EXECUTIVE SUMMARY

The main objective of the study was to examine the psychographies of small size car

customers and to know the factors which play important role before making purchase

decesion. The findings that came out were that the Respondents gave much worth to the

performance of the vehicle and their knowledge of cars was outstanding, they knew all the

cars available in a particular car segment like which car belongs to which segment.Our study

is limited to small car segment. Other most important finding was that the influence of the

family is very much on the purchase decision. Family affected the purchasing decision of the

customerthe most after that was the influence of friends and media.

In the end ,conclusion came out to be that the performance of the vehicle is most

important. Other factors like cost, style , brand name etc. were considered not very important.

Since most of the customers give importance to the performance the main aim of the

company should be to produce energy efficient vehicles and give more worth to the

customers. The customers will not fear to shell out some extra money if the vehicle has much

to offer than any other car in the same segment.

1
1
 1.1 OVERVIEW OF INDUSTRY AS A WHOLE

As India celebrates its 50 years of independence, the passenger car industry will
celebrated a centenary of its existence in India in 1998. Despite this head start, the
industry has never quite matched up to the performance of its counterparts in other
parts of the world. The all-pervasive atmosphere created by the government's
license raj was primarily responsible for this situation. The various layers of Acts
sheltered the industry from external competition and smothered the development of
the Indian automobile industry. Moreover, the ind ustry was considered low priority
as cars were considered to be an "unaffordable luxury."

With the liberalization of the Indian economy, the passenger car industry was
finally deregulated in 1993 and many companies, both Indian and foreign,
announced their plans to enter the market. The last four years have seen companies
like Daewoo, Ford, GM, and Mercedes-Benz launches their cars in India. The
passenger car industry notched impressive growth rates between 26 -30% during the
period FY 94-96 even though the economic slowdown has adversely affected the
industry in FY 98 with the growth rate tricking down to 1%. Nonetheless, times
have changed significantly - the days of the customer chasing the dealer to
purchase poor quality cars backed by inefficient service are history. Today, the
customer dictates the terms.

The segmentation of the passenger car market in India is vastly different from that
in the developed nations. In India, the economy segment accounts for the largest
share of the cars sold, as compared to mid-range segment in the mature markets.
The economy and the premium segment face the lowest competitive threats, while
the premium segment will witness intense competition due to lower volumes.

2
1.2 PROFILE OF THE ORGANIZATION

Tata motors one of India's largest private sector companies with a turnover of over Rs 80
billions, is the country's leading commercial vehicle manufacturer and has significant
presence in the multi-utility and passenger car segments.

Tata motors was established on September 1, 1945, originally for the manufacture of Steam
Locomotives at Jamshedpur. By 1954, the company had diversified into the manufacture of
commercial vehicles in collaboration with Daimler Benz, Germany. By the time their
collaboration ended in 1969, Tata motors had become an independent producer of Medium
Commercial Vehicles with a great degree of indigenization. It had also developed the
capability of designing, testing and manufacturing such vehicles.

The widely successful Tata Indica, a Euro 2 compliant vehicle, is the country’s first
indigenously designed, developed and manufactured passenger car. Tata Motors followed
that up with the Tata Indigo, a sedan that was launched in December 2002. The company also
makes several other passengers vehicles, including the Safari, Sumo and Sierra.

The company’s products have received wide acceptance not only in India but also in the
Middle East, Asia, Africa, Australia, Latin America and Europe.

Areas of business

The company manufactures medium, heavy and light commercial vehicles, multi-utility
vehicles and passenger cars. In the year ending March 2001, the company’s revenues from its
four manufacturing plants at three locations in India were Rs. 81.64 billion (US $ 1.73
billion). In 2000, they were Rs. 89.61 billion. (US $ 1.9 billion)

{The average exchange rate has been taken as Rs 47.0 to one US dollar.}

In the year ended 31 March 2001, the company’s total exports were worth about Rs 7.22
billion (US $ 153.6 million), against about Rs 6.09 billion (US $ 129.5 million) in the
previous year.

3
Locations

The company’s manufacturing plants in India are at Jamshedpur, Pimpri and Chinchwad near
Pune in Maharashtra, and Lucknow in Uttar Pradesh. Land has been acquired at Dharwad
(Karnataka) to build a fifth plant.

Collaborations

The company has technical tie-ups with:

 The Institute of Development in Automotive Engineering (IDEA), S.P.A., Italy, for

assistance in small car body design and styling; and

 Le Moteur Moderne, France, for the development of diesel and petrol engines for
passenger cars.

Subsidiaries

 Tata Construction Equipment Company Ltd. (TELCON): Its principal business is

manufacture and sale of construction, material handling and earthmoving equipment.

 Tata Technologies Ltd.: It oversees the IT requirements of Tata Motors and provides
services for SAP implementation, CAD/CAM-based design, and e-commerce
facilities to customers in India and abroad.

 Sheba Properties Ltd: It is an investment and finance company and a wholly-owned

subsidiary of Tata Motors since its inception. It is registered with RBI as a Non
Banking Finance company.

 Telco Dadajee Dhakjee Ltd. (TDDL): It is an investment and finance company and
proposes to undertake activities pertaining to the sales and service of Tata Motors’s
vehicles and spare parts.

4
  Minicar (India) Ltd.: Formerly known as Mazda Industrial Chemicals Ltd., this
company was incorporated on January 18, 1972 and is currently engaged in the
business of automobile sales and services.

 HV Transmissions Ltd.: It was incorporated on March 13, 2000 with the objective
of acquiring the Heavy-Duty Gear Box Division of Tata Motors at Jamshedpur as a
going concern. It supplies transmissions and their parts to Tata Motors against
purchase orders raised by Tata Motors on HVTL.

 HV Axles Ltd.: It was incorporated on March 13, 2000 with the objective of
acquiring the Heavy-Duty Axle Division of Tata Motors at Jamshedpur as a going
concern. It supplies axles and their parts to Tata Motors against purchase orders raised
by Tata Motors on HVAL.

 Telco Automation Ltd.: It was incorporated on March 13, 2000 with the objective of
acquiring the Machine Tool and Growth Divisions of Tata Motors as a going concern.
As and when required, Tata Motors sources factory automation equipment from TAL.

 Tata Technologies, USA: It was incorporated on August22, 1994 and became a

wholly owned subsidiary of Tata Technologies Limited on December 22, 2000. The
company is engaged in the business of computer consultancy and related services.

Strategic alliances

Tata Motors has several joint ventures and alliances. These include:

 Tata Cummins Ltd., a joint-venture with Cummins Engine Company Inc., USA;
makes fuel-efficient, low emission, environment-friendly diesel engines;

 Tata Holset Ltd., a joint-venture with Holset Engineering Company, UK, makes
turbochargers for diesel engines manufactured by Tata Cummins Ltd. and other
OEMs;

5
 Concorde Motors Ltd., a joint venture with Jardine International Motors (Mauritius)
for dealerships of passenger vehicles. Concorde has dealerships for Tata Motors
passenger vehicles in Delhi, Mumbai, Bangalore, Ludhiana, Hyderabad, Chennai and
Lucknow.

 Tata Precision Industries Pvt. Ltd., Singapore, for the manufacture and sale of high
precision toolings as well as electronic and plastic components for the computer
industry;

 Tata Motors Services Ltd., Singapore, for the sale of spare parts for Tata vehicles;
and

 Nita Company Ltd., Bangladesh, for the assembly and sale of Tata commercial
vehicles.

6
1.3 PROBLEMS OF THE ORGANIZATION

Given the city conditions, the consumers needed a very good overall performance
of cars, small cars taking less space has no parking problems, easy derivability in
heavy traffic conditions, easy gear shifts and good fuel efficiency. The small car
owners being mostly the professional class or the upper middle class were very
cost conscious and due to their busy life styles preferred low maintenance in their
cars.

Irrespective of these above aspects there is one more thing, which also needs attention is
customer satisfaction. Customer satisfaction is abroad term, which includes many things like
post sale service satisfaction, dealership locality towards customers, way of treatment at these
dealerships and service stations, solving the customers problems and concerns to their full
satisfaction and so on.

The occurrence of single problem is a source of dissatisfaction for customers. Problem

experience is not always something broken or loose. Many a times it is a function of
customers’ expectation of how a feature or a vehicle system should look or perform and any
performance short of this expectation is perceived as a problem.

7
1.4 COMPETITION INFORMATION

The main purpose of this section is to have an insight into TELCO’s external environment.
Here, we shall be briefly looking at the factors influencing its external environment, its
competitors and the kind of competition it faces.

Competition leads to improvement on all fronts. If healthy, it brings the best out of an
industry. Newer and better technology, innovative and much better products and processes,
user-friendly and economical products providing maximum value to customers, and other
such advantages, all arise out of competition.

TELCO faces stiff competition in almost all its business segments but has emerged as the
winner when it comes to market success. Out of its three business segments namely, the
Passenger Car division, Utility vehicle division and the Commercial vehicle division, the
Passenger Car division is the area, which is seeing a lot of activity in the current period. And
this activity is all set to intensify with the launch of the all-new TATA Sedan in the later half
of the current year.

TELCO currently has two products in the passenger car segment- the Indica and the Safari.
It faces direct competition from almost all the major automobile players in the passenger
segment, namely Maruti Suzuki, Hyundai, Fiat, Daewoo and Toyota.

S.I.A.M. (Society of Indian Automobile Manufacturers) has classified the Passenger Car
segment in India into further sub segments on the basis of their length,

1. Small Car segment (B segment)

2. Entry-level Mid Size segment (lower C segment)

3. Premium Mid Size segment (upper C segment)

4. Luxury Segment (D segment)

8
TELCO currently has one offering in the Small Car segment- The Indica, and one offering in
the Sports Utility Vehicle segment - The Safari. The proposed offering, christened the TATA
Sedan shall compete in the entry-level Mid-Size Car segment.

TELCO also has plans to introduce another offering in the Luxury car segment code-named
‘Magna’. The Magna shall be launched some time during the later half of next year in 2003.
TELCO currently is tight-lipped about the Magna and has divulged no details regarding the
car but according to group Chairman Mr. Ratan Tata, the Magna shall be TELCO’s answer to
the Luxury Segment in India, which shall force the competitors to revamp their strategies.
And if the success of the Indica and the Safari is to be believed, these words are sure to see
light in the near future.

The Indica comes in both diesel and petrol variants. TELCO has redefined the rules of the
game by launching the all-new Indica V2, which has met with huge success in the recent
months. It has earned a lot of respect among all the small car manufacturers because of its
quality and value delivered to the customer, truly fulfilling its promise of More Cars per Car.
TELCO, for the year 2002 had promised a product of great pedigree, and the Indica V2 has
just delivered that.

The Indica is directly pitted against the Zen, Alto and Wagon-R from Maruti Udyog, the
Santro from Hyundai, the Palio and Uno from Fiat, and the Matiz from Daewoo.

The segmentation of the passenger car market in India is vastly different from that
in the developed nations. In India, the economy segment accounts for the largest
share of the cars sold, as compared to mid-range segment in the mature markets.
The economy and the premium segment face the lowest competitive threats, while
the premium segment will witness intense competit ion due to lower volumes.

9
Range Price ('000 Rs.) Models

Economy Maruti 800, Maruti Omni,

Premier, Ambassador, Hyundai Santro

TAB
Mid-range 350-450 Uno, Zen, Ford Ikon, Fiat Palio
LE:
Premium 450 - 1,000 Esteem, Opel Astra, Ford Escort, 1.1
Mitsubishi Lancer, Hyundai Accent
Trad
Luxury > 1,000 Opel Vectra, Rover Montego, Mercedes ition
benz ally,
disp
osable income was perceived as the one critical factor that drove passenger car
demand. However, household income is no longer the single most import ant factor
in determining the demand for vehicles. Other critical factors are the mobility
needs of people and the availability of cheap finance. The top three income groups
- middle, upper middle, and high - have grown from 10% in 1986 to 17% of the
population and covers over 52 million families. The number of high -income
households is growing very rapidly, more so in the rural areas. These findings have
revolutionary implications for the passenger car market. The development of the
used car market will also play a major role, as the customers will be encouraged to
trade in their old cars. The key to the growth of future markets is to make
maintenance-free vehicles, to improve the road infrastructure, and to reformulate
fuels and lubricants so as to reduce vehicle-operating costs.

10
11
2.1 SIGNIFICANCE

The main significance of the study to analyze the strategies generally opted by
dealers and to focus on the Marketing mix of TATA Motors.

2.2 MANAGERIAL USEFULNESS OF THE STUDY

This project is useful to know the buying behavior of car owners.

2.3 OBJECTIVES

1. Examine the psychographics of small size car customers.

2. To probe the buying behavior of car owners.

3. To find people expectations or satisfaction regarding the small cars.

4. To judge the awareness level of small cars.

2.4 SCOPE OF THE STUDY

The research aims at finding the attitude of people towards the different brands of

cars, a conclusive research was conducted. The data collection form was designed in

the form of a standard questionnaire because it is more reliable than unstructured

format.

12
13
 METHODOLOGY

A research design is the arrangement of condition for collection and analysis of data in a

manner that to, combine relevance to research purpose with economy in procedure.Research

Design is conceptual structure within which research is conducted. It constitutes

the blue print of collection, measurement and analysis of date. Research Design is

needed because it facilitates the smooth sailing of various research operations,

thereby making research as efficient as possible yielding maximum information

with minimum time, effort and money. Research Design stands for adva nce

planning of methods to be used for collecting relevant data and techniques to be

used in the analysis .The design helps researcher to organize his ideas whereby it

will be possible for him to look for flaws and inadequacies.

Sources of Primary and Secondary data:

The major aim of the project was to analyze the Strategies of TELCO and to study
the consumer-buying behavior for small car customers.

For the first part secondary data was collected from various sources that included website of
TELCO and trade journal that were collected from TELCO’s Delhi Office.

By reducing the chance or the sample to influence results through different questions and
through different judgment of answers and what to record, the structured questionnaire
produces more reliable results i.e. if the research project is repeated in the same manner,
similar results will be obtained.

Most of the questions asked in the questionnaire were closed ended with a few
open-ended questions also, to know consumers general views. Some questio ns are

14
designed for the purpose of cross checking the sample genuineness in filling the
questionnaire.

For the purpose of analysis, ranking scale is used to rank the preferences of
attributes of the customers. (Semantic differential scale is used to under stand the
images of brands of cars as perceived by the consumers. This scale is used because
it permits the development of descriptive profiles that facilitates the comparison of
competitive items.)

Universe : The universe is entire group of items the researchers wish to study and
about which they plan to generalize. For this, the universe consists of people of
Delhi who own small car. Selecting the sample for this project, a probability
sampling method is used. Probability sampling method is those in which every item
in the universe has a known chance of being chosen in the sample. Here the sample
size consists of 60 residents of Delhi. The probability sampling is preferred
because:

 It is the only sampling method that provides essentially unbiased estimates

having measurable precision. If the investigator requires this level of
objectivity, then some variant of probability sampling is essential.

The probability sampling permits the researchers to evaluate in quantitative terms,

the relative efficiency of alternate sampling techniques in a given situation.
Usually this is not possible in non-probability sampling.

15
16
TELCO:

Currently the largest automobile company in India, Tata Motors ranks among the top 10
commercial vehicle producers in the world.

The transition of Tata Motors from being a predominantly commercial vehicle manufacturer
to a complete automobile company began in the early 1990's with the launch of the first
Sports Utility vehicle from Tata- the Sierra and later the Tata Estate. The insights gained into
customer needs in these markets led to the development of another world-class Sports Utility
Vehicle, the Tata Safari, launched in 1998.

Soon after launching the Safari, Tata Motors made an aggressive foray into the mainline
passenger car market with its small car, the Tata Indica. The Indica fulfills the Tata Group
Chairman Ratan N Tata's vision of developing and manufacturing a truly Indian car that
would use modern technology and contemporary styling of the small car genre. It went on to
set a benchmark in terms of its value proposition in terms of best value for money in its
segment and internal spaciousness.

The overwhelming customer response that the Indica generated at its launch in early 1999 has
translated into its capturing more than 17% of the premium small car segment, and 8 % of the
entire passenger car market in India within a year.

Clearly identifying the core areas as R&D, manufacture of critical components and the final
vehicle assembly, the company continues to be open to global alliances to effectively enhance
its competitiveness in the fast globalizing Indian markets.

Setting standards of corporate governance, Tata Motors focuses on Complete Customer

Satisfaction. With benchmarking systems to sell world-class products and services, Tata
Motors continues to uphold the trust of its various stakeholders, viz. shareholders, customers,
employees and business associate.

17
Business Sector

The Tata Group runs businesses in seven key industrial sectors, namely, Materials, Energy,
Chemicals, Consumer Products, Engineering, Communications and Information Systems, and
Services. TELCO is Tata’s flagship company in the Engineering sector.

Business Models

TELCO is primarily a Business-to-Consumer Company (B2C), serving various needs of a

number of its customers. It also practices the Business-to-Business (B2B) Model, though at a
much lower scale.

Business

TELCO is into the business of manufacturing and selling medium, heavy and light
commercial vehicles, multi utility vehicles and passenger cars.

Its major product line can be basically classified into three broad categories. There are
various sub-brands and products in these categories:

1. Passenger Cars

2. Utility Vehicles

3. Commercial Vehicles

TELCO currently has three products in its Passenger Car division namely,

a. Tata Indica

b. Tata Indigo

c. Tata Safari

18
It is in the process of coming out with another member in the passenger car family, the all-
new Indica Sedan, set out to storm the Indian Mid-Size Passenger car segment, which would
be launched in the last quarter of 2002.

Confirming to International standards all these vehicles are available with various features
such as petrol & diesel versions, 2-wheel and 4-wheel drives etc.

TELCO currently has three products in its Multi-Utility vehicle division namely,

a. Tata Sumo

b. Telco Sport

c. Telcoline Pickup Vans

All these vehicles come only in diesel-engine versions and are quite popular on the Indian
roads, especially on the highways and in the rural areas. They are known for their build
quality, reliability, ruggedness, and the various uses that they can be put at.

They are used as people carriers, as emergency vans, goods carriers, pick-up vehicles and so
many more uses.

The utility pick-up vans of Tata International are made for all kind of terrains and are
facilitated with features like 2 & 4 wheel drive, single & crew cabs etc.

TELCO is the undisputed leader as regards the Commercial Vehicle segment. It has a large
number of products in this segments classified as various types namely,

a. Buses

- Small Buses (4 models)

- Big Buses (4 models)

19
b. Trucks

- Light Trucks (5 models)

- Medium/Heavy Trucks (9 models)

c. Tippers (3 models)

d. Tractors (3 models)

20
 STRATEGIC GROUP MAPS

INTERNAL ANALYSIS

The basic premise is the Customer. So whenever a new product development plan comes into
picture, the idea is to look for ways to offer the customer
the best value for his money. And the way we define
value, the word covers all the possible and not so
possible ways to customer satisfaction.

STRATEGIC INTENT

Leadership with Trust

Purpose
being a part of the Tata Group, TELCO’s corporate purpose is to improve the quality of life
of the communities that it serves, through leadership in sectors of national economic
significance, to which the group brings a unique set of capabilities. This requires aggressive
growth in its focused areas of business.

The Tata Group’s heritage of returning to society what it earns evokes trust among
consumers, employees, shareholders and the community. Formalizing the high standards of
behavior expected from employees and companies continuously enriches this heritage.

The Tata name is a unique asset representing leadership with trust. Leveraging this asset to
enhance group synergy and becoming globally competitive is the route to its sustained
growth and long-term success.

5 Core Values

21
The Tata Group has always sought to be a value-driven organization. These values continue
to direct the group's growth and businesses. The five core Tata values underpinning the way it
does business are:

 Integrity - we must conduct our business fairly, with honesty and transparency.
Everything we do must stand the test of public scrutiny.

 Understanding - we must be caring, show respect, compassion and humanity for our
colleagues and customers around the world and always work for the benefit of India.

 Excellence - we must constantly strive to achieve the highest possible standards in our
day-to-day work and in the quality of the goods and services we provide.

 Unity - we must work cohesively with our colleagues across the group and with our
customers and partners around the world, building strong relationships based on
tolerance, understanding and mutual cooperation.

 Responsibility - we must continue to be responsible, sensitive to the countries,

communities and environments in which we work, always ensuring that what comes from
the people goes back to the people many times over.

22
Definition of Value at TELCO

Tata Motors constantly looks for ways to offer customers the best value for money. And our
definition of value covers all facets of customer satisfaction. Be it in the area of product
safety, reliability, utility or aesthetics. We believe in creating lasting relationships with our
customers and business partners.

A Chronology of Important Milestones of the Company

TABLE: 3.1

1946 Tata Engineering undertook manufacture of 5000 'KC' broad gauge open
wagons for the Indian Railway.

The Managing Agency Tata Sons was transferred to Tata Industries on July
1, 1946. The Managing Agency system continued till it was abolished by an
act of Parliament in 1970.

1947 Manufacture of boilers for imported locomotives commenced. This line was
discontinued in April 1958.

In true Tata tradition, which lays emphasis on worker benefits, 129 houses
were built for employees in Jamshedpur.

1948 Steam Road Roller introduced in collaboration with

Marshal Sons (UK)

Tata Sons purchased the shops from the Government of India on June 1,
1945 for Rs. 25.39 lakhs with the aim of immediately manufacturing steam
1945 locomotive boilers. Later it planned to manufacture complete locomotives
and other engineering products.

Tata Motors was established on September 1.

1950 Collaboration signed with M/s Krauss-Maffei, W. Germany for manufacture

23
 of steam locomotives

1954 Collaboration with M/s Daimler -Benz AG, W.Germany, for the manufacture
of medium commercial vehicles at Jamshedpur. First commercial vehicle
produced within six months of agreement.

1956 Steel foundry set up in collaboration with Usines Emile Henricot of Court St.
Etienne, Belgium.

1959 Research and Development Center set up at Jamshedpur.

1960 The company's name, which was Tata Locomotive & Engineering Company
Ltd., was changed to Tata Motors & Locomotive Company Ltd.

1961 Collaboration with M/s Pawling & Harnischfeger (P&H), U.S.A. for
manufacture of cable type excavators and cranes. First crane produced in the
same year.

Commencement of exports - first truck exported to Ceylon, now, Sri Lanka.

1964

Manufacture of popular 1210 vehicle model (with 7.5 T payload)

commenced

1966

Acquisition of Investa Machine Tool Co.

Setting up of Machine Tools Division at Pune.

Engineering Research Centre set up at Pune to cater to automobile research

and development.

1967 Press Tool Division set up at Pune.

Vehicle manufacture facilities steadily built up at Pune

1968 Collaboration with M/s Hueller Hille Gmbh, W. Germany, for the
manufacture of unit construction special purpose machines.

24
1969 The "T" replaces the three-pointed Mercedes Star.

1970 Last locomotive produced. (Cumulative production 1155 nos.)

1971 DI engines introduced.

1977 First commercial vehicle produced at Pune.

1983 HCVs, including articulated vehicles, introduced.

1984 Collaboration with M/s Hitachi Construction Machinery Co. Ltd., Japan, for
manufacture of hydraulic excavators.

Expansion of capacity at Pune.

1985 First hydraulic excavator produced under Hitachi collaboration.

Broad banding of licence (to manufacture only commercial vehicles above 8

Ton GVW) to include manufacture of all medium, heavy and light
commercial vehicles, jeep type vehicles and passenger cars.

Broad banding of excavator licence to manufacture all types of earthmoving

machinery.

Broad banding of machine tool licence to manufacture all types of machine

tools.

Collaboration with Niigata Engineering Co. Ltd, Japan

for NC / CNC Horizontal Machining Centers and with Nachi-Fujikoshi
Corp., Japan for NC /CNC In line Machining centers and flexible
manufacturing systems.

25
TABLE: 3.2

1986-90

1986 First Light Commercial Vehicle - TATA 407 produced. This was a
completely indigenous design with minimal import content. Also met fuel
efficiency norms specified by the government

1987 Second model of completely indigenously designed LCV - TATA 608

produced.

LPT 2416 a multi-axled vehicle introduced

1989 Third model of LCV – Tatamobile 206 produced

Collaboration with M/s Kloth-Senking Metalligessari, Gmbh, W.Germany,

for know-how of manufacturing aluminum castings.Collaboration with
Hitachi, Japan, for manufacture of a new generation EX

series hydraulic excavator.

1990 First EX model hydraulic excavator produced.

Indigenously designed front-end wheel loader - TWL 3036 introduced.

26
TABLE: 3.3

1991-94

1991 Introduction of indigenously designed passenger cars - Tata Sierra and Tata
Estate.

TAC 20 crane produced.

One-millionth vehicle rolled out.

1992 Production of MCV's commenced at Lucknow.

LPT 2213 - a multi-axled vehicle launched.

Collaboration with Nachi-Fujikoshi Corp., Japan, for manufacture of robots.

1993 Joint Venture Agreement signed with Cummins Engine Co. Inc.
to manufacture high horsepower and emission-friendly diesel engines for
medium and heavy commercial vehicles.

Tata Cummins Private Limited incorporated in Jamshedpur, Bihar, on

0ctober 20, 1993.

1994 Tata Sumo - a multi-utility vehicle launched.

LPT 709 - a full forward control, light commercial vehicle launched.

Joint Venture Agreement signed with M/s Daimler - Benz / Mercedes - Benz
for manufacture of Mercedes – Benz passenger cars in India.

Joint Venture Agreement signed with Tata Holset Ltd., U.K. for
manufacturing turbochargers to be used on Cummins engines.

Mercedes-Benz (India) Ltd. incorporated in Pune, Maharashtra, on

27
 November 22, 1994.

Tata Holed Pvt. Ltd. incorporated in Dewas, Madhya Pradesh, on December

20, 1994.

Collaboration with Shads Maschinenbau GmbH, for manufacturing CNC

cylindrical grinding machines.

The Company was restructured into two Strategic Business Units

Automobile Business Unit (ABU), and Construction Equipment Business
Unit (CEBU).

1995-96 TABLE: 3.4

1995 Collaboration with Hitachi, Japan, for the manufacture of mini excavator
models EX 40 and EX 60.

Production of robots in collaboration with Nachi-Fujikoshi Corp., Japan

commenced.

Mercedes Benz car E220 (W124) launched.

Tata Cummins engine plant inaugurated

1996 First engine produced by Tata Cummins in January 1996.

LPT 2516 vehicle fitted with Tata Cummins engine launched on March 4,
1996.

Tata Sumo Deluxe launched.

Tata Holset's turbo charger plant inaugurated on November 25, 1996.

688 acres of land at Dharwad (Karnataka) were allotted for Auto and CEBU
Units, in Dec 1996.

28
 Concorde Motors Ltd., a Joint Venture was established between Tata Motors
and Jardine International Motors (Mauritius) Ltd.

1997-98 TABLE: 3.5

1997 Industrial Entrepreneurs Memorandum was filed for taking up manufacture

of special purpose vehicles and construction equipment at Dharwad in Jan
1997.

Management Services Division of the Company was transferred to the

wholly owned subsidiary of Tata Motors - Tata Technologies (I) Ltd, in Apr
1997.

Tata Sierra Turbo launched.

100,000th Tata Sumo rolled out.

The commercial vehicle, LPT 909 introduced.

1998 Tata Safari - India's first Sports Utility vehicle launched in Jan 1998.

Concorde Motors Ltd., a Joint Venture between Tata Motors and Jardine
International Motors (Mauritius) Ltd. was appointed as dealer for the
Company's passenger cars in several cities across the country, in Feb 1998.

Two millionth vehicles rolled out.

Collaboration with Hitachi, Japan, for manufacture of Series V excavators to

replace Series I & III machines, in Mar 1998.

Indica, India's first fully indigenous car, launched in Dec 1998.

Telco Construction Equipment Company Ltd. (TELCON) came into being

as a subsidiary of Tata Motors, in Dec 1998.

29
 1999 TABEL: 3.6

1999 An overwhelming 115,000 bookings for Indica were made against full
payment within a week, in Jan 1999.

New TATA Logo unveiled.The company would hereafter be called " Tata
Motors ".

Commercial production of Indica begins and first car is sold.

Construction Equipment Business Unit is transferred to TELCON.

In Oct 1999, the Company won the National award for R&D Efforts in
Development of Indigenous Technology in the Mechanical Engineering
Industries Sector instituted by Department of Scientific and Industrial
Research, Ministry of Science and Technology for the year 1999.

30
 2000 TABLE: 3.7

2001 Order for 500 Nos. of Tata Indica received for Malta. First batch of 160 Nos.
exported in Jan 2000.

Indica with Bharat Stage II (Euro II) compliant diesel engine launched in Feb
2000.

Machine Tools and Growth Divisions, Axle Division and Transmission

Division of Tata Motors transferred to newly formed subsidiaries Telco
Automation Ltd., HV Axles Ltd. and HV Transmission Ltd. respectively on
March 31 2000.

The Automobile Business Unit was restructured into Commercial Vehicles

Business Unit and Passenger Car Business Unit, in Mar 2000.

Tata Motors bagged the National Award for successful commercialization of

indigenous technology by an industrial concern for the year 2000, for the
indigenous development and commercialization of Tata Indica, in Mar 2000.

Utility vehicles with Bharat Stage II (Euro II) compliant engine launched, in
Mar 2000.

Indica 2000, Bharat Stage II (Euro II) compliant with Multi Point Fuel
Injection petrol engine launched, in Apr 2000.

Tata Motors selected for the "Good Corporate Citizen Award" by Bombay
Chamber of Commerce and Industry for the year 1999-2000. The award was
received later in April 2001.

Tata Motors received the "All India Trophy for Highest Exports" for the year
1998-99 in the Capital Goods Exports- Non- SSI category, from Engineering
Export Promotion Council (EEPC) on May 31, 2000.

31
 Tata Motors was awarded the EEPC Regional Top Exporter's Trophy in the
category of 'Units registered with DGTD/ SIA/ Textile Commissioner etc.'
for engineering exports in the year 1998-99 on November 10, 2000.

Second prize- "Central Pollution Control Board Award for Environment

Protection" was bagged by Tata Motors at ENVIRO INTERNATIONAL,
2000 which was jointly organized by TAFCON Projects (India) Ltd. and
Royal Dutch Jaarbeurs, Netherlands, in Pragati Maidan, Delhi from
September 27 to 29, 2000.

Launch of CNG Buses in December, 2000.

Launch of 1109 vehicle (11 Ton GVW).

Hitachi inducted as an equity partner for TELCON under shareholder's

agreement with Tata Motors

Indica V2 launched - 2nd generation Indica.

100,000th Indica wheeled out.

Launch of CNG Indica.

2002
Launch of the Tata Safari EX

Indica V2 becomes India's number one car in its segment.

Exits joint venture with Daimler Chrysler.

32
 Unveiling of the Tata Sedan at Auto Expo 2002.

Petrol version of Indica V2 launched.

Launch of the EX series in Commercial vehicles.

Launch of the Tata 207 DI.

2003 2,00,000th Indica rolled out.

5,00,000th passenger vehicle rolled out.

Launch of the Tata Sumo'+' Series

Launch of the Tata Indigo.

Tata Engineering signed a product agreement with MG Rover of the UK.

Launch of the Tata Safari Limited Edition.

The Tata Indigo Station Wagon unveiled at the Geneva Motor Show.

On 29th July, J. R. D. Tata's birth anniversary, Tata Engineering becomes

Tata Motors Limited.

3 millionth vehicles produced.

2004
First CityRover rolled out

135 PS Tata Safari EXi Petrol launched

Tata SFC 407 EX Turbo launched

Tata Motors signs MOU for acquisition of Daewoo Commercial Co. Ltd.
Korea

33
 Tata Motors unveils new product range at Auto Expo '04.

New Tata Indica V2 launched

Tata Motors and Daewoo Commercial Vehicle Co. Ltd. sign investment

2005
Agreement

Indigo Advent unveiled at Geneva Motor Show

Tata Motors completes acquisition of Daewoo Commercial Vehicle

Company

34
 MANUFACTURING UNITS OF TELCO

Tata Motors owes its leading position in the Indian automobile industry to its strong focus on
indigenization. This focus has driven the company to set up world-class manufacturing units
with state-of-the-art technology. Every stage of product evolution - design, development,
manufacturing, assembly and quality control, is carried out meticulously. Its manufacturing
plants are situated at Jamshedpur in the East, Pune in the West and Lucknow in the North.

Jamshedpur:

This was the first unit of the company established in 1945 and is spread over a area of 822
acres. It consists of 3 divisions - Truck, Engine (including the Gear Box division) and Axle.
The divestments in March 2000 hived off the Axle and Engine plants into independent
subsidiaries. The Truck Division boasts of two assembly lines. The main assembly line,
measuring 180 metres in length, has 20 stations with a vehicle rolling out every 8 minutes
while the other line is dedicated to Special Purpose Vehicles (SPVs). State-of-the-art
facilities like a Centralized Paint and Press Shop with a set-up of a 5000 tonns Siempelkamp
press line and a cut-to-length line for strip preparation purchased from M/s. Kohler of
Germany makes it a fairly advanced production outfit.

This is supported by a fully equipped Foundry which supplies high-grade SG Iron castings
for automobile components and excavators and is rated as one of the cleaner, better and
highly automated foundries in the world. The Foundry has a sophisticated Kunkel Wagner
high pressure moulding line, which has a rated production capacity of 90 pairs of moulds
every hour. The Foundry has its own melting shop, core shop and sand plant. Other advanced
facilities include Channel Furnaces, Computerized Testing Equipment etc. In 1993, the
Foundry was ISO 9002 certified by the Bureau Veritas Quality International and later
followed it up with the more stringent QS 9000 certification from the BVQI in the year 2000.

The unit is also equipped with a semi-automated forging line, with 40,000 mkg Beche
hammer and state-of-the art presses from Kurimoto of Japan and is one of the most modern
forging set-ups in the country. It produces critical forging like crankshafts, front axle beams

35
and steering parts for the automobile plant. The new forging line, installed on April 20, 1984,
has the capability to forge front axle beams at 90 sec per piece and crankshafts at 120 sec per
piece. Mechanical presses help produce a variety of heavy forging. The sophisticated FIDIA
Digit 165 CC graphite milling machine links shop floor machines to the design workstation.
The Forge has been certified as ISO 9002 and QS 9000 by the BVQI.

Pune:

The Pune unit is spread over 2 geographical regions Pimpri and Chinchwad and has a
combined area of around 510 acres. It was established in 1966 and has a Production
Engineering Division, which has one of the most versatile tools making facilities in the
Indian sub-continent. It houses a Vehicle manufacturing complex which is one of the most
integrated automotive manufacturing centers in the country producing a large variety of
individual items and aggregates. It is engaged in the design and manufacture of sophisticated
press tools, jigs, fixtures, gauges, metal pattern and special tools, as well as models for the
development of new ranges of automobile products. Its capabilities have enabled Tata Motors
to introduce new products and improve existing ones without resorting to imports of dies or
fixtures.

Over the years, this division has developed expertise in design and manufacture of automated
dies, fixtures and welding equipment. Its large design group is fully conversant with state-of-
the-art CAD facilities and manufacturing facilities comprising of light and heavy CNC
machine shops, jigs boring room, plastic template shop, wood pattern and model pattern
shop, five axis precision machine tools and laser control machines. To cope with such a
diverse range, four assembly lines have been established, one each for MCVs and HCVs,
LCVs, multi-utility vehicles and one for Passenger Cars (Indica).

The Passenger Car Division in 'K' block executes the entire process of car manufacture over
five shops - the engine shop, the transmission shop, press and body shops, paint shop and the
trim and final assembly shop. The shops are fully automated ensuring that there is minimal
chance for error in the manufacturing processes. After the car is completely assembled, it

36
goes through several checks like wheel alignment, side slip test, brake test, shower test, and a
short test run before it is ready for dispatch.

All systems such as materials management, maintenance and other activities are
computerized, enabling smooth operations and minimum inventory needs.

The Electronics Division is engaged in the production of a wide variety of Machine Tool
Controllers, PLCs, and Test rig instrumentation, Servomotors, Proximity Switches. In
addition, it has developed a number of components such as flashers, horns, timers that are
used in Tata Motors vehicles.

Industry experts rate the fully automated Foundry at Chinchwad among the best, worldwide.
The Iron Foundry produces 16,000 tonnes of high precision castings per year with the help of
450 employees. These include Cylinder Blocks, Cylinder Heads, Gear Box Housing, etc. To
dispense with the need for outsourcing, an Aluminium Foundry with an annual capacity of
700 tonnes has also been established.

Lucknow:

Lucknow Plant is the latest in Tata Motors's manufacturing facilities. Established in 1991 and
covering an area of 600 acres, it was primarily started to assemble Medium Commercial
Vehicles (MCVs) to meet the demand in the Northern Indian market. However, in 1995, the
unit started manufacturing bus chassis of Light Commercial Vehicles (LCVs) and SUMO's.
The unit is equipped with facilities to manufacture spare parts. Subsequently, G-16 and G-18
Gear Parts were added in 1998. The plant started to assemble G -16 GearBoxes in 2000 to
meet the in-house requirement for SUMO vehicles.

37
 PASSENGER CARS SEGMENTATION

The segmentation of the passenger car market in India is vastly different from that
in the developed nations. In India, the economy segment accounts for the largest
share of the cars sold, as compared to mid-range segment in the mature markets.
The economy and the premium segment face the lowest competitive threats, while
the premium segment will witness intense competition due to lower volumes.

Segment-Wise Classification of the Indian Car Market Segment

Range Price ('000 Rs.) Models

Economy Maruti 800, Maruti Omni, Premier,

Ambassdor, Hyundai Santro

Mid-range 350-450 Uno, Zen, Ford Ikon, Fiat Palio

Premium 450 - 1,000 Esteem, Opel Astra, Ford Escort, Mitsubishi

Lancer, Hyundai Accent

Luxury > 1,000 Opel Vectra, Rover Montego, Mercedes benz

TABLE: 3.8

Key Demand Drivers

Traditionally, disposable income was perceived as the one critical factor that drove
passenger car demand. However, household income is no longer the single most
important factor in determining the demand for vehicles. Other critical factors are
the mobility needs of people and the availability of cheap finance. The top three
income groups - middle, upper middle, and high - have grown from 10% in 1986 to
17% of the population and covers over 52 million families. The number of high -
income households is growing very rapidly, more so in the rural areas. These
findings have revolutionary implications for the passenger car market. The

38
development of the used car market will also play a major role, as the customers
will be encouraged to trade in their old cars. The key to the growth of future
markets is to make maintenance-free vehicles, to improve the road infrastructure,
and to reformulate fuels and lubricants so as to reduce vehicle -operating costs.

PRICING

In any business, nothing is more dangerous than using money as the magnet for attracting
customsers. It kills loyalty, mangles margins, and encourages defections. But it is the Unique
Selling Price the only road to success in the intensely competitive automobiles business?

Those in the race for winning over the Rs. 7,500-crore small cars market seem to believe so.

In the small car segment, the only ‘P’ that, suddenly, seemed to matter was the second in the
Product-Price-Promotion-Place marketing-mix.

Evidently, features, technology, and service are secondary. And the only warhead is price.
According to the Research Analyst, Morgan Stanley, “Price is the most important ‘P’ in this
market because it is pyramidal in structure, with a huge base and a narrow apex”.

Everything else remaining constant, the purchase decision of the first-time buyer is
influenced by the 4 factors: Price, Price, Price and Price. The first is the price of acquisition.
The second is the price of finance, or the rate of interest on a loan to buy a car. Third is the
price of maintenance, which includes the cost of fuel, service, and spare parts. And the fourth
is the price of disposal, or the re-sale value of the car. The typical Indian car-buyer is
obsessed with post-purchase pricing. Which is,in effect, the cost of maintenance and the
possible re-sale value. And obviously, the lower the selling price of a second hand model, the
less is the purchaser’s incentive to opt for it.

However, not every company plays the price-card. Instead of cutting the price of Santro,
Hyundai Motors has launched an enhanced version with product features like power steering,
and product-plus features like better service and customer-care. Hyundai arrived at the
pricing strategy after a careful analysis. It does not believe in knee-jerk reactions to rival

39
moves. It also believes that when features are the USP, second P Marketing cannot help
reinforce that position. Strategic price marketing is a corporate weapon that must be applied
in the context of an entire portfolio of cars. Attempting to sell the lowest priced car in every
segment will not enable a company to survive.

Sure, the lower price will be an attraction to the first-time buyer who is, essentially, stretching
his budget to buy personal transportation. The less the stretch, the more is the likelihood of
actually buying a car instead of, say, a two-wheeler. So, even a drop of Rs.1000 in the small
cars segment could expand its size.

Go beyond the entry level – and the price-value equation will kick in immediately. Only if all
other things are perceived to be equal between competing brands will price be a decider.
Once incomes start rising again, there will emerge increasing numbers of upgrades as well as
first-time buyers who will not necessarily start at the lowest price-level. Thus, price will
become less important. Applied as a brand-level strategy, price may help the auto-marketers
win over only the entry-level customer.

However, only the lowest priced player will milk this segment. The rest of the low-price
aspirants will have to offer additional features as value to convince the budget-buyer to spend
more. As a corporate strategy, leading the charge through price may have a better pay-off. A
low –priced product will enable new entrants to gain entry into the consumer’s garage. The
threat, however, is that of a dangerous dilution of image.

Thus price can be a selling proposition for only one segment of customers. But a company
that seeks life-long customers, who progressively move up its product ladder, cannot rely on
price alone for success.

The main purpose of this section is to have an insight into TELCO’s external environment.
Here, we shall be briefly looking at the factors influencing its external environment, its
competitors and the kind of competition it faces.

40
Competition

Competition leads to improvement on all fronts. If healthy, it brings the best out of an
industry. Newer and better technology, innovative and much better products and processes,
user-friendly and economical products providing maximum value to customers, and other
such advantages, all arise out of competition.

TELCO faces stiff competition in almost all its business segments but has emerged as the
winner when it comes to market success. Out of its three business segments namely, the
Passenger Car division, Utility vehicle division and the Commercial vehicle division, the
Passenger Car division is the area, which is seeing a lot of activity in the current period. And
this activity is all set to intensify with the launch of the all-new TATA Sedan in the later half
of the current year.

TELCO currently has two products in the passenger car segment- the Indica and the Safari.
It faces direct competition from almost all the major automobile players in the passenger
segment, namely Maruti Suzuki, Hyundai, Fiat, Daewoo and Toyota.

S.I.A.M. (Society of Indian Automobile Manufacturers) has classified the Passenger Car
segment in India into further sub segments on the basis of their length,

 Small Car segment (B segment)

 Entry-level Mid Size segment (lower C segment)

 Premium Mid Size segment (upper C segment)

 Luxury Segment (D segment)

TELCO currently has one offering in the Small Car segment- The Indica, and one offering in
the Sports Utility Vehicle segment - The Safari. The proposed offering, christened the TATA
Sedan shall compete in the entry-level Mid-Size Car segment.

41
TELCO also has plans to introduce another offering in the Luxury car segment code-named
‘Magna’. The Magna shall be launched some time during the later half of next year in 2003.
TELCO currently is tight-lipped about the Magna and has divulged no details regarding the
car but according to group Chairman Mr. Ratan Tata, the Magna shall be TELCO’s answer to
the Luxury Segment in India, which shall force the competitors to revamp their strategies.
And if the success of the Indica and the Safari is to be believed, these words are sure to see
light in the near future.

The Indica comes in both diesel and petrol variants. TELCO has redefined the rules of the
game by launching the all-new Indica V2, which has met with huge success in the recent
months. It has earned a lot of respect among all the small car manufacturers because of its
quality and value delivered to the customer, truly fulfilling its promise of more Car Per Car.
TELCO, for the year 2002 had promised a product of great pedigree, and the Indica V2 has
just delivered that.

The Indica is directly pitted against the Zen, Alto and Wagon-R from Maruti Udyog, the
Santro from Hyundai, the Palio and Uno from Fiat, and the Matiz from Daewoo.

42
CORE COMPETENCIES

The Core Competencies of is there capability to make the Indica globally competitive in
terms of cost. If Telco can find markets to sell 20,000 or 30,000 more Indica’s, then they are
looking at a very interesting set of numbers. If you add variants to those numbers, you’re
looking at very reasonable numbers. Then you are in the niche. And if you focus on that
niche, invest in technologies required to give that one platform all the variants and changes
that you need, you survive.

Telco has a design and engineering capabilities that are unmatched by its competitors in the
Indian market and the company also possesses an unmatched ability to create and integrate it.
This gives it the capability to compete with firms in the world market.

It also has a World-Class dealer base and alliances with these suppliers; this ensures the right
Inputs for the company and also helps to manage the Just In Time systems.

Smaller auto companies (globally) will have to look for market niche’s to operate. In the case of Tata
Motors, the niche may be the lower end car. The unfortunate part is that the lower end market does
not offer much by way of margins. But you need volumes and that kind of scale and production
processes that will give you those advantages. That is what Telco has to look for and there they can
even stand on their own if they find markets beyond the shores of India. All that would come from
having a niche product that is globally competitive

But there is still a long way to go before the company is able to make a mark in the world
market and compete with the world’s leading companies in well-developed markets like
Europe, The United States and Japan. For that to happen, it will take a more focused
approach from the company towards quality and developing R&D and experience in such
project .Though its efforts towards Total Quality Management seem to be helping the
company.

43
KEY FACTORS FOR SUCCESS

Having the right resources is very important for a company to succeed in any industry. The
resources which are most vital for success in an industry are called ‘Key factors for success in
an industry’, the key factors for the industries that Telco Operates in are:

1. High Quality Management

The LCV & M&HCV segment are highly complicated sectors; the management not only
have to manage all the resources available to the company properly, but also have to be
highly professional in their approach.

2. R&D and Knowledge

The technological changes as per WTO specifications and Euro Emission norms need to
be followed for a company like Telco to sustain growth and Telco has been able to
achieve all this in all its products and services.

Human Resource

Industries like Telco have a high human element, it is very important for a company to
have High quality human resources

3. High and Standard Quality

For industries like Telco, which manufacture equipment's that serve the infrastructure
industry, it is very important to have high standards in quality.

4. Managing Cost

It is becoming more and more important for companies to achieve competitive costs, the
company is planning to continue with is cost reduction program. Most of this would come
from reducing fixed costs, operational efficiency an outsourcing.

44
RESOURCES

The resources of the company are similar for all the industries; many of the resources are
common for all the industries. But the Core Values like management capabilities are shared
by the entire organization.

Some of the major resources that Telco has are

1. Human Resource

Telco possesses a great Human Resource base; it’s in all its business is people oriented
operation. The company takes great care to ensure that it has a good supply of HR, the
values and efforts to ensure the HR departments of each SBU share good Human
Resources.

2. Management

The management of the company has gained the reputation of being one of the most
professionally managed companies in India. The management of each SBU has a strong
work ethic with an aggressive approach to managing the company.

3. R&D and Know-how

The company is known for its high level of sophistication when it comes to technology.
And it has great experience in projects with high levels of sophistication, which is very
important in a knowledge-based industry. It has a great R&D base, it invests a high
amount every year (compared to the average spent in the industry) on it for each
department. The R&D departments of each SBU have helped each other, for E.g. the
revival of Indica is a success story.

4. High Quality

The company has extremely high standards in quality; almost all Strategic Business Units
are technology leaders in their field of operation.

45
 Thus it is clear that Telco has most of the resources that companies require to be
successful in the industries it operates in. Cost is the only resource that sometimes
hampers its progress.

VALUE CHAIN

A large number of Telco's operations are different activities on the value chain for E.g. LCV.,
Utility Vehicles, HCV or others are used in different sectors, but all the vehicles have been
the leaders in their own segment.

This aspect not only allows the company to it to deliver tailor made products for other
divisions in the company, but also gives some divisions of the company a lot of business.
And the company is able to achieve lower costs than its competitors by procuring facilities
from other departments within the company, thus giving it an edge over the competition.

SYNERGY

The activities of the company give synergy to the company as a whole; this is due not only
because of the value chain, but also because the R&D from one division helps in the others.
For E.g. the R&D from the Engineering division helps the Production division. And in the
future the company wants to have synergy in all its activities to be highly successful.

46
 PEST ANALSIS –IDENTIFICATION OF CHANGE DRIVERS

The PEST(Political, Economic, socio-cultural and Technological) analysis for TATA

motors and Locomotive Company Ltd. (TELCO):

Political

The political environment has been highly unstable over the past few years, but recently it has
settled down somewhat. As we know that Telco is the leader in the commercial vehicle
segment with 54% market share in Light Commercial Vehicle (LCV) and 63% market share
in Medium & Heavy Commercial (M & HCV). Telco has a market share of 221% in utility
vehicle segment. The company has also garnered a 9% market share in the passenger car
industry in a very short span. The decision of the government to ban diesel buses and give
licenses to CNG buses has been a boon for TELCO as it is the major supplier of buses to all
State Transport Corporations. Though only few state governments are stern in implementing
this order but TELCO will remain one of the major suppliers of buses and hence can plan
expansion.

Economic

The availability of freight depends on the economic activity in the country. Therefore an
increase in economic activity broadly represented by growth in GDP helps in increasing the
freight availability. The GOI policy towards depreciation norms and excise duty etc will have
a bearing demand for MUV’s and CV’s. The implementation of infrastructure projects will
have a positive impact on demand of CV’s and MUV’s as they are extensively used in
transportation of material and people requirement of projects. The freight rates determine the
revenue component of fleet owners. The improvement in freight rates consistently over this
period will add to business of TELCO. Though oil prices have gone up but the shift in the oil
sector companies towards a positive pricing strategy will not affect Telco’s business plans &
performance.

Socio-Cultural

47
In order to boost sales passenger car companies often look for a general upbeat environment.
The sales during festival times perk up because the environment all round is joyous and
upbeat. Another effect is because of is that of good monsoons which translates into a higher
rural demand especially for the MUV’s. Thus socio-cultural factors do not affect the
Engineering business too much; it does have an impact indirectly. Though the metropolitans
have become over-crowded and but Telco’s Indica V2 sales have picked up.

Technological

The Company vigorously pursued a programme of product innovation in commercial vehicle

with a view to regaining and improving its market share. The company had already added to
its range Euro 1 Compliant Cummins Engine Powered Vehicle with a view to regaining and
improving its market share. Major innovation in the current year include a 25 Tones Truck
and a30 Tone Tractor Trailer; Fuel Efficient M&HCV Truck and Busses Powered by
Company’s Euro 1 Compliant 697 Engines; a Cost Effective 11 Tones Vehicle in both bus
and truck version to meet the growing demand in this segment; and a Fur Tones LCV fitted
with an internally developed Turbo charged Engine.

48
 STRATEGY IMPLEMENTATION

SEVEN S FRAMEWORK

The Boston Consultancy Group in the 1970s developed the ‘Seven S Framework’. It was
designed to build a cohesive strategy, and in turn integrate the 7S, these 7S are inter-related
and inter-dependent.

For the success of an organization the Seven S cannot work in isolation, they have to be
brought together.

For the Strategies to work at Telco, it is important that the company employs the framework.
To implement the framework the company should consider the following aspects-

STRATEGY

The strategies that the company needs to employ have been discussed in the previous section.
The strategies differ on the various levels, i.e. different for Corporate, Business, Operational
and International Levels. These strategies have to be aligned with the following elements.

STRUCTURE

When the company undertook the restructuring exercise, it was the first major restructuring
the Tata group had undertaken. The first phase of restructuring required some basic
foundation building. The group developed a common corporate identity for all group
companies leveraging the strengths of the Tata brand. The group companies were required to
sign an agreement to use the Tata brand, which entailed the compliance with the quality
standards and business ethics that we codified at that time. The company developed the Tata
Business Excellence Model to measure the quality and corporate performance of our
companies, and required them to achieve the specified level of performance in order to
continue the Tata Brand.

49
The company instituted the business review committees (BRCS), which constituted the
formal interface between the group and the holding company. The BRCS reviews the
strategic direction of each company, and the executive committee of each board reviews the
operations and the budget of the company.

To oversee the entire restructuring exercise, the group created a central group, which they
called the Group Executive Office (GEO). Its primary task was to look at the strategic
direction of each of our companies, in the process of which it set some tasks for our company
in terms of bottom-line and top-line growth based on historical growth trends, as industry
leadership in terms of being number one, two, or three. Ultimately, the GEO takes a view on
the figment of companies within our group.

Telco has also decided to restructure its operations by reducing its level of vertical
integration. Towards this, the company has decided to hive off three of its ancillary divisions
in Pune and Jamshedpur. The company is at present on the look out for suitable alliances with
international majors.

The company has set up an independent retailing network for cars and also for other utility
vehicles. The strength of dealership for these now stands at 118.

SYSTEMS

Systems are the procedures that make the organization follow for everything from top-level
decision making to board meetings, from employee training and hiring to transportation. All
the company’s activities should have a particular system particular to the company.

The GEO as mentioned above has put in place certain important hooks such as a central HR
and central financial coordination with a view to standardize the MIS systems of Telco for
financial reporting to the holding company. The net result of all these initiatives has been that
Telco now operates more as a group than what they did in the past, but what this really meant
was that each company had the stamp of its own CEO and went its own way, and if you

50
remove the name o the enterprise you could be looking at different companies with no
connection to the Tata’s.

STYLE

Every company has its own management style, style also consists of the way a company
operates its business.

As mentioned above the company instituted the business review committees (BRCS), which
constituted the formal interface between the group and the holding company. The BRCS
reviews the strategic direction of each company, and the executive committee of each board
reviews the operations and the budget of the company.

STAFF

This aspect concerns itself with the pool of people who need to be developed.

Telco takes a lot of efforts to ensure the best trainee level talent, through campus recruitment
from the top institutes of the country. It then gives them the proper training and development,
giving them the opportunity to grow and improve.

The current chairman of the company Mr. Ratan Tata is a prime example, in the way he
started at the middle level management, and then made it to the top of the company

SKILLS

This aspect considers the fact that every organization needs certain skills for its success, but
its not just enough to have skills, an organization must have the right combination of skills
that complement each other.

The company works hard to ensure that it has the necessary skills to ensure its success. It
trains its employees, through a set of carefully designed programs, to give them the desired
skills. Plus it has also entered into a number of alliances with a number of companies, which
help it to gain the necessary experience and which can also help it improve its R&D.

51
SUPER-ORDINATE GOALS

These are goals on which the other elements and other goals of the organization should
depend upon. These are reflected in the thinking of the organization.

These are Tata’s Diktat:

Globalize: With economies opening up, Tata companies are aiming for global benchmarks to
compete.

Be Skill – Intensive: With manufacturing ceasing to be India’ s advantage, the thrust is on

knowledge – based industries.

Build brands: Shift from selling commodities to marketing branded products and services that
not just differentiate but fetch a premium.

Leadership: To justify shareholder interest, Tata companies must be among the top three in
their industries.

Enhance Performance: Executives must pull their weight, and the best of them must get
opportunities across functions and group companies.

LEADERSHIP

Leadership is defined as “The art or the process of influencing people so that they will strive
willingly and enthusiastically towards achievement of the group’s mission”. Leadership is
something that greatly affects any company’s philosophy, culture, and in-turn the overall
health of the company.

Telco always has had a tradition of great leadership. One of its founders Jamshedji Tata has
been a hallmark of leadership.

That surge of electricity – not unnoticed by merchant bankers, now crawling all over Bombay
House, the group headquarters – is in fact the spark that the group is looking for to rocket
itself into a new orbit of growth. In 1991, when a shy and reclusive Ratan Tata took over the

52
chairmanship of the group from uncle J.R.D Tata, his priority was not new businesses or even
growth. It was something much more immediate – and arduous. It was to turn a loose
confederation of companies, controlled powerfully by powerful satraps, into a group that
thought and acted like one. The challenge however wasn’t merely of ousting powerful
chieftains like Russi- Mody of Tatasteel, Ajit Kerkar (Indian Hotels) or Darbari Seth (Tata
Chemicals). The leadership in Telco has also had a big impact on the company, perhaps like
any company its entrepreneurs had the greatest impact on the company, and they defined its
outlook, its businesses and its philosophy in different situations.

Over the last the 10 years, Ratan Tata has quietly entered 15 new businesses, exited 11, and
herded the rebellious Tata companies into a cohesive group. Tata now wants to double
revenues every four years, and profits, every three. His secret weapon: branded products and
services. He wants to justify shareholder interest and wants Tata companies to be among the
top three in their industries.

53
54
Sample size – 60

Respondents:

Owners of Santro – 14

Owners of Zen - 14

Owners of Indica – 14

Owners of Maruti 800 –9

Owners of other cars –9

TABLE: 4.1

OTHER CAR OWNERS

RESPONDENTS

800 OWNERS
ZEN OWNERS
INDICA OWNERS
SANTRO OWNERS

0 5 10 15 20 25 30
NO. OF RESPONDENTS

Interpretation

Most of the respondents are in an income bracket of R s.20001 to Rs.25000 and

above Rs.25000. This indicates that most of the car owners belong to either upper
of upper middle class segment.

Performance of a car clearly outweighs its style and cost on the consumer’s list of
priorities to buy a car. Performance be it engine make up, fuel efficiency in city
conditions, smoothness, pick up, derivability, is consumer’s first preference in
their look out on attributes in making a decisions for buying a car. Very few
consumers surveyed gave style and cost as their priorities to buy a car. A mere
25% of respondents gave style and 30% gave cost as their reasons to buy a car.

55
85% of respondents i.e. 51 out of 60 respondents gave performance of a car as a
factor for making a purchase decision.

Out of a total of 60 respondents surveyed, 30 respondents gave performance, 7

performance and style, 11 performance and cost, 2 style, cost and performance, 4
gave style and 4 gave cost as the reasons for purchasing their car.

When the consumers were asked to rank the factors, they consider being important
in buying a car, ranking the factors from 1 to 7 where ‘1’ is the highest preference
rank ‘7’, the lowest preference rank, performance of the car was ranked the highest
on the preference scale. Performance, on an average o f 60 respondents was ranked
‘1.48’ showing that the consumers sought performance in a car as the first
important factor in making a purchase.

The car owners as the second most important factors ranking them 2.9 and 2.7
respectively considered the cost and low maintenance of a car.

After sales service and brand name were the third and fourth preferences of the
respondents with 3.4 and 3.86 as their respective rankings. Safety was ranked 4.35
on the preference scale and credit facility stood at the car owner s’ lowest
preference with a rank of 6.43.

Given the city conditions, the consumers needed a very good overall performance
of cars, small cars taking less space has no parking problems, easy derivability in
heavy traffic conditions, easy gear shifts and goo d fuel efficiency. The small car
owners being mostly the professional class or the upper middle class were very
cost conscious and due to their busy life styles preferred low maintenance in their
cars.

The small car consumers are high search information s eekers, most of them using
at least 3 sources of seeking the information. They believe that extensive search is
necessary to make a good buy. Having owned fewest carts previously, they had
very less information about the cars.

56
The survey showed that a highest number of consumers sought friends as a source
of information. Even as a majority of them went for magazines and other car
owners as a source of seeking information, a good number of consumers went to
dealers for getting the information. Television as a source of information was used
by less number of consumers and a very few of them went to mechanics in search
of information.

Most of these small car buyers being first time purchasers usually go for friends,
automobile magazines or other car owners to get information about the various
products and brands in the market to know the most favorable brand or products
and later they seek further information from dealers and other sources once they
are through their choice process and have decided upon a pa rticular brand or
brands to buy.

Most of the small car consumers are happy with their purchases. A probe into
respondents’ satisfaction level, ranking from 1 to 5 where ‘1’ was full satisfaction
and ‘5’ full dissatisfaction with theirs cars, gave ‘1.79’ a s an average figure of
satisfaction level.

Out of a total of 60 respondents, 26 ranked their satisfaction level as ‘1’, 20 ranked

‘2’, 9 ranked ‘3’, 2 ranked ‘4’ and only one respondent showed null satisfaction.
The main reasons which were quoted for their satisfaction were driving comfort,
good fuel efficiency, small is cute, easy parking, less maintenance, good pick -up
and a perfect car for a small family.

Again when the consumers were asked about their preference for any other car, the
highest number of respondents chose small cars, that are 20 out of 56 respondents
preferred small cars, midsize cars, 16 large size cars, 5 went for jeep models and 8
consumers luxury cars like BMW, Mercedes, Ferrari, etc. The main reason again
given for their preference was comfort of driving, performance, good looks and
fuel efficiency.

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 TABLE: 4.2

FACTORS IMPORTANT IN A CAR PURCHASE

COST
3% 3% 7%
7% STYLE

18%
PERFORMANCE

PERFORMANCE AND
STYLE
PERFORMANCE AND
12%
COST

50% STYLE AND COST

STYLE COST AND

PERFOMANCE

58
 FACTORS IMPORTANT IN A CAR PURCHASE

90

80

70
PERCENTAGE OF RESPONDENTS

60

50 PERFORMANCE
STYLE
40 COST

30

20

10

0
1
ATTRIBUTES

TABLE: 4.3

59
 RESPONDENTS’ RANKING OF ATTRIBUTES

PREFERENCE RANK PREFERENCE POINTS

1 140

2 120

3 100

4 80

5 60

6 40

7 20

TABLE: 4.4

Attributes Preference Rank Preference Points

Performance 1.5 130

Cost 2.9 102

Low Maintenance 2.7 106

After Sales Service 3.4 92

Brand Name 3.8 84

Safety 4.4 72

Credit Facility 6.4 32

TABLEL: 4.5

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TABLE: 4.6

CREDIT FACILITY
PREFERENCE POINTS

SAFETY

BRAND NAME

AFTER SALES SERVICE

LOW MAINTENANCE

COST

PERFORMANCE

0 20 40 60 80 100 120 140

ATTRIBUTES

61
 SOURCES OF INFORMATION

40

35

30
NUMBER OF RESPONDENTS

25 TELEVISION
MAGAZINE
FRIENDS
20
DEALERS
MECHANIC
15 OTHER CAR OWNERS

10

0
1
SOURCE OF INFORMATION

TABLE: 4.7

62
 INFLUENCING FACTORS IN DECISION MAKING

80

70

60

50
FRIENDS
PERCENTAGE OF
RESPONDENTS 40 FAMILY
MEDIA
30
OTHERS

20

10

0
1
INFLUENCERS

TABEL: 4.8

63
SWOT ANALYSIS

Strength

 Technology and manufacturing know-how that lets Tata Motors make cars more
profitably than most other carmakers.

 Flexible manufacturing system gives it an advantage over most of the carmakers.

 It requires smaller number of platforms but multiple assembly lines for production
that provides better, cheaper, more oriented management and production.

 Research- Its R&D budget now exceeds that of Japan's No. 2, Nissan. Tata Motors
spends 5% of revenues on R&D.

 Tata Motors possesses Goodwill and Credibility in the Indian automobile market

Weaknesses-

 It is a new concept to be launched in the market where majority of the consumers go

for family cars. Also it has not been tested in the market, therefore there is risk
involved with the launch.

 It can't afford a wrong move on big-volume models. Tata Motors relies on Civic and
Accord sedans for 55% of sales.

 Tata Motors is unable to spread its fixed costs for engineering, technology, and
marketing over a huge volume of vehicles.

64
Opportunity

 It is first sports car to be launched in the Indian market; therefore it has no real
competitor.

 According to the facts India has emerged as one of the largest automobile market in
the global community.

Threat

 A new competitor in Indian market.

 Price wars with competitors.

 A competitor like Toyota has a new, innovative product or service.

 Competitors may have superior access to channels of distribution.

 Taxation is introduced on your product or service.

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66
 LIMITATIONS
1. The time for which the project was conducted was very short. Hence the
sample size was restricted to 60 only.
2. The scope of study was also restricted to the study of awareness about the
consumer preferences. It could be widened to cover various others aspects of
product demand.
3. As there are many competitors of Tata motors in the pvt.sector. Only 3 of its
competitor’s products were analyzed in detail. A detailed study of all the
competitors of Tata motors would have given more reliable and accurate
results.
4. The area from where the sample population was selected was Delhi only.
Other cities and moreover rural area was not covered under the study.
5. The primary data was collected form present and potential customers of
products to evaluate their preferences. But the preferences of marketing agents
were not considered which would have helped to evaluate the preferable
commission sale which helps to boost product sale.

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68
 CONCLUSION

In the end, I can conclude that most of the respondents who were questioned

gave importance to performance of the car. Other factors like safety, brand

name, style, performane cost were not given much importance.Hereby I can say

that performance matters the most.Other features are not important for the

customers. Tata motors give much importance to the performance of the car

and conducts surveys to know the changing needs of the customers .

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70
 RECOMMENDATIONS & SUGGESTION

STRATEGIES

To improve its market position, the company has a number of strategies at various levels.
These are-

1. Corporate Strategies

2. Business Strategies

3. Operational Strategies

4. International Strategies

CORPORATE STRATEGIES

Corporate Strategies are strategies that the company employs at the top level, these are not
concerned with areas of operation, but are concerned with achieving the strategies of the
company as a whole. These help in achieving the Strategic Objectives that the company has.

Globalize: With economies opening up, Tata companies are aiming for global benchmarks to
compete.

Be Skill – Intensive: With manufacturing ceasing to be India’ s advantage, the thrust is on

knowledge – based industries.

Build brands: Shift from selling commodities to marketing branded products and services
that not just differentiate but fetch a premium.

Leadership: To justify shareholder interest, Tata companies must be among the top three in
their industries.

Enhance Performance: Executives must pull their weight, and the best of them must get
opportunities across functions and group companies.

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BUSINESS STRATEGIES

Business Strategies are the strategies that Telco uses in the various areas of business that the
company operates in. These strategies can be studied separately for all the segments:

As we know that Telco is the leader in the commercial vehicle segment with 54% market
share in Light Commercial Vehicle (LCV) and 63% market share in Medium & Heavy
Commercial (M & HCV). Telco has a market share of 22% in utility vehicle segment. The
company has also garnered a 9% market share in the passenger car industry in a very short
span. The decision of the government to ban diesel buses and give licenses to CNG buses has
been a boon for TELCO as it is the major supplier of buses to all State Transport
Corporations. Though only few state governments are stern in implementing this order but
TELCO will remain one of the major suppliers of buses and hence can plan expansion.

Telco will use GOI policy towards its benefits as depreciation norms and excise duty etc will
have a bearing demand for MUV’s and CV’s. The implementation of infrastructure projects
will have a positive impact on demand of CV’s and MUV’s as they are extensively used in
transportation of material and people requirement of projects. The freight rates determine the
revenue component of fleet owners. The improvement in freight rates consistently over this
period will add to business of TELCO. Though oil prices have gone up but the shift in the oil
sector companies towards a positive pricing strategy will not affect Telco’s business plans &
performance.

Though the metropolitans have become over-crowded and but Telco’s Indica V2 sales have
picked up. The Company vigorously pursued a programme of product innovation in
commercial vehicles with a view to regaining and improving its market share. The company
had already added to its range Euro 1 Compliant Cummins Engine Powered Vehicle with a
view to regaining and improving its market share. Major innovation in the current year
include

 A 25 Tonnes Truck and a 30 Tonne Tractor Trailer

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 Fuel Efficient M&HCV Truck and Busses Powered by Company’s Euro 1 Compliant 697
Engines

 A Cost Effective 11 Tonnes Vehicle in both bus and truck version to meet the growing
demand in this segment

 A Fur Tonnes LCV fitted with an internally developed Turbo charged Engine.

OPERATIONAL STRATEGIES

These strategies are employed at the operational level, it deals with the working of the
organization once the Corporate Strategies have been decided.

1. QUALITY CONTROL- the company has adopted a new philosophy of Total Quality
Management. In the future it can extend this philosophy more to the suppliers and
stockiest. It should also train the employees towards TQM, and adopt various policies to
improve quality.

2. HR POLICIES- the company operates in a number of areas where HR is the main

resource, and it should indulge into more team building exercising to improve the
efficiency of its employees.

3. IMPROVE HR BASE- just recently the company has been unable to attract fresh talent
to its new initiatives. The company should find attempt to lure fresh talent through
initiatives such as Factory gate recruitment, more autonomy, better pay packages etc to
lure fresh talent.

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INTERNATIONAL STRATEGIES

1. INVEST HEAVILY IN R&D- the main area where Telco can improve in its efforts to
make an impact in the global marketplace is by improving its R&D base and bringing it
up to world standards. Also Telco can get into strategic alliance with a international car
manufacturer for R&D support.

2. STRATEGIC TIE-UPS- the company should attempt to tie up with some Strategic
Partners, to help it gain entry into foreign markets. These partners should have
competencies in the area of cost management or R&D, or these companies might be
suppliers who provide inputs in the projects taken up by the company

Consumers of small cars are seeking a very good overall performance in a car than any other
attributes. Most of the consumers prefer Small cars and mid sized cars for their good mileage,
good acceleration, easy derivability, requiring small rooms for parking. Good looks
hardly count for the buyers of small cars.

Again a good after sales service and low maintenance in a vehicle is a garnish on
customer’s delight. Safety and credit facilities are almost ignored factors in purchasing a
small car.

Family wields the highest influencing power in making a purchase decision for an Indian
consumer. Friends and media also have a good impact on decision -making. A very few
consumers take a self-purchase decision.Usually consumers get detailed information
through friends, magazines, other car owners and dealers whereas, they get the product
information from the other sources like television, hoardings etc.The dream cars of the
consumers are high luxury cars like Mercedes S -class, BMW, Ferrari, Pajero, Rolls
Royce, Jaguar, Porsche, the cars with a class apart when it comes to their brands images,
cars which flaunt status, style, wealth and attitude of the people owning them, cars which
are considered to the best on the globe.

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LEARNING

Learning is defined as “The gaining of knowledge or skill”. The environment around us is

constantly evolving, it is important for anyone to constantly evolve and improve. This is no
different for a company, who keeps on evolving, and attempting to learn faster than its
competitors.

The learning-based route forward believes that route to success is adopting a flexible,
emergent strategy that monitors events in the environment and reacts to them in the best
possible way.

Telco has adopted a learning route forward, it has showed that it reacts well to market
changes and various events; its strategy has always evolved according to these changes.

Seeing the opening up of the market, and the growth of the infrastructure, the company
decided to look for alliance partners, to come up to world-standards.

In the future Telco should continue to learn and evolve into a world-class company, and make
changes that will help it achieve its goals in the best possible way.

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76
 QUESTIONNAIRE

A survey of consumer perception about small cars

Personal details:

Name:

No. of members in family:

Monthly household income:

1. Do you own (Please Tick?)

Car or a 2 wheeler

2. If you do own a car

Name
Model
Color

3. Are you satisfied with it?

4. How much do you spend on maintenance on a monthly basis?

5. Name some cars in the small car segment in India

6. Can you relate the following cars to their ads

Zen 
Indica 
Santro 

7. Rate the following (I to II) attributes according to you preferences while buying a new car
Price 
Looks 

77
 Safety features 
Interiors 
Value added accessories 
Color 
Stability while driving 
Low maintenance costs 
Fuel efficiency 
Boot space 
Gear box 

8. Comment on the following statements according top the tables given below

1 strongly agree
2- Agree
3-neither agree nor disagree
4-disagree
5- Strongly disagree

 Indica, being the only indigenously made car is preferred by me

 Santro has the most effective AC
 Zen has the jazziest and outgoing colors

9. Rate the following cars as per your perception on the basis of the attributes specified (5
excellent to 1 poor)
 Indica
 Santro
 Zen
- Sales and services
- Price
- Fuel efficiency
- Smooth and stable ride

78
 - Up market status
- Luxury
- Value for money
- Looks
- Financing facility
- Comfort
- Safety

10. When are you planning to buy the next car?

One month later
Within six months
6 months later
No such plans

11. Which one?

12. Why?

13. Comment on the following cars as to how can there be any improvements
Indica
Santro
Zen

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80
 BIBLIOGRAPHY

Reference books:

Mowen c. John Consumer Behavior Macmillian publication 6 th edition

Tull & Hawkins Market Research Pearson publication 7 th edition

Internet:

http://www.tata.com/0_careers/our_people/20020214_suman1.htm

http://www.tata.com/0_b_sectors/index.htm

http://www.cybersteering.com/auto_makers/telco/tata.html

http://www.tata.com/tata_engg/index.htm

http://www.tatainternational.com/automob_products.asp

http://www.tata.com/tata_engg/articles/index.htm

http://www.telcoindia.com/home.htm

http://www.tata.com/tata_engg/media/20020228.htm

http://www.tata.com/tata_engg/articles/2000106051indica2.htm

http://www.tata.com/tcs/articles/20011110_auto_engg_service(1).htm

www.marutiudyog.com

www.hyudaimotorindia.com

www.autoweb.com

Magzines

Business today

News Papers

Economic Times

Business line

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