Tata Motors arms on fast track
The Telegraph— December 21, 2005

Tata Motors is upbeat about the performance of its subsidiaries, which are poised for expansion in the coming months. The subsidiaries include its construction equipment venture with Hitachi, Tata Technologies Ltd that provides engineering, design and IT services to multinational and large domestic manufacturers, and vehicle financing.

Since the merger of Tata Finance with the company early this year, the four-wheeler auto financing business occupies the fourth position next to ICICI Bank, HDFC Bank and Citi Financial. Tata Motors feels it will bag the third slot by the end of this fiscal. For this fiscal, the unit is looking at financing the retail level close to Rs 5000 crore that should give it more than 23 per cent market share.

The unit is also looking at expanding its operations. Apart from hire purchase and customer finance, it is planning to venture into new business activities that include managing fleets, refurbishing vehicles and financing. Its operations also include channel financing for its dealers and supply chain finance for its vendors. The unit is also planning to foray into international vehicle financing in South Korea and South Africa. Moreover, it intends to provide fee-based financing like insurance brokerage and related services.

Praveen Kadle, executive director-finance and corporate affairs, Tata Motors, revealed these plans recently. Another subsidiary Telco Construction Equipment Company Ltd (Telcon) plans to bring in two new products - dumpers and dozers - through the Hitachi technology. It also wants to tap the growth potential in the construction equipment business and not remain a pure excavator company.

It expects Telcon to emerge as a global sourcing hub for Hitachi's international activities. It also feels export revenues may grow exponentially over the next five years. From only 2 per cent, exports are expected to contribute 20 per cent of the venture's revenues. Moreover, there are plans to come out with an initial public offering (IPO) though a final decision will be taken after two years.

At Tata Technologies, which earlier acquired an overseas company called Incat Technologies, the takeover is being seen as an important means to have a marketing engine overseas. Tata Technologies is now hoping to bag new customers in the automobile segment in the North American, European and the Asia-Pacific markets.

It is expected that over the next few years, the dependence over Tata Motors will come down as Tata Technologies scales up its capabilities. During 2004-05, Tata Motors accounted for almost 65 per cent of the revenues of Tata Technologies and it is projected that this figure will come down to around 15 per cent. Tata Motors has two other subsidiaries - HV Axles Ltd and HV Transmissions Ltd. While the company is looking for strategic partners to strengthen its operations further, Kadle said Tata Motors is examining the possibility of an IPO. However, this will come only if it is not able to rope in strategic partners.