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Rediff.com  » Business » Shakeout coming in auto market, warns Tata

Shakeout coming in auto market, warns Tata

Last updated on: September 2, 2010 09:30 IST

Shakeout coming in auto market, warns Tata

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BS Reporter in Mumbai

India's largest vehicle manufacturer, Tata Motors, on Thursday held its 65th annual general meeting, where its chairman hinted at further consolidation, followed by more pressures in the challenging automotive market.

Ratan Tata stated, "There has been increased consolidation (in the automotive market) and it will continue; there will be some (company) demise, there will be pressures from the environment, in terms of maintaining balance of fuel. This is a challenge to the industry and to the company."

His comments come after another Indian automotive company, Mahindra & Mahindra, is in the process of taking over South Korean auto maker Ssangyong Motor Company, expected to be done by November.

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Image: Tata Group chairman Ratan Tata.
Photographs: Reuters
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'JLR foray pays'

Two years earlier, Tata Motors itself was at centre stage, with the takeover of high-end British brands Jaguar and Land Rover, which it bought from Ford Motor Company for $2.3 billion (Rs 11,225 crore).

A year after both the financially unhealthy British brands turned profitable, Tata today made a note of that decision.

"Last year, there was a tremendous amount of criticism for the Jaguar-Land Rover buy. There were concerns that this purchase will burden our company with high losses. But I am happy to state that both the brands have posted a great comeback," he stated.

He said Tata Motors, 19th largest automotive company and also the 15th largest commercial vehicle maker in the world, had repaid $1.98 billion of the $3 billion JLR loan.

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Image: Hyundai cars ready for shipment at a port in Chennai.
Photographs: Reuters
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The shareholders gave overwhelming approval to all official resolutions.

Appointments of Ranendra Sen, former Indian ambassador to the US, and Carl-Peter Forster, former head of General Motors Europe operations, were also put through as additional directors.

Forster is chief executive officer and managing director of Tata Motors, brought on to take the brand international, with the key responsibility for handling JLR operations.

Tata also praised R Gopalakrishnan, former board member, for his decision of not opting for re-election.

"He has mainly done this as he wanted to bring more executive directors on the board. We appreciate Gopal's understanding and for his great support he has given to the company," he said.

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Image: All new Jaguar XJ model.

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Wider range, exports

On a broader note, he said, "We will look at rationalising of platforms in the coming years. We will continue to widen our passenger and commercial vehicle range, add electric and hybrid vehicles, as well as focus on markets like Africa, Russia, Middle East, North and South America and China."

On the Nano small car, Tata said its exports would begin with identified markets like the Saarc and Asean regions, Africa and Latin America. He did not say when the exports would begin.

The company is working on a diesel Nano with a larger engine, as well as a bi-fuel Nano with a diesel or petrol and CNG option.

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Image: Ratan Tata.
Photographs: Courtesy, Harvard Business School
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The company is gearing to export the electrically-powered Indica, to be sold in Britain by the end of this year.

After repeated concerns raised by several shareholders on the latest incident in New Delhi where the small car caught fire, Tata said, "We are going to do a thorough and detailed investigation on the incident. As and when we are able to determine the cause, we will make a statement."

The company is looking to set up a manufacturing line for the small truck, the Ace, at its Dharwad plant in Karnataka, as capacity at its existing plant in Uttarakhand is saturated.


Image: Ratan Tata with the Nano.
Photographs: Reuters
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