July 11, 2002 | Business Standard

Taco set to strike four US ventures

Tata Autocomp Systems (Taco), the automobile component manufacturing company of the Tata group, is set to forge joint ventures with four US-based companies. The move is to mark the company's foray into the high-end electronics business of the auto industry. The company has already signed a memorandum of understanding with the four companies, and the joint ventures are expected to fructify soon, company officials said.

Further, Taco has also decided to set up a retail chain across India tocater to aftermarket sales of high-end electronic systems for automobiles. It is currently scouting for a strategic partner with experience in running a retail chain. DS Gupta, managing director, TACO, said that all the four companies are leaders in their respective areas of business, but declined to reveal their identities, citing confidentiality reasons.

"The scope of electronics in the future is immense. We foresee electronics and retailing contribute a major chunk of our future revenues," he said. Gupta also added that the company was open to growing inorganically (through acquisitions) to enhance its presence in the electronics business. Currently, Taco has three strategic business units (SBUs) -- engineering, manufacturing and supply chain management. Electronics and retailing will be the fourth and fifth SBUs as and when the company enters these segments, he explained.

Taco's decision to enter the electronics field has come at a time when the company has decided not to make any huge investments in the manufacturing side of the auto component industry. The company will henceforth outsource a large part of its manufacturing requirements to third parties, and will itself focus on areas such as design and final assembly of vehicular modules. Gupta said the company, which has so far invested around Rs 400 crore in its various manufacturing facilities, is hopeful of achieving a 50 per cent growth in top line to Rs 888 crore by the end of this fiscal from Rs 600 crore in 2001-02.