The company chalks out a five-pronged strategy to rev up its fortunes. Will it work?

In India, for decades, automobiles and Telco, have been almost synonymous. So, when the 56 year-old Telco made a jaw-dropping, record-making Rs 500 crore loss this fiscal, it brought in an avalanche of mixed responses. For consumers and admirers, it was a feeling of disbelief. For investors and analysts, it brought in sharp criticism. And for the company itself, it highlighted the need for deep introspection. Why did Telco come to such a pass? According to Mr Ravi Kant, executive director, commercial vehicles business unit, Telco, the Rs 500 crore loss is a combination of operating loss and one-time charges.

The turnaround strategy
Cost Management: In order to reduce the vulnerability of the company to the operational factors like drop in volumes, the company proposes to go for a major cost reduction drive so that the breakeven point is achieved at a much lower rate.

Financial Restructuring: The initiatives for financial restructuring can be clubbed mainly under keeping borrowing under control, making strategic disinvestments and improvement in the risk profile, under which it proposes to reduce the cost of funds by retiring high cost debt, reducing the working capital days and putting efficient credit control systems.

Organisational Renovation: Telco has started efforts towards right-sizing by bringing down manpower by 11,500 over the last three years. The company will be concentrating both on asset and business restructuring besides cost cutting.

Product Realignment: The company plans to achieve increase in volume by targeting both new product development and aggressive marketing, says Ravi Kant. In the commercial vehicle segment, the company had already adopted the strategy of new product development by launching two new variants.

A New Marketing Thrust: It is restructuring it's marketing structure. The company now plans to build quadrangular network involving customers, dealers, financiers and manufacturers at the same time.

Mr R. Gopalakrishnan, executive director, Tata Sons who is also vice-chairman of Telco says that fundamentally it is a strong company with a track record and has the resilience to overcome the current problems that it is facing.