September 2001 | Usha Somayaji

TAL in tune with the times

Having forged an identity independent of its big-name parent, Telco Automation is banking on expertise, experience and customisation to establish its credentials. We profile a company that is making light of sluggish market conditions to get on the fast track

Neither a start-up nor an established company, Telco Automation Limited (TAL), carved out of Tata Engineering (Telco), is making a name for itself in the machine tools and equipment industry. Few outside of Telco know of this new entity, situated within the company’s sprawling premises at Pimpri in Pune, but word of TAL’s excellence is spreading fast – for the depth of expertise it offers and for the totality of manufacturing solutions it delivers.

"When customers come to us they know that what they are getting is not piecemeal plant or machinery or machine tool," says Y Nath, TAL’s managing director. "What they get is the final assurance that what they take from us is fully guaranteed to work."

Today’s TAL was once the machine tools and equipment building (then called ‘growth’) divisions of Telco. That means, among other things, 35 years of experience in building machines, tools, and equipment, and putting them to work. All Telco plants and engineering stand testimony to this, including the new, extensively automated Indica plant.

TAL came into being in April 2000 following the Tata group’s decision to focus Telco’s attention on its core business of design and development of vehicles and to shed all its other enterprises. Thus Telco’s construction business became Telcon and its software business Tata Technologies. The motive behind the move was to make the new businesses self-supportive and its growth prospects independent of Telco’s.

When Telco set up its machine tools and equipment divisions in 1966-67 in Pune, the decision was born of necessity. Technology and machinery being largely imported then, and import restrictions being what they were, it was imperative that the company have the in-house capabilities to complement its vehicle design and development wings. With imports being freer now and factors like the recession in the automobile sector and dim expansion prospects coming into play, it made sense for the two divisions to look at a customer base beyond Telco.

TAL has faced the challenge of standing on its own feet confidently. In its first full year of operations it achieved a turnover of Rs22 crore, most of it with orders from outside Telco: a shot-blasting machine for BHEL, Trichi; a paint shop for Telcon, Jamshedpur; a testing rig for Rane Brakes, Chennai; a continuous carburising and hardening furnace for TVS Suzuki; and small machining centres for Huski of Italy.

In a declining capital goods market, how does a new entrant like TAL hope to make its mark? "We have positioned ourselves as a ‘manufacturing solutions company’, offering machines, equipment, and engineering services," explains Mr Nath. "What we provide are total solutions. Earlier, when Telco was our sole customer, our mandate was never only to make and give products; it was to see that the products we made and installed actually worked. This is the total package we now deliver to our new customers. Our competitors cannot do this. Most of them are mere manufacturers of machines; they do not have integration skills."

Thanks to its Telco pedigree, TAL has a wide range of machines and equipment. The company can hence offer a wide range of solutions, be it in machinery, equipment, paint shop, technology or application, almost everything required in the white goods and automobile industry. "We have the tooling capability for a wide range of products and services, and the expertise to integrate all these capabilities," says Mr Nath.

TAL has devised a three-tier offering for clients. "If a customer wants to produce an item, we can advice him on how to do it. This is the soft side. Then we can provide him the machines, the tools and the equipment to produce the product. That is the hardware. Finally, if he wants them in larger numbers, we can automate and integrate the equipment and help build the systems."

TAL has spent plenty of energy since its formation on building awareness, generating inquiries, meeting customers, and generally making itself known in the marketplace. To this end, TAL took part in the latest IMTEX exhibition, which led to an avalanche of enquiries and concrete orders worth Rs22 crore. "We need a turnover of Rs60 to 70 crore to break even," says Mr Nath. This, he hopes, will be achieved in 2002-03. This year the company expects to cross Rs50 crore, aided in part by Telco orders and no cash losses.

Last year TAL reaped the benefits of its R&D efforts, succeeding in bringing out a number of new products. These included low-cost machining centres, standard slot-blasting machines, standard handling machines, dye-mould making machines, gear-cutting machines, etc – all standard stuff but customised to specific client requirements. This was a deviation from the company’s earlier practice, when it concentrated on special-purpose machines that didn’t find ready markets. The new line of products, besides helping TAL with greater cost efficiencies, also allows for greater speed of delivery.

Since these new products are modified to meet individual needs, they score over the competition. "Our costs match those of the standard products available in the market, but the specifications that go with them are available only at the high end and in imported machines, which are 40 to 50 per cent more expensive," explains Mr Nath. This is how TAL ensures that its customers get more for less.

Among the TAL products that have found ready favour in the market are twin-spindle vertical machines, welding and assembly robots and high-speed multiple tool changers, which generated a lot of interest at the IMTEX exhibition.

The capital goods market has been through tough times recently, registering a negative growth of five to six per cent over the past few years. However, TAL believes it can hold its own by positioning itself in the niche sector of a manufacturing solutions provider, with its own range of standard but customised machines.

Exports are also on TAL’s agenda. The company is building machines with international specifications but scores on prices that are 30 per cent lower. This factor, it believes, makes it ideally placed to sell in markets such as Japan and Germany. TAL has already tasted some success on this front with two of its products: high-performance machining centres and gear-cutting machines.

TAL proposes to make optimum use of the internet to further its prospects. It is betting that cyberspace will help it to prise open a new market, the United States, and a new business, remote engineering service. "We are in a position to provide engineering support advice and be a consultant on the net," says Mr Nath.

The target market is the small and medium sector in America. "Companies [in these sectors] may not have in-house engineering skills and may not be in a position to hire these skills in the home country. We can offer such advice on the net at a much lower cost, using our knowledge and experience of building and using special-purpose machines." TAL expects to have a 30 per cent share of turnover coming from exports within three years.

Newly created it may be, but TAL's ambitions are hardly small time. The company’s aim is to become India’s largest manufacturing engineering solutions provider. "Our focus is on helping customers reduce their cost while improving quality," says Mr Nath. "In a downturn, the customer looks to reduce cost, improve quality and have solutions that are guaranteed to deliver. We have the capabilities to provide all of that."