World Class Competence 1.Offsetting cyclicality & de-risking business model 2.Increasing Competitiveness 1.Product Development 2.Supply Chain 3.Marketing & Sales 4.International Business 5.Human Resources 6.Performance Systems

12 Towards building World Class Competencies 1. Product Development $0.55 Bn $1.1Bn + Generation 1 Generation 2 A. Passenger Car Our 1 st generation cars (Indica & Indigo) are competing with competitions’ 5 th or 6 th generation cars & are helping Company to gain Market Share in Car segment Indica: 19.5%(#2) (behind Alto) TML Market Share In B & C segments Indica Indigo Marina Indigo: 33% (#1)

13 Towards building World Class Competencies 1. Product Development B. Introduction of India’s first Mini Truck – TATA ACE for last mile distribution Beginning May’05, ACE sales have grown to 50,000 nos (annualised) Impact of ACE on 3 Wheeler Sales Pkups ACE L3W S3W

14 Towards building World Class Competencies 1. Product Development C. Moving from ‘Developing Products’ to ‘Managing Product Development’ Engg Research Centre Pune, Jsr, Lko TATA Technologies INCAT, UK Aggregate Suppliers TATA Daewoo Korea Outsourcing Partners Hispano Carrocera Spain Bus Body Building ACGL - Goa TML-European Tech Centre, UK Management of Product Development needs of TML In house Product Development Product Life-cycle Management (PLM) system for effective product data management & analysis Institutionalizing New Product Introduction (NPI) Process across the organization Incorporating ‘Voice Of Customer’ – for meeting Customer expectations Advanced Computer Aided Design (CAD) Environment for product design, virtual testing & validations for reducing development time and enhance effectiveness

15 Building World Class Competence 1.Offsetting cyclicality & de-risking business model 2.Increasing Competitiveness 1.Product Development 2.Supply Chain 3.Marketing & Sales 4.International Business 5.Human Resources 6.Performance Systems

16 Towards building World Class Competencies 2. Supply Chain A. Manufacturing – Lean manufacturing, improvement in Quality & Productivity Lean Manufacturing Single Piece flow Flexibility & Scalability Centre of Excellence (CX) SMED (Single Minute Exchange of Dies) JIT supplies / KANBAN KAIZEN / Poke-Yoke Enhancing People Capability Multi Skilling & Multi Tasking Small Working Groups Advanced & focused training Modernization of facilities Improvement in Quality Design Quality Build Quality Special emphasis on Visual Quality & Performance parameters X 2.2 X Increase in Productivity (Equivalent Veh /Man/yr)

17 Towards building World Class Competencies 2. Supply Chain Outsourcing content 57% 60% 75% 82% Outsourcing M&HCVs 2005 ACE Highly Vertically integrated company Global Sourcing : Steel, various aggregates & other components & beyond Controlled economy Protected environment Less developed supplier base Limited domestic competition Open economy Entry of International players Developed supplier base Product complexity B. Outsourcing & Global Sourcing

18 Towards building World Class Competencies 2. Supply Chain C. Vendor Management 1. Source Selection2. Development3. Management4. Partnering Past performance Managerial capability Technology Knowledge Process development Quality Capacity rate Training 2 way communication Change adoption New Technology New business Rating performance Improvement Relationship building Rationalization Features Early involvement of Vendors in product design & development Focus on ‘overall least cost’ Self Certification of Vendors e-Commerce/ e-auctions & other IT tools (PLM, SRM)

19 Towards building World Class Competencies Leading to reduction in Break Even Point Direct Material Cost Reduction Variable Conversion Cost Reduction e-Sourcing – Largest e-Sourcing company & among Benchmark companies in Auto Industry Alternate Sourcing / materials Benchmarking, tear down & design changes Negative working capital – Unique distinction for an Engineering Company Lowering of BEP has prepared the Company to withstand severe demand fluctuations TML’s BEP as % of Capacity BEP was brought down to 1/3 rd of capacity by:-

20 Building World Class Competence 1.Offsetting cyclicality & de-risking business model 2.Increasing Competitiveness 1.Product Development 2.Supply Chain 3.Marketing & Sales 4.International Business 5.Human Resources 6.Performance Systems

21 Towards building World Class Competencies 3. Marketing & Sales A. New Customer Segmentation approach - To develop products as per target customer requirements India Tomorrow India Today Customer Segments A B C D Example: Pickup

22 Towards building World Class Competencies 3. Marketing & Sales B. New Sales Planning Process InquiryStage 1Stage 2Sale Non uniform Sales processes at various dealerships Sales process Benchmarking Addressing gaps / modified Sales process / Standardization Embedding Sales process in IT enabled CRM system CRM data analysis for sales trends & sales process improvements Largest deployment of CRM (Siebel) system world wide in Auto Industry covering all TATA Motors Dealerships & Workshops

23 Towards building World Class Competencies 3. Marketing & Sales Uniform TATA Motors identity C. TATA Motors Corporate Identity Program

24 Towards building World Class Competencies In FY 05-06, TATA Motors achieved all time high domestic sale of > 400,000 vehicles Cars (47%) * Sumo, Sierra, Estate, Pickup Cars* (17%) CVs(83%) CVs (100%) CV Market Share ~ 60% (# 1 ) Car Market Share ~ 17% (# 2 ) CV Market Share – 51% Car Market Share – 0% CVs(53%) TATA Motors Sales

25 Building World Class Competence 1.Offsetting cyclicality & de-risking business model 2.Increasing Competitiveness 1.Product Development 2.Supply Chain 3.Marketing & Sales 4.International Business 5.Human Resources 6.Performance Systems

26 Towards building World Class Competencies 4. International Business A. De-risking business from cyclicality of Domestic market CAGR: 6% Strategic importance of International Business Domestic leadership image to be leveraged effectively for building relationships in global markets 1.Products meeting Global Standards Entry of Global Players in India World Class Road network International Emission & Safety norms 2. To offset domestic cyclicality effect Greater share of IB can dampen the effect of cyclicality in domestic market 3. Economies of Scale For advanced products, IB markets provide economies of scale 4. Accelerate Growth Growth opportunities in International markets

27 Towards building World Class Competencies 4. International Business B. Organic Growth Product offerings were developed/ customized as per market requirements e.g. South African market required vehicles with Higher Power to Weight ratio as roads are highly developed Cyclicality of these markets was out of phase with the Indian market Market Attractiveness & Potential High Low Regulatory Environment Emission, Safety, Entry regulations TML’s ability to address markets Based on Stage of Market development South Africa South Korea Sri Lanka UK Italy Bangladesh Nepal Saudi Arabia Ukraine Malaysia & others…

28 Towards building World Class Competencies 4. International Business B. Organic Growth – TATA Motors I B Sales No of countries 9,500 30,500 50, Today, entire range of automobiles from Mini Truck to Heavy Trucks to Buses to Passenger Cars under TATA Motors Brand is exported to 35 countries 5.3 times

29 Towards building World Class Competencies 4. International Business C. Inorganic Growth – TML acquired Daewoo Korea in Mar’04 1.Addition to Topline 2.Enhanced Product portfolio 3.Growth in South Korea 4.Managing business in a developed country 5.Operating high quality manufacturing plant 6.Lead change in domestic market a HP b HP c HP Daewoo range TML range Complementary Product Range TATA Novus was launched in India in Dec’05 Medium Truck was launched in Korea in Dec’05

30 Towards building World Class Competencies 4. International Business C. Inorganic Growth – Daewoo acquisition provided us with valuable learning to initiate Brand building in Korea (even before the acquisition happened) 1.Be prepared for being evaluated Entire Daewoo team was closely monitoring TML team’s work practices & behavioral traits 2.Collect first hand knowledge from market & customers Interactions with customers & local transport associations Customer reaction… “No existing Company management has bothered to ask me how I feel or what I want…and here you are doing so even before taking over the business…” 3.Focus on human integration & communication Overcoming the language barrier India considered low on technology TATA Motors Brand Building

31 Towards building World Class Competencies 4. International Business C. Inorganic Growth – Evolution of Cross Cultural partnership with Daewoo Initiation Basic understanding Language familiarity Familiarization Cultural familiarity Country visits Harmonization Fine tuning Music, movies, food,.. Sister City Concept Synergizing Sharing of best practices Work Ethics Corporate Governance

32 Towards building World Class Competencies 4. International Business C. Inorganic Growth – TATA Motors in Korea Good Corporate Governance Cost effectiveness Strong Engineering base Work Ethics Quality Productivity Synergy of key attributes for making a Global Company Tata Motors, India Integrity Understanding Excellence Unity Responsibility DWCV, Korea Big Modern Reliable

33 Towards building World Class Competencies 4. International Business C. Inorganic Growth – TATA Daewoo brand received very well in Korean market

34 Towards building World Class Competencies 4. International Business C. Inorganic Growth – Increase in TDCV Revenue & Market Share X 1.3X TML X TDCV Revenue X 1.5X FY03-04 FY FY TML 1.2X FY03-04 FY FY DWCV Acquisition 13.5% Heavy Trucks Medium Trucks TDCV Market Share in Korea TDCV Sales (Nos) Exports Introduced in Jan’06

35 Towards building World Class Competencies 4. International Business C. Inorganic Growth – Learning from Daewoo helped in our 2 nd acquisition - Hispano Hispano buses Sales (Nos) Q1 Q1 Q2 Q3 Q4 Revenue X X 3.5X 4X TML

36 Towards building World Class Competencies 4. International Business TATA Motors International Business template To be seen as a local Company in the country of operation As a South Korean Company in South Korea As a South African Company in South Africa As a Spanish Company in Spain Brand ‘Japan’ - Electronics, High Tech, Innovative, Efficient, Trendy, Process oriented Brand ‘Germany’- Automobiles, Engineering excellence, robust design, heavy duty, meticulous Brand ‘India’- ?

37 Building World Class Competence 1.Offsetting cyclicality & de-risking business model 2.Increasing Competitiveness 1.Product Development 2.Supply Chain 3.Marketing & Sales 4.International Business 5.Human Resources 6.Performance Systems

38 Towards building World Class Competencies 5. Human Resource 1. Right People Customer focus Quality focus Cost focus Innovation Agility 2. Challenging assignments / International exposure 3. Meritocracy Hierarchical Organizational Structure 4. Changes in Organizational Structure Cross Functional Team Cross Functional Team Cross Functional Team Awarded India’s Best Employer 2004

39 Building World Class Competence 1.Offsetting cyclicality & de-risking business model 2.Increasing Competitiveness 1.Product Development 2.Supply Chain 3.Marketing & Sales 4.International Business 5.Human Resources 6.Performance Systems

40 Towards building World Class Competencies 6. World Class Performance Systems Balanced Score Card Financial & Business perspective Customer perspective Process perspective Learning & Growth perspective Tata Business Excellence Model (TBEM) 1. Leadership 2.Strategic Planning 3.Customer & Market Focus 4.Information, analysis & KM 5.Human resource focus 6.Process management 7.Business Results JRD QV TBEM Award for CII-EXIM Bank Award for Business Excellence for ‘Hall of Fame’ for 2003 for effective deployment of BSC 2 Case studies published in ‘HBS Review’ on BSC deployment at Tata Motors Awards & Recognitions

41 1.Overview 2.Building World Class Competence 3.Results Contents

42 1. Negative Net Working Capital 2. Low Debt/Equity Ratio (Days of Sale) Business Results

43 1 USD = Rs 44 (0.1) TML PBT (USD Bn) & EBIDTA Margin (%) TML Market Capitalization (USD Bn) 7.2% 12.7% 13.3% EBIDTA (%) Mar’02 Mar’04Mar’ TML 8.1(#1) Maruti 5.7 M&M 3.3 ALL 1.1 (BSE 31 Mar’06) TML Turnover (USD Bn) TML Sales 170, , , ,300 (’05-06) Ford 13.4 GM 11.6 TML 7.9 (NYSE 19 Apr’06) TML

44 Thank You


Download ppt "Building World Class Competence TATA Motors 21 April 2006."

Similar presentations


Ads by Google