A Project On

TATA MOTORS : EMPLOYEE HEALTH, SAFETY & WELFARE

Submitted to

University of Mumbai

in the partial fulfillment of M.Com (Bus.Mgmt) part 1 Degree

by

Name: HITESH BORICHA.

Class: M.COM IN BUSINESS MANAGEMENT PART-1

Semester-2

Roll No. :15003

Studying at

Parle Tilak Vidyalaya.

Mulund College Of Commerce,

S.N.Road,Mulund(West),Mumbai-80.

Academic Year – 2012-2013

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DECLARATION

I Hitesh Boricha a student of Class M.Com In Business Management part 1, Roll

No. 15003, academic years 2012-2013 ,studying at Mulund College Of Commerce,

hereby declare that the work done on the project entitled TATA MOTORS :

Employee Health, Safety & Welfare is true and original and any reference used in

the project is duly acknowledged.

Date: Signature of student

(Hitesh Boricha)

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CERTIFICATE

I,Prof.A.P.Kulkarni , hereby certify that Mr.Hitesh Boricha studying

in Class M.Com In Management Part 1 Roll No. 15003 academic years

2012-2013 at Mulund College Of Commerce has completed project entitled

TATA MOTORS : Employee Health, Safety & Welfare is under my

guidance.

To the best of my knowledge,information submitted in the project is

original and authentic.

_______________________ ______________________

Signature Of The Principal Signature Of The Project Co-ordinator

(Prof.A.P.Kulkarni)

Signature Of External Examiner

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ACKNOWLEDGEMENTS

First of all I would like to take this opportunity to thank the Mumbai University for having projects as a part of the Master in Commerce curriculum.

I would also like to express my sincere gratitude to Prof.A.P.Kulkarni who has greatly influenced & shaped the contents of this project in a very interesting manner.

I also would like to thank my brother who has helped and encouraged me throughout the working of the project

Last but not the least I would like to thank the Almighty for always helping me.

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INDEX

Serial No. Contents Page No.1 Introduction 62 Business Segments 133 Workplace Safety 294 Employee Welfare Schemes 335 Conclusion 396 Bibliography 40

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Introduction :

In early 2004, the mood at Tata Motors, earlier called Telco (Tata Engineering and Locomotive company) was distinctly optimistic. After a spectacular comeback in the past two years, Tata Motors was planning to expand the capacity of its Pune factory from 1.5 lakh cars to 2.5 lakh cars by December 2004, to meet the growing domestic and international demand for its products. This was the first major capital investment by the company since 1999, when it had invested Rs 1,800 crore to design and manufacture its small car, the Indica.

Just three years back, not many analysts believed such a transformation could happen. The company was reeling under the biggest ever loss in its 58-year corporate history. Following a whopping Rs 500 crore loss (in 2001), its stock price fell from Rs 564 in 1996 to Rs 59 in 2001.

The recovery had been led by the remarkable success of its small car, the Indica. The larger and more recently introduced Indigo also seemed to be faring well. The Tatas had made major forays into global markets. The acquisition of Daewoo’s commercial vehicles division in Korea for $102 million, signaled the company’s global intentions. There was a speculation that Tata Motors was ready to develop a new car that would take on Suzuki’s highly successful small car, the Maruti 800, which dominated the Indian roads.

Did the Tatas have the capabilities and resources needed to implement such ambitious plans? That was the question uppermost in the minds of analysts in mid-2004, notwithstanding the optimism of chairman Ratan Tata and his colleagues.

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Background Note :

The Tatas :

In 1868, Jamsetji Nusserwanji Tata, the founder of the Tata group, started a private trading firm in Bombay with a capital of Rs.21,000. His travels in the Far East and Europe inspired him to start manufacturing cotton goods. In 1874, the first Indian textile mill, The Central India Spinning, Weaving & Manufacturing Company, was established. In 1877, Jamsetji established the famous Empress Mill in Nagpur. And in the same year, Tata and Sons was set up. In 1886, Jamsetji launched the Swadeshi Mills to mark the beginning of a movement to popularize the use of indigenous goods in place of British goods.

Jamsetji foresaw the significance of the industrial revolution for India. He believed three basic ingredients were needed for progress: steel, hydroelectric power, and technical education. In 1900, Jamsetji got the approval for building a steel plant. In 1904, Jamsetji passed away in Germany, but his vision became a reality under his son, Dorabji Tata. The Tata Iron and Steel Company was set up in 1907, in Jamshedpur, in Bihar. In 1910, the Tata Hydro Electric Power Supply Company was established.

In 1938, JRD Tata was appointed as the head of Tata group. One of India’s most respected business leaders, JRD guided the group for well over half a century. In 1956, he initiated a programme to facilitate greater participation of workers in the management of the company. Five core values - Integrity, Understanding, Excellence, Unity, and Responsibility directed the group's expansion. JRD succeeded in attracting and nurturing talented mangers who were empowered to manage individual businesses with considerable freedom.

Over time, the Tatas became a large, diversified business group with interests in metals, automobiles, energy, engineering, chemicals, consumer products, finance, international operations, information technology, and agri-

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industries. Since the mid-1990s, under the leadership of Ratan Tata (Tata), the group had restructured itself. Many business activities had been rationalized or divested. New blood had been brought in as the need for change was strongly felt in a liberalized environment.

For Ratan Tata, automobiles were a strong passion. Within the Tata group, Tata Motors enjoyed a special place. Tata genuinely believed the company had in it to become a global player.

The Formation of Tata Motors :

The Telco saga began in 1948 when the Tatas acquired an Eastern Railway Workshop to build boilers and steam locomotives for the railways. Though Telco made 1,000 locomotives, the company did not make any profit in the first ten years. By then Sumant Moolgaokar, head of Telco, was desperately scouting for a foreign collaboration.

Shortly after World War II, when the German industry lay in tatters, hungry for business, Daimler-Benz looked eastward. It approached Telco with a proposal to manufacture diesel road transport vehicles. T.T. Krishnamachari, then industries minister, flagged off the project in 1954 on the undertaking that within four years, Telco would indigenise considerably, a commitment that was met by Telco. Thereafter, the company never looked back.

Until 1969, when the collaboration agreement ended, Jamshedpur became virtually a German town. It was widely believed that Tata Motors picked up its uncompromising standards of quality and meticulous engineering from Daimler Benz. Before the collaboration ended, Moolgaokar had succeeded in developing strong engineering capabilities within the organization.

The master plan to duplicate Jamshedpur began in 1966 when 800 acres of barren, rocky land was purchased in Pune. The facility became the testimony to Moolgaokar’s long term vision and ability to look years ahead into the future. Variously described as an "industrial jewel" and a "grand masterpiece", it epitomised Moolgaokar’s engineering philosophy: vertical integration, self-reliance, constant technical innovation, research and development.

The various assembly lines at the Pune plant were all supported under one roof by divisions that designed and manufactured state-of-the-art machine tools

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and press tools. The heart of the plant was what Moolgaokar considered as "the most sacred place" - the Engineering Research Centre (ERC). Moolgaokar had laid heavy emphasis on training

The first building to be constructed was indeed the training center. Every year, a quarter of the workforce acquired a higher skill. All promotions and increments were skill-related.

In 1981, the Indian government declared its new policy of allowing ‘broad-banding’ of licenses in the automobile industry. New firms could enter any segment while existing firms could introduce new models. A firm could change its product mix within its overall capacity. For example, a four-wheeler manufacturer could make cars, jeeps, and any type of commercial vehicles. Tata Motors utilized this opportunity to enter the light commercial vehicles (LCV) market. The company successfully withstood the onslaught of the Japanese and staked its credentials as a serious player.

Ratan Tata takes charge :

Though a late entrant, the Tatas had long eyed a place in the passenger car market. These initiatives gained momentum under the leadership of Ratan Tata. Tata got involved in the passenger car project right from the time he joined the company, (then called Telco) in 1986 as deputy chairman.

In 1988, Tata Motors introduced its pick-up truck model Tatamobile 206. In hindsight, this was the turning point in Tata Motors’ history. The model failed to build volumes, but gave the company confidence in its design capabilities. The company’s engineers realized a car was not far away.

Tata Motors launched Tata Sierra in 1991, followed by Tata Estate, in 1992. In 1994, Tata Motors launched a multi utility vehicle - Tata Sumo, and a full forward

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control, LCV LPT 709. In the same year, the company signed an agreement with Daimler-Benz to manufacture Mercedes Benz cars in India.

Tata Motors launched the Tata Sumo deluxe in 1996 followed by the Tata Sierra Turbo in 1997. In 1998, the company launched Tata Safari, a sports utility vehicle.

Restructuring

Ratan Tata had always been keen on entering the lower-end of the market as he believed the big market lay there. He initiated steps to develop the Indica. Billed as India's first indigenous car and kept as a secret for a long period of time, the Indica promised much. Unfortunately for the Tatas, the development of the Indica coincided with one of the worst phases in the company’s history. During the period 1995-1998, the commercial vehicle business had been doing well and Tata Motors grew at 30-40 per cent. Then came the downturn in the economy and the market for commercial vehicles shrank by about 40 per cent.

On the eve of its GDR issue in 1997, Telco had piled up huge stocks with its dealers and the products remained unsold even after two years. Telco sank into a financial quagmire, dealers were distraught and employee morale was low as stocks piled up. With its pipeline choked, Telco could not bring new products to the market. Competitor, Ashok Leyland snatched Telco's marketshare in the fast-growing segments like heavy trailer trucks.

Ratan Tata recalled:

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"Theoretically we had two choices - to hold on or put the project in cold storage. We opted for the second choice and launched the project. We always knew that there would be a gestation period and that we'd make a loss till we built up the volumes to break even. What we didn't expect was that the truck business would have been in a loss making position. We expected trucks to subsidise the car venture during the gestation period. For the outside world, it would appear as though the Indica project pushed the company into the red, which is not the case".

Realizing the urgent need to cut costs, the Tatas embarked on a major restructuring exercise. Between 2001 and 2004, the company generated savings of nearly Rs 950 crore (in the first year Rs 500 crore and around Rs 250-odd crore in each of the following two years) through cost cutting.

The restructuring measures mostly focused on cutting raw material costs, extensive manpower rationalization and reduction in interest costs, manufacturing costs and overheads. Raw material costs were reduced by means of a vendor rationalization programme, which involved price negotiations, value engineering, better supply-chain management, and e-sourcing. The company attacked manpower costs, reducing employee strength by over 5,000 across the company in various categories from the lowest level to the highest. Tata Sons executive director R. Gopalakrishnan personally supervised a 3-year wage agreement with workers and an employee separation scheme. By improving the manufacturing processes on an ongoing basis, the processing and conversion cost and cycle time were reduced.

The finance function received special attention during the restructuring. Working capital requirement was slashed by cutting inventory levels down from a peak of 75 days of sales to around 35 days and receivables from close to 90 days to around 16 days. The company started operating on negative working capital from mid-2003, becoming one of the few automobile companies in the world to achieve this distinction.

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Tata Motors also identified non-core investments and either sold or hived them off. Over a period of three years, the company divested its stakes in big-ticket joint ventures with Mercedes-Benz, Bridgestone, Asahi Glass, and even IBM. The cash generated was used to prepay around Rs 750 crore worth of high-interest debt. The debt burden was reduced to around Rs l,700 crore by March 2003, from Rs 3,400 crore two years earlier, on account of higher cash accruals (over Rs 500 crore in 2002-03 and around Rs 350 crore last year), lower capital expenditure, and better working capital management. The cost of debt, which was around 12 per cent or so, came down to 5-5.5 per cent. According to company estimates, 25% of the total cost reduction of Rs 950 crore came from a lowering of interest cost.

The reduction in overheads resulted in a steep decline in breakeven volumes. In the commercial vehicles unit, the operating breakeven point was reduced to below 70,000 units, which meant one-third capacity utilisation. For the passenger car and multi-utility vehicle unit, the figure was 100,000 units.

Even as Tata Motors cut costs, it also gave a new thrust to product development.

“In the last fiscal year we launched about a dozen products - the 207 DI pickup in the sub-four-tonne category, which took us into a segment we were not very strong in; the EX series of trucks with new bodies and cabs; and the Indigo in the 'C' segment of the passenger car market; plus a series of Sumos and a limited edition of the Safari petrol version,”

BUSINESS SEGMENTS :

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Tata Motors had two main business segments - commercial vehicle business unit and passenger car business unit.

Commercial Vehicle Business Unit (CVBU) :

In 2003, CVBU recorded domestic sales of 1,06,194 units, a growth of 32% over 2001-02, maintaining its overall CV market share at 56%. The company had a 67% share in the truck segment and 51% in the bus segment. While Tata Motors lost some market share in the LCV segment in the first half of the year, it recovered in the second half with the successful introduction of new models like Tata Safari Exi, and Tata SFC 407 EX Turbo.

Passenger Car Business Unit (PCBU) :

Even though growth in Indian passenger car sales was low (7%) in 2003, PCBU recorded sales of 1,04,155 units, a growth of 18% over the previous year, leading to a 14.6% share in the passenger vehicle market. The Indica recorded a 24.2% growth in the compact size car segment. The Indigo had a market share of 26% share in its segment. In utility vehicles, Safari’s sales grew by 19%.

Product Development :

Product development was a critical success factor in the automobile industry. Over the years, the Tatas had built up strong design and engineering capabilities. Sumant Moolgaokar, Chairman Tata Motors, from 1970 to 1988, had played an important role in shaping Tata Motors 's R&D philosophy.

Moolgaokar once mentioned:

“We spend a lot of money, Rs.10 to Rs.12 Crores (US$7 to 8 million at

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prevailing exchange rates) on R & D. It is our strong point...in a manufacturing industry research and development is a series of mistakes by which you benefit. It gives our people excitement and real knowledge. My singular contribution has been to build a team. We regard our whole operation as one big training facility”.

In the late 1960s, the Tatas set up the Engineering Research Center (ERC) at Pune, with over 1100 scientists and engineers dedicated to product and process development, technology upgradation and new product introduction. By 1994, ERC was equipped with world class facilities including Computer Aided Design (CAD) and Computer Aided Manufacturing (CAM) centres that had been installed at a cost of Rs.1000 million (approximately $40 million). The CAD center, equipped with 53 CAD stations, was used for the development of vehicle specifications, styling interiors and exteriors, reviewing the styling from the engineering and aesthetic points of view and virtual prototyping to check for design acceptability and feasibility of manufacture. Based on this information, several running prototypes were made and tested. It was only after all the flaws had been corrected, that the vehicles were approved for mass production. ERC undertook design and development of not only vehicles, but also machine tools, dies, fixtures and other capital equipment. The center enabled Tata Motors to successfully take on competition from the Indo-Japanese LCV joint ventures in the mid-1980s. The centre also completed the design and development of the Tata Sierra and the Tata Estate in less than 20 months. ERC was honoured with the 'National Award for Successful Commercialization of Indigenous Technology by an Industrial Concern - 2000.

In July 1991, the Government of India announced a major shift in its economic policy. The regulations on the import of technology were liberalized. In 1992, the company imported technology from AVL Austria for developing a fuel-injected petrol engine for its 207 family of vehicles and for styling the body of five-door version of the Tata Sierra. It was around this time that serious product development efforts in the passenger car segment began.

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The Indica :

In 1994, Ratan Tata, announced that the Tatas would make a small car that would be affordable to the masses. The car would have the size of Maruti’s Zen, the interiors of Hindustan Motor’s Ambassador, the price of Maruti 800 and would run on diesel, a much cheaper fuel compared to petrol. Tata was confident that such a car could be developed in 33 months.

ERC studied the designs of many small cars worldwide and ran simulations of these cars under Indian road conditions using its CAD. The team decided to take the help of car designer, IDEA of Italy.

Tata Motors decided to develop both petrol and diesel cars. After a detailed study of various models, the development team decided to have a 1400cc engine for both. The team completed the engine design and transmission by the end of 1995. For improving engine performance, Tata Motors tied up with La Moteur Moderne (LMM) of France. Improvements in the cylinder head and the combustion chamber were incorporated to increase fuel efficiency. Multi-point fuel injection technology was developed for petrol engines.

ERC designed the transmission entirely in house with five-speed transmission. 740 dies and 4,010 production fixtures were specially manufactured for the Indica. ERC also developed electronic controls for engine systems, aimed at improving emission standards, and vehicle drive train and chassis systems, besides fuel efficiency. The Indica continued to build on its gains, its market share climbing to 24.2% in the compact segment, during 2002-03.

The Indigo :

The Indigo was a big step forward in Tata Motors’ quest to consolidate its presence in the Indian car market. Bigger, stronger, sturdier and more sophisticated

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than the Indica, the Indigo was rolled out in 23 months. The vehicle promised enhanced comfort, increased space, improved engine performance and smoother handling. It was positioned as the most spacious and comfortable sedan in its segment.

Indigo’s exterior and interior design were developed fully by ERC. The Indigo’s wheelbase length (the distance from the centre of a car’s front wheel to the rear axle) was 50mm more than that of Indica to provide more space in the rear seat. ERC developed the Indigo’s three-link independent suspension, in India and in Europe, for high-speed handling and better low-speed drive. ERC decided to increase the engine horsepower to 85 bhp and add a turbo charger to the diesel version. Indigo had new seat contours, fabrics and materials. The car was designed with speed sensitive power steering (rack and pinion gear).

Globalisation :

Global expansion figured high on Tata Motors’ agenda in the early 2000s. To facilitate globalisation, Ratan Tata reorganised the company. The previously independent export division was merged into the passenger car and commercial vehicle divisions. The independent international division that looked after exports and overseas business was dismantled. In the early 2000s, Tata Motors made several important moves in its efforts to expand and consolidate its global presence.

Passenger Cars :

In October 2003, Tata Motors forged a tie up with MG Rover of UK for supplying petrol-powered cars with the Rover badge and styling, labelled as the City Rover. Over the next five years, Tata Motors hoped to ship 100,000 cars.

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Priced at around £6,500, the City Rover was positioned as a value for money product.

"The centre of gravity has been lowered for the higher-speed traffic in the UK and Europe; the transmission has been redefined, the suspension changed, left- and righthand-drive versions made available for drivers in the UK and Europe, standard safety features such as airbags and powered windows, and a vastly improved fit and finish,"

- Explained Sumantran.

Exports to MG Rover were expected to pick up in the second half of fiscal 2004 and approximately 10,000 cars would be exported. By 2005, this figure would be doubled. Meanwhile, Tata Motors would continue to sell cars under the Indica name in the European market, to build the Tata brand.

Commercial Vehicles :

The Commercial Vehicles (CV) Industry posed special challenges. Unlike the fragmented car market, a few leading players in the CV business - Volvo,

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Scania, DaimlerChrysler, Paccar, Fiat-Iveco and Navistar - controlled nearly 60% of the industry. In terms of volumes, Tata Motors’ truck business was one tenth of the size of DaimlerChrysler's. Unlike the passenger car business, scale advantages did not accrue in the labour-intensive truck manufacturing industry because of the sheer variety of products that customers demanded.

"The more variants you can offer at lower costs, the greater is the competitive advantage,"

- Explained Ravi Kant, Executive Director (CVBU).

But Kant believed the company had the ability and skills to go global. In particular, Tata Motors had the advantage of understanding the customer needs in high potential emerging markets especially in Asia. Across several markets in south-east Asia, Kant believed that it made sense to buy out smaller companies that made light commercial vehicles.

The major parameters that drove truck sales included appearance, quality, consistency, price and solutions. In developed markets like Europe and the US, customers paid a premium for marquee names for the quality and consistency they guaranteed. The customers were too much concerned about fuel efficiency. Fuel costs accounted for 55% of operating cost in India, but formed a much smaller portion in developed markets. In developing countries, huge financing costs were involved while buying a truck. Nearly all the big truck manufacturers were American or European and their current designs did not focus on the needs of the developing markets. The Tatas believed that they could tap exciting opportunities in emerging markets across the globe through aggressive pricing.

But price was not the only factor driving customers even in emerging markets. Tata Motors’ research showed that customers in these markets, who were used to trucks made in the US and Europe, were willing to pay a premium for trucks with better aesthetics and driver comfort. In other words, cabin (cab) design was an important parameter in choosing a truck. The company decided to engage an Italian design company to help it build a futuristic truck cabin.

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Engineering also played an important role. A customer for Scania trucks could virtually build his own truck by selecting from a range of engines, gear-boxes and the number of axles he wanted in his vehicles. DaimlerChrysler also offered customers such facilities. So Tata Motors engines and aggregates teams were working on parts that would fit without modification in trucks with payloads ranging from 9 to 49 tonnes.

Tata Motors selected a dozen markets after careful analysis. Like India, each of them was at a different stage of development. The company had identified two or three segments, in which to compete, which offered reasonable scope for growth, and the opportunity to build market share quickly. Dealers would be selected and the product tests would commence by the end of 2004.

The Daewoo acquisition :

A major step in Tata Motors’ globalization efforts was a bid for Daewoo Com-mercial Vehicles Ltd (DCVL), South Korea. As part of its financial reorganization after its car unit was sold to General Motors, Daewoo had spun off its commercial vehicles business in November 2002 and offered it for sale.

In April 2003, Tata Motors asked merchant bankers to locate possible buyouts. In

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July 2003, even as the company’s newly formed M&A team headed by general manager (corporate finance) R.S. Thakur was scouting for deals, KPMG the official advisers to DCVL, asked Tata Motors if it was interested in bidding.

After a brief discussion, the Tatas decided to find out more about the offer. They bought the tender documents for $2000 more out of curiosity and to conduct a small exercise for the fledgling M&A department. But what they saw in the offer documents excited them. Daewoo's 20,000 unit manufacturing plant, established in 1995-96 was operating at 25% capacity. Yet, it commanded a 22 per cent marketshare in the 8-tonne-plus segment. The existing models were a bit dated but Daewoo seemed to have the technological capabilties to introduce new models.

In the initial round, there were 15 other companies who had made non-binding bids. A couple of weeks later, Tata Motors was among the 10 bidders shortlisted for the next round. After a discussion in the next board meeting, Thakur led a team of 20 people to Gunsan to begin due diligence, before putting in the final, binding bid.

On 27 August 2003, Kant landed at the Gunsan factory just before the due diligence exercise. He sensed something going wrong. Among the bidding teams, the Europeans were put up at Gunsan's best hotel, Summit, whereas the Tata executives were booked in the somewhat rundown Gunsan Tourist Hotel. As Kant chatted with a young manager, he learnt that Daewoo would prefer to partner with a European company that could bring in advanced technology.

Kant recalled:

"To me, this was the turning point in the deal. I realized it was not about bidding high. Clinching the deal was about winning the confidence of the Koreans."

Kant immediately asked his team to draw less attention to the financial capability of Tata Motors and more to the size of Tata Motors (the sixth-largest

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commercial vehicle company in the world), its excellent labour relations, and strong engineering capabilities.

The competition was tough for Tata Motors. The qualified bidders included financial investors like Carlyle Investment Corporation, who were being advised by George Bush Sr; a local auto component company named Tongil Corporation; and Voith, a European transmission company. There was also an unnamed European Commercial Vehicles manufacturer.

During their two weeks stay, Kant and Thakur informally disseminated information to local authorities and trade associations. They made presentations specially prepared in Korean to the local governor and mayor, and organised banquets for the bureaucracy.

On 22 October, 2003 the Tatas came to know that they had become the preferred bidder. Thakur again left with a team to do the final due diligence. Now the Tatas had access to all the books of the company. The final due diligence allowed a 5 per cent reduction in the bid price if the bidders found any substantial anomalies in the books. The Tatas succeeded in doing so and got a full 5 per cent reduction.

Various synergies made the acquisition look very attractive. The Tata range of 1-tonne pickup could find a new market in Korea and the rest of the region. Daewoo did not have a presence in that segment, which was dominated by Hyundai and its subsidiary, Kia. The pickups made by the Tatas were slightly bigger than 1-tonne in India and were different from the Korean 1-tonners. But the Tatas had begun working with a European firm for a sub 1-tonne pickup, whose specifications matched the requirements of the Korean market. The Tatas were reportedly buying the rights to the product design and the tool room, and were likely to launch the product in Korea and India in the next six months.

DCVL manufactured heavy-duty trucks in the range of 200-440 hp, while Tata Motors’ maximum engine capacity was 160 hp. DCVL also produced over 93 models in the cargo, dumper, mixer, and tractor categories. The product lines complemented each other. DCVL had made considerable investment in developing

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advanced cabin designs such as full floating cab air suspension.

Till the DCVL acquisition, the CVBU had been squarely focused on the domestic market. Global sales were just 5 per cent of total sales. Though Tata Motors had indicated plans to expand the global business to 20 per cent by 2005-06, nothing much had come out of it. One reason was the lack of suitable products. The Tatas believed Daewoo’s products were well suited for markets like China, South Africa, Turkey and the Middle East. For over a year, Tata Motors had tried hard to break into China but failed. With their expressway system in place, the Chinese were no longer interested in low-powered trucks. Daewoo made heavy trucks, powered by engines of 350 or more horsepower, which ran at 140 kmph even with loads of 12 tonnes. With the Daewoo trucks, Tata could enter not only China and Korea, but also markets like Italy and Spain.

After the Daewoo deal was finalized, the Tatas launched a major public relations initiative. Articles began appearing in the local media, which was fascinated by the trusteeship structure of the Tata Group, and its charitable activities. Articles talked of Ratan Tata's frugal lifestyle and the group's trouble-free labour policy. Tata lived up to the expectations. When he reached Gunsan, Tata wore the Daewoo jacket and ate in the workers' canteen. In his speech to the workers at the factory, Tata said his company was there to learn from the Koreans.

The Korean market was to adopt Euro III emission standards from 1 July 2004. On 12th June, Tata-Daewoo organised a high profile launch for its Euro III-compliant product. The event was attended by dealers, important business partners, and local dignitaries.

Ratan Tata summed up how the Daewoo deal would benefit Tata Motors:

“With the acquisition of Daewoo, we have accelerated our ability to have products that India does not have or does not need. We will address sophisticated markets in South Africa, Asia, China and some countries in Europe with the Daewoo product. We will use Daewoo products to engineer new products in India.”

But despite the feel-good spirit, many analysts believed managing the integration process would be tricky. Cultural issues were likely to dominate the

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integration process. The Tatas were handicapped by a shortage of global managers.

Africa :

Tata Motors had started exploring the South African market under a taxi recapitalization programme, which aimed at replacing 120,000 of the country's 16-seater buses by 2006 with close to 80,000 buses in the 18-35-seater range. The annual delivery of 20,000 light passenger vehicles was scheduled to begin in June 2003, but had been delayed. The companies short-listed for the project were DaimlerChrysler, Tata Motors, lveco (India), Gazo of Russia, AMC of South Africa and Swaziland, and Kwoon Chung of China. Tata Motors estimated it could ship 5,000-8,000 vehicles annually. In South Africa, Tata Africa had also set up a distribution network to sell its entire range of vehicles, including Daewoo trucks.

The Tatas had helped set up a bus assembly plant in Senegal with a capacity of 1,000 buses a year.

"We have already started this since September 2003 and buses with the Tata badge are already on the road. We have not invested there - the government has 10 per cent stake and the balance is held by a private party. We only helped to establish the plant and then produce and run the plant on commercial terms and conditions,"

- Explained Kant.

Asia :

The Tatas were also setting up an assembly unit in Thailand which had emerged as the largest manufacturer of pickup trucks in the Asian region and the second-largest market in the world. In the next three years, 20 per cent of total revenues were expected to be generated abroad, through a combination of overseas assembly lines and vehicle exports.

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A team from Tata Motors went to Turkey to study that market. In the Middle East, the Tatas expected the Daewoo trucks to be sold without much modification. The Tatas tied up with Khodro of Iran for passenger cars, which promised a potential offtake of around 20,000 vehicles per year. The Tatas also had a presence in Ukraine, Malaysia and Bangladesh.

The Road Ahead

The Indian car industry had seen some major changes in the recent times. When Maruti’s Alto overtook the Maruti 800 in sales in April 2004 this year, it was a new land mark for an industry which had just touched the one-million annual sales milestone. The end of the Maruti 800’s reign on Indian roads symbolized a deeper and more significant shift in the Indian car market. Bigger and more expensive mid-sized cars were gaining in popularity.

In 2003-04, while the sales of mid-sized cars (Esteem, Indigo, Accent, Ikon, Corsa, Petra, City, etc) grew by around 51 per cent over the previous year, the economy segment dominated by Maruti 800 grew by only 17 per cent and the most popular compact segment (Zen Wagon R, Alto, Santro, India, etc) grew by around 24 per cent.

In most countries, the mass vehicle was one or two notches above the entry level car. Companies were doing their best to replicate the global experience in India. A spate of launches, frequent face lifts, stripped down variants, frequent discounts, attractive exchange offers and enticing features were being added on to mid-sized cars to push car lovers to think and buy big. The biggest pull factor so far had been aggressive pricing. Maruti recently relaunched the Esteem, pricing the basic model at Rs. 4.29 lakh as against Rs. 4.60 lakh earlier. Ford followed soon after, bringing down the price tag of the basic Ikon model from Rs. 4.99 lakh to Rs. 4.49 lakh.

In 2004, there were 7 companies, 8 models and 29 model variants in the mid-sized segment vying for the customer’s attention. The growing competition

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and the pressure to retain marketshare had pushed car manufacturers and dealers to rejig cost structures and margins to achieve sales targets. Prices of virtually all models had come down substantially in the past few years. For instance, the Esteem VXI, which was priced Rs. 5.5 lakh in 1996, was priced at less than Rs. 5 lakhs in mid-2004.

Meanwhile, the growth prospects for the Indian car industry looked bright. The average period of car ownership in urban India was four years. A big chunk of over 30 lakh car buyers who bought compact cards in the past five years would be willing to replace and possibly upgrade their vehicle. Dealers and finance companies were expanding the market by offering attractive financing offers and discounts. For example, the EMI for a compact car would come to around Rs. 6,000 for a five-year loan. But if this EMI was raised by about Rs. 1,000 one could drive home a bigger and safer car.

As car manufacturers strived for a wider appeal for bigger vehicles they also needed to refashion their marketing strategies. Earlier, they had been trying to attract price-sensitive customers to compact cars. Now they had to cater to fashion conscious buyers of feature-loaded cars. Customers in the mid-sized segment looked for better technology, comfort and safety.

According to Rajiv Dubey, Vice president, passenger car business unit, Tata Motors would continue to focus on value-for-money products.

“In a competitive market what is going to be important is products that offer tremendous value. With the Indica we have hit upon a good value propo-sition. The Indica has really come to mean 'more car per car' for many people. The Indigo offers lot more space for people in the 'C' segment more than some bigger cars. This will continue to be the main theme of our strategy - you must give people better value. Both our cars are leaders in

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their segment.

Tata Motors believed there was considerable scope to grow in the domestic market. The market, for cars priced below Rs 2.5 lakh (the Maruti 800 and the Omni), made up close to 26 per cent of the overall car market.

"To grow we have to open up this segment. It is a very attractive and a challenging proposition. Most automakers around the world have tried and given it up because it is a very difficult task. It's like giving a person a car at the price of a motorcycle,"

- Explained Sumantran.

There had been a lot of speculation in the industry about a small car on which Tata Motors was doing an exploration study.

Entry into the small car market would mean competition with the well-entrenched Maruti Udyog. In all probability, the Tatas would roll out a low cost diesel version, which could be marginally smaller than the Indica. It was likely to be a stripped-down version of the Indica with a smaller engine and body, powered with the two-cylinder diesel engine developed for the cargo vehicle.

Ratan Tata outlined the Tatas’ philosophy,

“On the people’s car, what we have really wanted to do is to take a target market, essentially the two-wheeler market, which the Indian family tends to use. You see 4 or 5 people precariously traveling on a scooter on slippery roads, in the monsoons, in bad weather and this is their only motor transport unless they can move to a four-wheel vehicle… In a country where the greatest demand is at the low end, we would look, without producing a

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substandard car or without putting four wheels on a scooter, to develop a niche product, that has the safety and the weather containment of a car, positioned somewhere between a two-wheeler and a car, thereby addressing the need of people’s transport for a family. I think we can come pretty close to achieving that goal.”

Tata added that detailed plans for the vehicle would emerge in the near future, and these would envision the setting up of a network of low-cost, low-volume manufacturing facilities around India for component production and assembly.

Developing new products required heavy capital investment. But the Tatas were confident about mobilizing the necessary resources. Capital expenditure and product development expenses were expected to be Rs 500 crore on an average per year for the next five years, Praveen P Kadle, executive director (finance & corporate affairs), expected the investment to be funded by strong cash-flows generated from operations and by improving the net working capital position of the company.

"Net of our capex and product development spending, we expect a strong free cash-flow... wherever we see opportunities in terms of divestment of non-core assets or investments, we will look at them. Those inflows would come as extra funds to help us meet capex and product development expenses.”

Ratan Tata expressed cautious optimism about the company’s long-term prospects,

“In the next decade, it would be very pompous to say that one wants to see Tata Motors as a global company, but certainly I want to see it as an automobile company that is respected all over the world, that has operations not only in India but in other parts of the world, both in the commercial vehicles and passenger car businesses. I hope in course of time, it will also be a trendsetter in terms of new products.”

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Workplace Safety

Ensuring safe working conditions is of paramount importance to us. We believe that a safe workplace instils a sense of security and confidence among our workforce which enhances our productivity. We have put in place a companywide occupational health and safety policy. This policy coupled with our strong implementation and assessment measures helps us achieve our objective of minimizing workplace injuries as well as occupational diseases. We strive to ensure that every individual working within our plant premises is protected from

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any inherent risks related to workplace safety. Towards this end, we recently completed a diagnostic of the existing safety systems through DuPont and are taking steps to raise the safety standards continuously. This activity would enable us to identify the gaps and assess the as-is scenario. As part of this assessment, a safety perception survey was also conducted to understand employee insights on safety.

Across our plants, we have dedicated teams of safety and health professionals working to devise safer work procedures. Safety measures have been ingrained into the standard operating procedures at each of the processes at our facilities. Work related hazards have been identified in specific areas of operations including the foundry, paint shop, welding line, etc. and their individual task related safety procedures have been devised.

We have procedures in place to ensure that all the workers entering the plantpremises are medically fit to carry out the job they are assigned. We have made it mandatory for all workers to undergo a primary health check-up on joining and similar checkups at regular intervals. A host of initiatives on health and wellness were taken across the plants. At Pune a ‘Health Index’ was created and an ergonomics study was conducted to improve the workplace environment.

Safety observations and incidents receive a high priority, with the topmanagement being directly involved in all such matters. A steering committee headed by the Managing Director addresses safety, health and environment issues on a monthly basis, in order to track performance and identify areas of improvement. Workplace safety is supported by a divisional safety council structure comprising of the divisional head, safety steward, maintenance andproduction representative, medical officer and safety officer from the plant safety department. Workmen participate in various proactive safety and IR committees to suggest and aid implementation of improvements at the workplace. Currently 210 of our employees are part of statutory plant level safety committees with equal representation from management and non-management staff. In addition to the statutory plant level safety committees, we also have management level safety committees at each of our plants.

While the number of reportable injuries has been steadily decreasing, the number of near misses has increased due to increased awareness of safety among our employees. All reportable injuries are duly communicated and investigated. Of all the reportable injuries to our employees, three have been sustained by female associates resulting in a loss of 149 work days. Inspite of having heightened safety

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awareness and safe work practices in place, we are sad to report the demise of two19 personnel at our operations.

We are committed to our goal of achieving zero fatalities in our operations. ZAP meetings are held across all plants and defined bay owners champion these meetings.

Contractor safety management :

To address the issue of inculcating a safety culture within our contract workforce, we have developed a centralized system for contractor safety management. The salient features of this system are:

Distribution of contractor safety & guidelines along with work order Obtaining a declaration from the contractor as per the requirements of the

safety department (list of equipments, certifications, list of employees & their medical records,etc.)

Compulsory safety induction training for all contractors before commencing work inside the factory premises

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Implementation of personnel protective equipment (PPE) clause in the contractors by second of every month

Submission of safety report (in prescribed format) by all contractors by second of every month

Regular work related safety trainings to contractor workmen Regular inspection and audit of contractor work area Review of safety performance on a common platform (Contractor Safety

Meet) Evaluation of contractors based on their safety initiatives and rewarding near

miss reporting and incident free workdays

We select service providers based on techno-commercial evaluation including evaluation of their safety practices. Additionally, we have a monthly safety committee meeting with the service provider, which is also a common platform for raising any grievances. The head of the contract cell and its senior members are part of this meeting and devise a plan to execute the action points, with the measures meeting. Going forward we intend to have bi-annual safety performance evaluation of the service providers to inculcate awareness on improved safety practices.

To improve our incident and near miss reporting, at our Lucknow plant we have started a system of “Safety Alert Card” where employees fill in a card with the details of any incident and drop it at a collection point at the shop floor. This ensures capturing of incidents on a timely and regular basis and enables us to implement appropriate trainings required to prevent such incidents in the future. We have also started a special suggestion campaign for seeking ideas on improving safety measures from all our employees as well as educating them on basic safety. Every month, we select safety related topics forspreading awareness amongst our workforce. This year we have covered topics like safe material handling, over head safety, fire safety, handling and storage of hazardous materials, electrical safety and road safety. Apart from workplace safety procedures we also take care of the continued well being of our employees through employee health programmes.These include the following:-

In-house blood testing Health awareness lectures and seminars Awareness on management of chronic diseases such as diabetes &

hypertension and treatment support for the same Issuance of diabetic cards to keep track of the required tests and their results

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Medical centres with qualified doctors, paramedical staff and emergency medical equipment are available at all our locations and provide round the clock services.

Health inclusivity :

The SA 8000 team from PCBU Pune set an example of altruistic service and commitment towards society by distributing some essential items to the workers in the scrap yard. They provided summer coats, head scarves, caps etc. to the scrap yard workers and intend to repeat this exercise every six months. As a part of the same initiative, a medical check-up of all the women workers was carried out in our dispensary. Those who were found to have adverse health conditions were given free consultation and medicines by the company doctors.

Employee Welfare Schemes

The highly respected Tata Motors Ltd. has a strong tradition of entrepreneurship. The company’s business strategy calls for reaching beyond the borders of India to enter new markets for its Nano, the innovative small car for the urban middle class.

One of the major drivers of success at Tata Motors Ltd. (TML) is its ability to fully exploit information technology to drive business goals. The company was an early adopter of CAD and CAM systems to speed the design of the Nano. The company also uses Siebel Systems to manage its vast customer relationship

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network and SAP® for all critical business services, such as logistics, supplier relations management, customer relationship management, human resources (HR), and finance.

According to Probir Mitra, Chief Information Officer at TML,

“IT is an integral part of every business process from design to delivery and the power of IT has been extensively leveraged for the Nano project. The design processes used more digital content than ever before. State-of-the-art CAD and CAM services integrated design across multiple disciplines, making it possible for our designers to harness and benefit from their inherent ability to innovate. IT helped the company shrink the design cycle time.”

He adds that BSM tools from BMC Software played a key role in tracking and controlling all components of IT services and automating the management of the IT infrastructure which is vital to the design and planning for manufacture of the Nano as well as running day-to-day business processes.

EXCELLENCE IN OUTSOURCING :

Following its strategy of outsourcing noncore activities, TML has outsourced its IT applications to Tata Technologies Ltd. and its IT infrastructure to IBM.® The outsourcing decision has proven to be a wise one. TML reaped significant benefits through the outsourcing initiatives. TML was recognized in 2007 and conferred the “SAP Ace” award for its SRM & Warehouse Management implementations. It also received the “Uptime Championship Award” at the CIO 100 event in the same year.

Initially, the outsourcing approach posed several challenges. Technology silos were performing adequately. However, a flexible service-oriented

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management framework was required to link the silos and provide a comprehensive a view of the IT landscape underlying a given business process. To make this framework a reality, TML decided to adopt IT service management concepts outlined in the ISO 20000:05 international standards, as well as best practices outlined in the IT Infrastructure Library® (ITIL®) Version 3. In addition, the company decided to establish a service-oriented management architecture that treated IT services as assets and managed them on a lifecycle basis.

PUTTING BMC SOLUTIONS TO WORK :

“BMC provided visibility into the entirety of services components across business process chains. It also integrated the various IT service management disciplines into a single, unified solution”, Mitra says.

TML started with the out-of-the-box capabilities of the BMC Remedy IT Service Management Suite to establish a baseline of the IT application and infrastructure landscape across all technology pillars. The company used the applications’ embedded ITIL-compatible controls —without modification — to define roles, responsibilities, and authorities required in the support groups. TML realized immediate benefits from the transition to the BMC applications, which served as the software framework for managing the interactions and process relationships among all the support groups managing the IT infrastructure underlying business services. A service-oriented organizational structure was designed and configured in the BMC Remedy applications. Mitra worked with two vendors to recast processes to achieve a business service orientation.

A major innovation in the configuration is the use of logical architectural definitions for the support group infrastructure. Logical role names for technical support staff login allowed uniformity of definitions across the entire support community regardless of whether the employee is internal to TML or outsourced. The naming convention encompasses competency levels that enable the incident coordinator to assign tickets based on complexity. This feature has real value in a multisite support group where names by themselves mean very little. Service managers can now plan staffing on the basis of competencies and have a transparent view of support staff effort and load across locations.

SERVICE-ORIENTED AGREEMENTS :

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As CIO, Mitra’s goal was to measure the availability and effectiveness of service in terms that the customers could recognize — not from the perspective of the diverse technology components and technology pillars that comprise the service (as it had in the past). BMC Service Level Management provided the high level of transparency required to construct and support service level agreements (SLAs) that are described purely in business terms.

Service requests among support groups managing different domains were put in place and a new set of agreements were defined and tested. The concept of subtickets was introduced to minimize ticket bounces. The transparency that this introduced improved collaboration among support groups.

“BMC Service Level Management has allowed us to consolidate and track multiple service windows across the country, streamline our vendor contracts, and enhance our ability to conduct meaningful contract reviews that focus on improvement,” says Mr. S. Dole, Tata Technologies’ practice manager for system integration and networking.

A SINGLE POINT OF CONTACT FOR IT SERVICES :

TML used BMC Remedy Service Desk and the end-user console to establish an outsourced IT service desk that is the single point of contact between the IT user community and the IT service providers. This new service desk consolidated more than 25 different help desks across the country, making it simple and straightforward for users to get assistance and report problems. This also helps to project a single unified face of IT to the customers although multiple IT service providers are involved in the complete services to the customer.

An innovative, segregation-of-duties approach ensures that the vendor providing a particular service is not also responsible for tracking and reporting on that service. This was done by creating a special group within the IT service desk

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for ensuring satisfactory closure of tickets and monitoring status of paused tickets. TML is required to be SOX compliant. Statutory requirements for ensuring segregation of responsibilities were met by allocating responsibilities for recording, classification, and routing by one vendor, and closing verification, customer satisfaction assurance, and performance reporting by another.

“The service desk design and the flexibility of configuration features available in the BMC applications have given us a lot of peace of mind,” Dole says. “By segregating responsibilities for incident response and incident closure verification, we can ensure that the service performance reports from our vendors have the reliability and accuracy required for stakeholders to agree on service levels achieved. This goes a long way in our ability to manage multiple third-party vendors in a transparent and effective manner.”

CHANGE IN MANAGEMENT THAT COMPLIES WITH THE SARBANESOXLEY ACT :

In the past, changes to the SAP configuration and ABAP code were done through a complex process. Up to 90 percent of incidents reported required changes that needed to be made in compliance with rigorous IT controls.

End users used the SAP Solution Manager to register their issues. A daily process allocated these tickets to a consultant responsible for the relevant module. The tickets were then transferred to the document manager, business requirements documents, and other relevant documents required for making the changes. The documents were exchanged by e-mail and approvals were done using the Document Manager.

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Manual controls using forms and signatures to authorize access to relevant clients and to transport changes among golden clients, development environment, test environment, and production servers added administrative overhead. Basis administration by IBM Basis Support pillar, while effective in ensuring segregation of duties, added overhead and delays that were not attributable to any individual.Delays in user acceptance testing (UAT) resulted in wasted effort on changes that were never moved to production. Release management was informal. Audits to verify compliance with the Sarbanes-Oxley Act were cumbersome and establishing end-to-end traceability for testing was an onerous task.

To meet these challenges, the FlexMode framework for ITSM change management, created by Action Research Foundation, a BMC Consulting partner, was adopted and a security-embedded workflow based on out-of-the-box features of BMC Remedy Change Management was designed and implemented. The new workflow replaced all other tools used by the support groups to manage change and demonstrate compliance. The new change process offers numerous advantages:

A unified repository eliminates non-value-adding bureaucracy required in a multitool environment.

Business representatives are integrated by configuring them as a support group; business process owners and superusers for individual services were included in the workflow for approvals and UAT.

Ticket assignment is automated; routing logic transfers tickets to the right consultants in multiple locations instantaneously, dramatically improving response times.

All mandatory documents, review results, and approval comments are directly loaded by business users, consultants, and approving executives. Audit trails are maintained automatically and available from within the ticket.

Automated task templates based on standard software development lifecycle (SDLC) ensure repeatability of change processes.

Interactions with the SAP Basis teams for access controls and transport between environments are under the purview of newly constructed underpinning contracts.

Interactions with the business for UAT were brought under the purview of operational level agreements with business process owners, UAT documents and results are transported and managed with service requests to track and manage these activities.

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Iterations where UAT failed were tracked within the same ticket providing a complete trail of related events.

A release manager role was established. All changes that pass UAT are moved to the release manager for validation of compliance with policies and planning of the release. The release manager conducts post-release reviews and records updates before closure of the ticket.

Auditors can independently verify compliance directly on the system. Engineering effort is required only when errors in compliance are identified.

CONCLUSION

From this project we conclude that the marketing strategies of Tata motors are according to market. They always look after their consumers and their needs. They make changes in their product what consumer wants, that’s why most of the consumers, are satisfied for the company. Company wants that every people can purchase their product so, they have product from low price to high price with number of different styles and designs without compromising product quality. Company is also providing good services to their customers. Company has its own show rooms and service centres in different places so customers can’t face many difficulties to purchase their products.

“Success will largely be determined to the extent a company can differentiate itself in terms of  intangibles that go with a car.” Success could well hinge on the best of bundle of  services that a carmaker can provide.

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