New Delhi: When India’s largest automaker Tata Motors Ltd hired Guenter Butschek as its chief executive and managing director in 2016 after a two-year hunt, hopes were high that the move would stop the drift in sales that began with the retirement of former managing director Ravi Kant in 2009. On Wednesday, the company got a pat on the back from Tata Sons chairman N. Chandrasekaran after it posted a near 11-fold increase in net profit due to a surprise turnaround in its India business.
Chandrasekaran reaffirmed his faith in the company and said its performance will only get better.
“Tata Motors’ performance is sustainable,” he said in response to a query.
Chandrasekaran, however, declined to comment on the performance of certain products, including the Nano.
“It is going to get better from here. Tata Motors is committed to future mobility with significant investments being made in the electric, passenger and commercial vehicle segments,” he said.
The Tata group holding company’s chairman unveiled H5X, a sports utility vehicle (SUV) jointly developed by Tata Motors and Jaguar Land Rover Plc, at the Delhi Auto Expo. Butschek, hired by former Tata Sons chairman Cyrus Mistry, was under the scanner over his performance and the changes he was trying to make at Tata Motors.
The Economic Times in August reported that Chandrasekaran had reversed many of Butschek’s turnaround initiatives, raising concerns that the company’s fortunes would take longer to revive.
“Forget all the rumours that were flowing around 9 months ago as far as my destiny is concerned. I will complete two years on 15 February,” Butschek told Mint.
Net profit at Tata Motors, including those of its units, rose to Rs1,214.6 crore for the three months ended December from Rs111.57 crore in the same period a year earlier, the biggest jump in seven quarters. A Bloomberg poll of 19 analysts had pegged quarterly profit at Rs2,349.1 crore.
The key reason for the lower-than-expected profit was the weak performance by JLR. Sales in that unit rose just 3.45% from a year ago to 154,447 units. While sales in the US and Europe declined, sales growth in China slowed to 14.6%. JLR’s sales were weighed down by few launches and model refreshes during the year.
Butschek has, in fact, acknowledged some of the problems, taking the first step to fix them. In August 2016, he admitted Tata Motors is not on the top of potential customers’ consideration list in passenger vehicles, and pointed to problems such as a silo approach, lack of accountability and no clear definition of excellence.
He reiterated that on Wednesday.
“Overview of Tata Motors in terms of product portfolio, capacity utilisation, base line profitability, was not entirely wrong,” Butschek said.
“We wanted to make sure that there is an ownership on the executive committee, dedicated project teams, which would go beyond developing concepts, focus on execution and improving baseline,” he added.