Collaborative & innovative approach vital – Ravi Kant

Aggressive entrepreneurship is basic to corporate success. To sustain the growth of any industry sector, including automobiles, it is essential to take to collaborative working and innovative approach.

This was stated by Mr. Ravi Kant, Managing Director, Tata Motors Ltd., in his address at the CEO Conclave – L’ATTITUDE organised by Great Lakes Institute of Management, Chennai.

He said the current recession which had its origin in the US and later spread to the European countries and all other individual economies across the world, including India, within months, is quite unprecedented. While the US Government, in its recent bail-out move, tried to save the three auto majors – Ford, General Motors and Chrysler – from a major crisis with huge loans, the European auto manufacturers have also sought similar support from their respective Governments. Surprisingly, Toyota Motor Corporation, the Japanese auto giant, is reportedly facing problems and is likely to incur loss this year.

Referring to the history of the automobile industry, Mr. Ravi Kant said that the 100-year-old industry is mainly dominated by majors like Toyota, GM, Ford, etc. The normal behaviour of any recession happening every seven to 10 years, is always cyclical as far as the auto sector is concerned.

While the first few years of Independence have not witnessed a recessionary phase of serious propotions in India, a setback was noticed in the post-liberalisation period when even an auto major like his company suffered a Rs. 500-crore loss a few years back.

Normally a cyclical recession with its heavy fluctuations has its great impact of upto 50 per cent on the HCV segment and 25 per cent for LCVs. As far as the recession in the bus segment is concerned, it always maintains a normal cyclical nature. Since recession in the passenger car segment is less cyclical, Tata Motors has ventured into the field by rolling out the much successful Indica. While on the downslide of the cycle, there are attempts made to cut down cost of production during the upward movement, the tendency is to make huge profits.

The Ace success

According to Mr. Ravi Kant, the Ace is among the most successful of products from Tata Motors. In fact, the company took the risk of setting up the Ace plant four years back with a capacity of 2,50,000 units when the total market for such category vehicle itself was only 2.5 lakh units. In the last six years, the company exports have grown 15 times.

The industry recession has forced Tata Motors to rethink its production strategy. To move forward he suggested the following three beneficiary factors: A collaborative endeavour involving the industry, the Government and the financial institutions coming forward to solve the industry problems; a joint effort by the manufacturer and the dealer to minimise risks; and finally a collaborative approach within the product development department to minimise risks and losses. All this has to take the customer interest into account. In commercial vehicle business, many times the operators have to go without business. Hence the need to find alternative means of making profits.

Stressing the need for innovation, Mr. Ravi Kant said that an innovative policy always gives a competitive advantage for any company. As for the Nano small car project, the innovative product is specially designed for Indian customers at a fairly low price. At an affordable price, the Nano, with a carrying capacity of four passengers, offers a best solution to the existing two-wheeler users.