Tata Motors in 2004: Going Global


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Case Details:

Case Code : BSTA035
Case Length : 21 Pages
Period : 1868 - 2004
Organization : Tata Motors
Pub Date : 2004
Teaching Note :Not Available
Countries : India
Industry : Automobile

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Introduction

In early 2004, the mood at Tata Motors, earlier called Telco (Tata Engineering and Locomotive company) was distinctly optimistic. After a spectacular comeback in the past two years, Tata Motors was planning to expand the capacity of 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 was 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 believed such a transformation could happen. The company was reeling under the biggest ever loss in its 58-year corporate history.

Following a whopping Rs 500 crore loss (in 2001), its stock price fell from Rs 564 in 1996 to Rs 59 in 2001.

The recovery had been led by the remarkable success of its small car, the Indica. The larger and more recently introduced Indigo also seemed to be faring well. The Tatas had made major forays into global markets. The acquisition of Daewoo's commercial vehicles division in Korea for $102 million, signaled the company's global intentions. There was a speculation that Tata Motors was ready to develop a new car that would take on Suzuki's highly successful small car, the Maruti 800, which dominated the Indian roads.

Did the Tatas have the capabilities and resources needed to implement such ambitious plans? That was the question uppermost in the minds of analysts in mid-2004, notwithstanding the optimism of chairman Ratan Tata and his colleagues...

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