Team-BHP
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That's some major cost cutting spree after the TATA TAMO RACEMO Project. Look's like after minimizing the no of Platforms/Verticals, providing VRS option to few employees, they are still in the process of consolidating their Balance Sheets.
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Participating in the Geneva auto show, which kicks off on March 8, 2018, will be an expensive affair with an estimated cost of INR 20-30 Crore. Besides,T1 Prima Truck Racing series had an annual expenditure of around INR 70 crore.
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Apart from axing programs mentioned above, senior executives at Tata have taken a salary cut. Salaries of the Executive Director, CFO and Company Secretary have taken a hit of 2-12%.
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Link IAB
Tata racing - Was bound to happen with over board budgets and not enough gain in customer community
Quote:
Originally Posted by sudev
(Post 4245861)
Tata racing - Was bound to happen with over board budgets and not enough gain in customer community
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Sad News :( , i had the opportunity to witness the 2016 edition and it was an amazing spectacle indeed!
The reported 70 crores expense per year was quite a drain, given that the entire race + show was for free to the 50,000+ audience, just couldn't understand their revenue model.
:OTHope VW does not pull the plug from their Ameo Cup car races after seeing this precedent.
Don't think any of these will make a real difference to the overall budgets of a giant like Tata Motors (it's pocket change for them), but well, as long as it leads to better products, who's complaining? Don't know much about CVs, but as a petrol-head, I can see that Tata's cars are back in the game. I think this move is more about removing unnecessary distractions & focusing on the core business / products. It also sends a message out to the stock market that the company is making amends.
Whether in business accounting or personal, there are two types of expenses - mandatory & discretionary. The latter isn't important to the core functioning of an individual or business. Whenever times are tough, discretionary expenses are the first to go.
Here is a thought -
Profits from Tata Motors' CV and passenger vehicle division helped them pay $2.3 billion for acquisition of Jaguar Land Rover. Profits from Tata Motors' CV & PV segment gave them confidence to take loans from European banks and turn around JLR.
Now that the parent is in trouble, I wonder why the management does not use cash generated by JLR to fix issues of India CV and passenger vehicle division. JLR has been regularly generating operating profits of Rs. 10,000 to Rs. 20,000 crores per year in the past 5 years.
Quote:
Originally Posted by smartcat
(Post 4246233)
I wonder why the management does not use cash generated by JLR to fix issues of India CV and passenger vehicle division.
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I don't think the problem with Tata is cash crunch. They have been late to the party in many segments. Due to complacent nature, they let others gatecrash and are now playing catch up game. For CV it is medium size trucks where Signa arrived when market was flooded with modern Bharat Benz and Ashok Leyland trucks. While Signa has been in market for over a year now, I hardly see it on road. On PV front, we all know how Tata first aced compact sedan space and then squandered the advantage.
Tata was doing things wrong even when cash registers were ringing and no one cared. Now, they need to belt up and keep doing right things because reversing the momentum won't happen overnight.
And Prima is probably the only marquee CV brand now for Tata. Would be a shame if they overlook this and then find themselves fighting with Mahindra Navistar and other new entrants in future.
Good job Tata. Irrespective of whether you are doing this for the optics of being focused on delivering real products; or as a genuine move to focus on core competency, it is a much needed move.
In a recent interview N Chandrashekaran admitted that no Tata Motors car makes money! Not a single one.
100 crore saving at eliminating these tasks. And sales of around 15,000 - 20,000 per month means additional spend of approx. 4,000/- to 5,500/- available on each car. This could be used to improve so many things -
1. Discounts / rebates to push car sales
2. Improve sales & delivery experience
3. Cushion for any budget towards customer / warranty claims
Although, in the overall scheme of things, 100 crore for TML might be small. But certainly a move in the right direction.
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