Turnaround not a one-time effect, it is sustainable, says Tata Motors CEO

The CEO says the company has decided to put together a comprehensive turnaround plan in July 2017, which was aimed at taking the transformation ahead

Guenter Butschek, the managing director and chief executive officer at Tata Motors, who is credited with the turnaround visible in the domestic commercial vehicle (CV) and passenger vehicle (PV) business, tells Ajay Modi that his biggest challenges when he came on board in early 2016 were the complacency among team members and lack of willingness to change. According to Butschek, the management has been able to put employees on their toes and the results are visible. Edited excerpts:

You have had an eventful journey so far. How do you look back at the two-and-half year journey?

I am necessarily not a person who looks back. I want to look forward. When I accepted the offer around three years ago to head Tata Motors, I realised that this was an extremely demanding and challenging task. It was clear to me that there was high level of expectations. Speed was my concern and it is determined by the sense of urgency to change and the willingness to change and own the change. Everybody in the organisation needed to be part of this change and this was the biggest problem. You hope that you will get allies and coalitions inside and outside. I was disappointed at the beginning as I found allies only at the board level.

How things changed? What is the future of this turnaround?

Can one impose a call for turnaround in such an organisation? It was agreed that we must aim for transformation and not turnaround, bring a sense of urgency, launch projects in a different fashion. But FY17 went on a different track due to BS-III to -IV transition and demonetisation. We decided to put together a comprehensive turnaround plan in July 2017, which was aimed at taking the transformation ahead. We accelerated the sense of urgency and the ownership. The turnaround is not a one-time effect. It is sustainable as seen by our first quarter results and we took the courage to call it a Turnaround 2.0 in order to win decisively in CVs, win sustainably in PVs, and embed the turnaround culture in the company’s DNA. 

How do you see the near break-even in PV business?

When I said PV would turn into a self-sustainable business, people looked at me with a surprise. For the public and analysts, the PV business was a loss-making operation to an extent that nobody had a belief that we would ever be able to turnaround. We are gaining volume and regaining market share. We are again on the consideration list of customers. I am happy but this is just the beginning. The organisation has lived up to the occasion. We need to consistently keep the turnaround live in the organisation. When we launched the first exercise in 2016, people felt that this was the flavor of the month or the business year. But today turnaround is the new norm. It was required to make us less vulnerable to the volatility of the market, which is a naked reality in today's business. It can be geopolitical, regulatory or competitive — all three not in our control. We managed to get our people on their toes, we need to learn to run. 

How scalable is the electric mobility business?

Now, the market is possibly the biggest unknown. It possibly will become concrete when we know more on FAME II. We will focus on the bus and commercial fleet. The bus business is scalable. We expect to fully leverage the electric bus business, which can change our model. In passenger vehicles, the Tigor EV was a surprise when we became L1 in EESL tender. We are living up to the demand from EESL. There is demand from outside NCR. The Tigor EV is scalable. The same solution can be applied to the Tiago and we are in touch with potential customers. I still believe that we need a policy to drive electric mobility sector.

Are you not looking to sell electric cars to private users?

Our approach will be the fleet play in bus and cars and we our focus on B2B and not B2C. There may be some private customers but we will not let them walk away. The range of anxiety has been highlighted as a biggest concern. People will experience vehicles electric in fleet and this will shape the demand in private space. Traditionally, old products used to become part of a fleet. In EV, the latest product may first go to fleet and they will find their way into the private sector. 

Is it a worry for you that JLR has not done well while the standalone business is doing well and that is dragging the stock?

It has been said that JLR is seeking opportunities to improve its cost position. JLR is reviewing its future investment in order to align its business to the new changed environment. We expect there will be some changes as far as China business is concerned. If some of these current conditions improve, it will offer a headroom. I do not see any reason why JLR should not get into a successful turnaround like we have seen in the India business.