TATA- DAEWOO

THE ROAD TO GUNSAN

Presented to: Prof A.k Sengupta
BY: Abhishek Jain
aura! Thapar
".#a!i$iran
"ohit Bahoria
#a%anpreet Po&ar
'e%ant Sood
aura! oe(
#a)ee! Jose
Se*tion : B+
,ontents
Tata Motors An Introduction

About Tata Daewoo Commercial Vehicle

Start of the Acquisition

Cultural Issues

An Interview with Ratan Tata

Future roducts and !aunches

"hat the Future #olds

2
TATA "OTO#S: A- .-DO".TAB/E ,O"PA-Y
Tata Motors is not only at the forefront of the Indian automobile industry, it
is also one of Indias best-known brands in international markets. Today, Tata
branded cars, trucks and buses are seen in most parts of South Asia, Africa,
Middle East and Europe. Tata Motors recently entered into an areement with M!
"o#er $.% for manufacture of "o#er branded Tata Indicas in $.% and continental
Europe.

Tata Motors is the larest company in the Tata roup with a total income of
$S& '.( billion in the year )**'-*(. More than ' million Tata #ehicles ply on
Indian roads makin Tata a dominant force in the Indian automobile industry.
Tata Motors is Indias only fully interated automobile manufacturer with a
portfolio that co#ers trucks, buses, utility #ehicles and passener cars.
Established in +,(-, Tata Motors entered into collaboration with .aimler
/en0 of !ermany in +,-( to manufacture commercial #ehicles. The collaboration
ended in +,1,. Tata Motors has since rown from strenth to strenth.
Tata Motors has the uni2ue distinction of i#in India its first and only
indienously built passener car - the Tata Indica. The Indica launched in +,,3
reached the ),-*,*** sales mark within -) months of launch.
Tata Motors Enineerin "esearch 4entre has o#er ,** scientists and
enineers dedicated to product and process de#elopment, technoloy
upradation and new product introduction. /esides, the 4ompany works with
leadin international desin and stylin houses. Tata Motors has a lobal
presence with e5ports of #ehicles to se#eral countries in Europe, Africa, South
America, Middle East, Asia and Australia and assembly operations in Malaysia,
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/anladesh, %enya, South Africa, $kraine and "ussia. The 4ompanys #ehicles
are known for their reliability, durability, safety, comfort and #alue for money.
ur$ose
At the Tata !roup our purpose is to impro#e the 2uality of life of the
communities we ser#e. 6e do this throuh leadership in sectors of national
economic sinificance, to which the roup brins a uni2ue set of capabilities. This
re2uires us to row aressi#ely in focussed areas of business. 7ur heritae of
returnin to society what we earn e#okes trust amon consumers, employees,
shareholders and the community. 8ormalisin the hih standards of beha#iour
e5pected from employees and companies will continuously enrich this heritae.
The Tata name is a uni2ue asset representin leadership with trust. 9e#erain
this asset to enhance roup synery and becomin lobally competiti#e is the
route to sustained rowth and lon-term success.
core #alues
The Tata !roup has always souht to be a #alue-dri#en oranisation. These
#alues continue to direct the roup:s rowth and businesses. The fi#e core Tata
#alues underpinnin the way we do business are;
Inte%rit& - we must conduct our business fairly, with honesty and transparency.
E#erythin we do must stand the test of public scrutiny.
'nderstandin% - we must be carin, show respect, compassion and humanity
for our colleaues and customers around the world and always work for the
benefit of India.
()cellence - we must constantly stri#e to achie#e the hihest possible
standards in our day-to-day work and in the 2uality of the oods and ser#ices we
pro#ide.
'nit& - we must work cohesi#ely with our colleaues across the roup and with
our customers and partners around the world, buildin stron relationships based
on tolerance, understandin and mutual cooperation.
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Res$onsibilit& - we must continue to be responsible, sensiti#e to the countries,
communities and en#ironments in which we work, always ensurin that what
comes from the people oes back to the people many times o#er.
About Daewoo Commercial Vehicle*
.4< is %oreas second larest hea#y truck maker with a modern plant in
!unsan that has an annual production capacity of )*,*** medium to hea#y-duty
#ehicles. 6ith the robust manufacturin and 2uality processes deli#erin a
contemporary product rane, T.4< is aimin for a market share in e5cess of '*
per cent of the %orean hea#y truck sement.

Truc+ of $rofessional com$an&
The e5istence of a company in#ol#es many factors. The decision to select a
certain factor as bein the most important is made on the basis of a company
philosophy. At TATA .aewoo 4ommercial <ehicle, we maintain a stron belief that
no company e5ists without customers, that our customers are the primary reason
for our e5istence. 6e do not consider our customers to be a tool that can be used
for the sole purpose of eneratin profit for us. "ather, they are none other than
those whom we must satisfy, to whom we must always listen, and share mutual
de#elopment.
Value creation


This is why we e5ert so much effort to offer our best to our customers. 6e
belie#e that the most #ital aspect is the 2uality of the products pro#ided to each
and e#ery customer. As can be e5pected from a company that represents one of
the worlds top ten 4ommercial <ehicle manufacturin countries, TATA .aewoo
4ommercial <ehicle is already e2uipped with hihly ad#anced technoloy, which
is utili0ed to produce of e5ceptional performance and 2uality. =owe#er, we ha#e
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yet to be fully satisfied with our current technoloy, 2uality and reputation.
rofile

The Start of the a*0uisition
8or all the strateic importance Tata Motors is assinin to the
ac2uisition, the deal itself happened rather accidentally. In April )**',
%adle had finalised a plan for rowin Tata Motors: 4< business
inoranically and had asked merchant bankers to locate possible
buyouts. In >uly )**', e#en as the newly formed M?A team headed by
eneral manaer @corporate financeA ".S. Thakur was scoutin for
deals, %BM!:s Indian office, actin at the behest of its %orean
counterpart @the official ad#isers to the dealA, sent the company a
proposal askin if it was interested in biddin for .aewoo 4ommercial
<ehicle. A court recei#er appointed to li2uidate .aewoo:s assets after
its collapse in )**+ was sellin the firm.
%adle asked %ant if he was interested. The fact sheet on the
company pro#ided by %BM! was skimpy. More details would be
a#ailable for "s ,1,*** @&),***A. After a brief discussion, %ant decided
to find out more about the offer. At that time, they had no inklin they
would put in a bid. They bouht the documents out of curiosity and to
conduct a small e5ercise for the fledlin M?A department.
6hat they saw in the offer documents e5cited them. .aewoo:s
manufacturin plant was operatin at only a 2uarter of its capacity, yet
it commanded a )) per cent marketshare in the 3-tonne-plus
sement. /ein under court recei#ership, no in#estments had flowed
into the company, makin the e5istin models a bit dated. /ut it
clearly had the technoloy prowess to brin out newer #ersions.
8urther, .aewoo had no products in the biest 4< sement in %orea.
Sure, they were warned aainst the militant labour unions in %orea,
but it looked like a reat opportunity. E#entually, Tata Motors decided
to make a non-bindin bid.
All this action took place within a week as per the strict deadlines set
by the %orean court.
6
In the initial round, there were +- other companies who had made
non-bindin bids. A couple of weeks later, Tata Motors was amon the
+* bidders shortlisted to o on to the ne5t round. That:s when the
team at Tata Motors ot real serious. The deal was discussed in the
ne5t board meetin. Thakur would lead a team of )* people to !unsan
to bein due dilience, before the Tatas put in their final, bindin bid.
In %orea, .eloitte Touche was hired as accountants and %im, 4han
and 9ee as the lawyers for the ac2uisition.
7n )C Auust )**', %ant landed at the !unsan factory Dust before the
due dilience e5ercise to recei#e instructions from the %orean company
officials. 6hile he was sittin in the <IB #isitors: room, %ant chatted
with a youn manaer, 4harles 4hoi. 4hoi, who was con#ersant in
Enlish, was there as an interpreter. =e told %ant .aewoo would prefer
to partner with a European company that could brin in hih
technoloy.
This showed up in the hospitality too. 6hen the biddin teams arri#ed
for due dilience some weeks later, the Europeans were put up at
!unsan:s best hotel, Summit, whereas Tata Motors was booked into
the somewhat rundown !unsan Tourist =otel. %ant says; ETo me, this
was the turnin point in the deal. I realised it was not about biddin
hih. 4linchin the deal was about winnin the confidence of the
%oreans.E
7nce he ot out of the <IB room, %ant immediately issued instructions
to Thakur to chane tack. =e no loner wanted Thakur to stress on the
financial capability of Tata Motors. Instead, he wanted him to make
presentations on Tata Motors bein the si5th-larest commercial
#ehicle company in the world, its stron labour relations, and the fact
that unlike .aewoo, the company was not a mere assembler of trucks.
There was touh competition for Tata Motors. The 2ualified bidders
included financial in#estors like 4arlyle In#estment 4orporation, which
was ad#ised by !eore /ush SrF a local auto component company
named Tonil 4orporationF and <oith, a European transmission
company. There was also an unnamed European 4< manufacturer.
Each one did its due dilience from the e5clusi#e data room assined
to it.
Tata Motors did more than that. .urin the two weeks they were
there, %ant and Thakur informally disseminated information to local
authorities and trade associations. They made presentations specially
prepared in %orean to the local o#ernor and mayor, and oranised
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ban2uets for the bureaucracy. !unsan:s mayor, %an %eun =o, told /6
he had chaned his perceptions about the Indian auto industry. =e
says; EThouh %orean companies e5ported to India, we had no idea
that India had bi auto companies. It was a re#elation to us and now
we are proud to ha#e them here.E Adds %ant; EE#entually, I will belie#e
that it is this soft-sellin that clinched the deal for us.E
After the due dilience, the Tata Motors board members aain
deliberated on the issue. %adle and Thakur considered the future
business, #olumes and e5pected cash flows to arri#e at an appropriate
bid. /y this time, "atan Tata:s interest in the deal was buildin up. =e
wanted to see the plant. /ut %ant insisted he should o to !unsan only
once the transaction was complete. And at one stae, when %ant felt
they could lose the deal, "atan Tata was 2uite concerned.
The board a#e the reen sinal to Thakur, the head of the M?A team,
and told him the rane he could bid within. Thakur did the
mathematics, chose a fiure on the lower side of the rane, and made
his bindin bid. Says Thakur; EIt was lo#e at first siht when we saw
the plant. /ut we consciously tried to suppress our e5citement.E
7n )) 7ctober, %BM!:s director !eore Traub told %adle and %ant o#er
a conference call that Tata Motors was the preferred bidder. 6hen Tata
heard the news, he personally conratulated each senior member who
had worked on the deal. Thakur aain left with a team to do the final
due dilience, as the earlier analysis had been restricted to the data
room. Gow, he would ha#e access to all the books of the company.
This final due dilience was important, as the rules allowed for a - per
cent reduction in the bid price if the bidders found any substantial
anomalies in the books. 6hich the Tatas did. The team found sales for
>une )**' was corrected after the first due dilience and stood lower
in the 7ctober )**' accounts. The Tatas ot a full - per cent
reduction. All this took a few weeks.
The court then put the final bid to the .aewoo creditors who
owned the company. !ettin their appro#als and sortin out .aewoo
brand issues @which was owned by +) firms includin .aewoo
4ommercial <ehicleA took two months more. "atan Tata wanted the
deal completed before Tata Motors closed its books for )**'-*(, and
so the final hando#er of share certificates was ad#anced to ), March.
That was when "atan Tata first #isited !unsan. A few days
earlier, e5ecuti#es from <aishna#i 4ommunications, the Tatas: public
relations aency, flew to Seoul and hired a local aency to introduce
the Tata !roup to the local media. Soon articles bean to appear in the
local media. The %orean media was fascinated by the trusteeship
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structure of the Tata !roup, where a portion of the profits of roup
companies o to charity. Articles talked of Tata:s frual lifestyle and the
roup:s trouble-free labour policy. Tata, when he reached !unsan,
didn:t disappoint. =e arri#ed at the !unsan factory in a ma5icab, a
paid ta5i ser#ice, with his key e5ecuti#es. Inside the factory, he wore
the .aewoo Dacket and ate in the workers: canteen. Says Mayor =o;
EMy first impression was that you can trust this person.E In his speech
to the workers at the factory, Tata said his company was there to learn
from the %oreans. E#en before the share certificates had been handed
o#er to Tata Motors, e5ecuti#e director %ant had beun his assessment
of how to turn around .aewoo. Since a couple of rounds of due
dilience had been completed, the Tatas had a ood sense of the
situation on the round. /ut the key issue was, would the %orean
manaers cooperateH 7r would they come in the way of the chanes
that the Tatas were planninH %ant then picked nine hih-performin
manaers from the Indian operations who would dri#e the interation
effort. 9eadin the pack were 4.<. Sinh and S.$.%. Menon.
The %oreans, on the other hand, already had a senior team in
place. %wan-7k 4hae, the president, had worked directly under the
erstwhile .aewoo chairman, %im 6oo 4hoon, and headed important
businesses for the roup. =e was sent by %im to 4hina to set up the
small car enine manufacturin plant. =e was later in chare of
buildin a 4< business there. 4hae worked on the proDect for two
years, but it remained incomplete because .aewoo had collapsed by
then. There were others too, like %i-=ee 6on, who had e5perience in
the $% in sales, and later headed the Austrian operations. Gearly all
the 1** workers had been trained at the Isu0u plant in >apan.
The Tatas knew that the best way to retain such stron local manaers
was to i#e them full operational freedom. After all, this is what Tata
himself had committed to the workers. 6here#er there were aps,
particularly in ser#ice and marketin, Tata mo#ed in its own people.
Earlier, .aewoo:s trucks used to be sold by another firm, .aewoo
Motor Sales, and hence, the company had no marketin and ser#icin
arm. Tata-.aewoo has a small sales team of its own and also si5
authorised ser#ice centres across %orea. In the ne5t si5 months, it will
ha#e its own finance schemes for customers. The Tatas also took
control of the finance function @this is normal in ac2uisitionsF the Tatas
had in#ested "s -** crore to ac2uire the firmA. Says %wan-%Du %im;
EGothin has chaned e5cept for the fact that we now belon a lare
automobile company. That will take some time to from + >uly )**(. 7n
+) >une, Tata-.aewoo oranised a bi-ban launch for its Euro III-
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compliant product Go#us at the swanky 4o-e5 4entre in Seoul. The
total budet; nearly &-**,***. Tata, who was in Seoul for another
meetin, dropped by for the launch. The e#ent was attended by
dealers, important business partners, and local dinitaries. Says %ant,
E6e had to create a flutter in the market.E 8or the .aewoo manaers,
this was a bi e#ent. Says .on-=o 9ee, president of .aewoo Motor
Sales 4orp; EThis is first time in a decade that the company has made
a sinificant launch.E
Cultural Issues
AT Tata-.aewoo:s factory in !unsan, an industrial port ),* km
south of Seoul, you soon et accustomed to the constant roar of iant,
(**-hp trucks that are bein put throuh their paces at the test
tracks. A few hundred yards away from the tracks is a functional,
lass-and-steel buildin called the .aewoo Technical 4entre. 7n most
days, the enineers and the handful of administrati#e staff who work
in the buildin 2uietly do their work durin the normal office hours,
and #acate the buildin by around -.'* p.m.
7n - >uly too, #ery few of them were workin late. And that:s
why they didn:t et to hear the din from the e5ecuti#e offices that
drowned out e#en the noise of the trucks on the test track. "aised
#oices in both %orean and Enlish could be o#erheard from behind the
closed doors of #ice-president 4handra <ir Sinh:s office. Sinh is the
man in chare of makin sure that the .aewoo business interates
smoothly with Tata Motors. Also seated in his room are %wan-%Du %im,
%i-=ee 6on and S.$.%. Menon. %im is the manain director of
.aewoo:s product di#ision, while 6on is also desinated as manain
director, with the responsibility of administration. Menon is Sinh:s
peer and handles finance and business plannin.
The room was thick with tension. The meetin had draed on
for o#er (- minutes. The con#ersation was occasionally interrupted by
an anry yet firm #oice cracklin o#er a speakerphone. The caller was
"a#i %ant, e5ecuti#e director, Tata Motors, sittin in his first-floor
corner room office in /ombay =ouse, the head2uarters of the Tata
!roup.
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The meetin had been called to draw up the ame plan for the final
round of labour neotiations scheduled for the ne5t afternoon. %orean
labour oranisations were known to be e5tremely touh. In the past,
they had stopped at nothin - workers had e#en tried immolation - to
et better deals.

The neotiations didn:t seem to be oin the way %ant had
wanted. %ant felt Sinh and the rest of the team, includin president
%wan-7k 4hae @who was awayA, were i#in away far more than
what =yundai, .aewoo:s biest competitor, had promised its union
Dust the day before. =e didn:t want the new Indian owners to appear
weak before the %orean labour unions. /ut at the same time, he didn:t
want the neotiations to be aborted as that could lead to a strike and a
factory closure. =e wanted answers 2uickly. /ut e#ery time he asked a
2uestion, %im and 6on would first discuss it amon themsel#es in
%orean, before answerin in haltin Enlish. It bean to test %ant:s
patience. Sittin miles away, how could he ensure the %oreans weren:t
bein too soft on their unionsH
8our months after the Bimpri-based, "s +-,(3'-crore Tata
Motors snapped up the South %orean, &)'+-million .aewoo
4ommercial <ehicle 4ompany @now Tata-.aewoo 4ommercial <ehicle
4ompanyA for a little o#er &+** million, the action is heatin up.
India:s biest automaker is s2uarin up to the challenes of
manain its first maDor o#erseas ac2uisition.

Sure, this isn:t the biest o#erseas deal that India Inc. has
struck. At nearly &-*) million, the Tata !roup:s buyout of Tetley in the
$% was fi#e times bier. The .aewoo deal is also smaller than
"eliance:s &)*C-million buyout of 89A! Telecom.
/ut for Tata Motors the deal has hue implications. Till it ac2uired the
%orean firm, Tata Motors: commercial #ehicles @4<A business was
s2uarely focused on the domestic marketF lobal sales were Dust - per
cent of total sales. It had plans to e5pand the lobal business to )*
per cent by )**--*1, well before the .aewoo deal was on the radar,
but nothin much had come out of it. @See :Telco:s /i /et:, /6, C >uly
)**'.A
11
I
Interview with the ratan tata
,Tata motors has a wa& to %o -to
%lobali.e/,
Chairman Ratan Tata chats on the
future of 0unsan and Tata Motors1
What difference did the Daewoo
deal make for Tata Motors?
=istorically, Tata Motors has been outside
India for most part. Althouh it broke a lot
of new round in e5ports in the years one
by, they were really in soft currency areas. And the e5ports JwereK
from India because those countries did not ha#e hard currency. 7r in
de#elopin countries, where you operate on a low sellin price. It has
been only in recent times that we ha#e sort of struck out to try and et
a foothold in the de#eloped world and compete aainst the ad#anced
products in Europe and Asia. I said all of this because, in many ways, it
is now that Tata Motors will ha#e to position itself aainst the maDors in
the automoti#e world. Short answer to your 2uestion is that Tata
Motors will now ha#e to ear up to compete and it has a way to o.
Are there any inherent competitive advantages that Tata
Motors has in its quest to go global?
It has many competiti#e ad#antaes and some disad#antaes. The
ad#antae is, of course, the cost base and the enineerin base which
enables it to desin and enineer products. Its disad#antaes are that
a lare market, its own home market, does not demand the kind of
products it wants to sell elsewhere. So Tata Motors is not producin
12
those products for the Indian market because the Indian market today
does not need them. And in so doin, e#en when it desined products
for the international market that were different from those in India, it
did not ha#e the scale to produce them competiti#ely. In the past, all
the e5ports were :this is what we ha#e and that is what we i#e you:.
Today markets are #ery different. Lou ha#e to i#e the markets what
they want. So there lies a bit of disad#antae until India itself
increases its product re2uirements to e2ual that of the world. If that
were to happen, then I think Tata Motors: competiti#e ad#antae would
be e#en reater because it would ha#e a home base with scale for a
similar product rane.
How long do you think that would take to happen?
6ell, it is already happenin in the pollution front. It will soon happen
on the safety front. And to some e5tent, Tata Motors itself would ha#e
to dri#e thins like dri#er comfort, product reliability in hiher speeds
when we et the hihway network, etc. So, broadly, I would say that in
the ne5t fi#e to se#en years, India should be more or less where the
Asian markets are in terms of product sophistication.
o! essentially you would be looking at the Asian market
with this acquisition? "r would you also look at Western
markets?
In the ac2uisition of .aewoo, we ha#e catapulted oursel#es or
accelerated our ability to ha#e products that India does not ha#e or
does not need. 7ut of .aewoo with its scale, Jwe can address aK
eoraphic market JthatK we would not be able to address JotherwiseK.
8or e5ample, in the Middle East, we ha#e products that are appealin
but cannot be used because they are not desined for hihway speeds
there. In other countries, we don:t ha#e the si0e -- of products like the
(*-(- tonne product. 6e don:t ha#e tractor-trailer, multi-a5le -- the
types that are used abroad. Gow, we do. I belie#e we will address
#arious sophisticated markets in South Africa, in Asia, in 4hina and in
some countries in Europe with the .aewoo product, and we will use
those .aewoo products as the foundation to enineer new products out
of India.
Tata Motors has been quite adept in engineering# $ow!
you are going to add another company which comes will similar
or greater skills# How will you integrate the two companies?
6e ha#e 4.<. Sinh in %orea whose main Dob is to interate the two
factories or companies. The way we ha#e to do it -- it is a delicate
e5ercise - Jis thatK neither side must feel that they are superior to the
other. 6e should really ha#e an interation of two e2uals. And I think
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e#en thouh .aewoo miht be smaller, in terms of work ethics, in
terms of ood practices, 2uality and producti#ity, we ha#e a lot to learn
from them. In terms of scale and si0e, we are bier. /ut I think what
they can learn from us is probably the le#el of inno#ati#eness that has
made us what we are today. So the interation will really be to try and
put the strenths of the two companies toether in such a way that
each one would draw on what it thinks it needs from the other rather
than either side imposin its will on the other. I think that is the crucial
issue.
At the plant in %orea! there are e&ecutives who have
substantial e&perience in operating huge business and plants in
other countries# $ow that it is a part of Tata Motors! how would
you specifically integrate these people? 'or e&ample! the
current ()" Mr *%wang+"k, (hae! headed the car business in
(hina for Daewoo# How will you integrate him into the Tata
cadre?
I did not know of Mr 4hae:s role in 4hinaM
Mr (hae was sent by the then Daewoo chief Mr %im to
break into the (hinese market# Mr (hae set up the
manufacturing units in (hina! which have now been acquired
by -M#
I didn:t know that. If that were so, as it ob#iously is, what we should
do is a#ail of that e5perience and interate that into our operation.
Gow, one way to do this is to create a Doint forum between the two
companies. In Tata Tea, for e5ample, we brouht the manain
director from Tetley on to the board of Tata Tea. =e participates,
therefore, in the well-bein and rowth of Tata Tea. I think, now that
you are sayin it, we would need to set up an interation roup
between the two companies on which Mr. 4hae and "a#i %ant and
others should be. And optimi0e and le#erae the strenths that each of
the companies ha#e. After this meetin, I will set that up.
)verybody is talking of (hina# .ig as it is! it is also a very
tricky market and auto companies have lost immense amount
of money there# .ut not being in (hina means you are not in
the fastest growing market# Would you set up a deadline that
you must be in (hina by this time?
6e are already in 4hina. 6e ha#e already sined an M7$ with 4hina
/rilliance for the Indica. 6e are talkin to another company about the
commercial #ehicles. And I belie#e our entry into 4hina will be
somewhat easier than Jthat ofK a $S company or a !erman company.
8or two reasons. 6e are not really paranoid about settin up in 4hina.
14
9ike for many of the other companies, the only way to be in 4hina is to
be there oneself, take one:s product and raft it into 4hina and sell it
as one:s product. In both the cases, we ha#e been willin to talk in
terms of a Doint de#eloped product. 6e may lose our identity a little
bit, but we will be in 4hina in a smoother and on a larer scale than
some other companies who started out.
Hyundai has a technical tie+up for commercial vehicles in
(hina# Will you also adopt a similar entry strategy for (hina?
Go, we won:t o in for a technical tie-up. 6hat we are thinkin of doin
is not so much with our India product. It is JwithK the %orean product.
There will be a partner in 4hina who will assemble those products. 6e
will encourae the local country. 6e will ha#e a royalty for what we do.
6ell, it won:t be Dust the transfer of technoloy. 6e will transfer the
product. 6hat I am tryin to say is that if one of the $S or !erman
companies in 4hina wanted to make a chane, they could not make it
there because of their parentae. Their product couldn:t be any
different in 4hina than elsewhere in the world. 6e would not ha#e that
problem. 6e will be more fle5ible. So, what is in 4hina may not be the
same #ehicle as it is in %orea or in India. It would be for the 4hinese
market and foundation of that would be ours.
A re!o(ution on .ndian roads1
15
Tra#ellin down a %orean e5pressway at +)* kmph in the
SsanLon lu5ury model - 4hairman - the last thin you e5pect is to
be o#ertaken by another #ehicle. $nless it were a Mercedes. After all,
the !ermans helped the %orean automaker desin the sedan. /ut a
fully loaded truckH .urin the hour-lon dri#e from !unsan to
>eollabuk-.o, each time one of these +1-tonne beasts thunders past,
you can only rub your eyes in disbelief.
In India, it is popular belief that cars tra#el faster, more comfortably
and more safely than trucks. /ut in the de#eloped world, that:s no
loner true. In Europe, for instance, trucks come with air suspension
under their dri#ers: cabins to ensure that the ride is smoother than
that of e#en the latest Mercedes car. Sophisticated electronics control
the brakin system and the enine, which, in turn, stop these
monsters from causin accidents.
Gow, here:s the moot point; why put so much technoloy into
trucks that simply carry oodsH That:s because trucks tra#el down the
same e5pressways as cars do. They also occupy more road space. A
tractor-trailer truck can be as lon as fi#e lare sedans parked one
after the other. If it were to tra#el at a leisurely pace, Dust as trucks do
in India, it would simply clo up hihways that you pay e5pensi#e tolls
to use. Also, since trucks carry hea#y loads, accidents not only
dislocate traffic, but also tend to substantially damae road
infrastructure.
16
The Safer #ide
,abins of $orean tru*ks are designed to be safe and
ease dri!er fatigue2 as is !isib(e in the photograph
abo!e. .n *ontrast2 .ndian tru*ks 3(eft botto%4 are
*heaper2 but do not %ake the (ong hours spent
dri!ing a tru*k an5 %ore *o%fortab(e for the dri!er
That:s why many proressi#e countries are actually ensurin,
throuh leislation, that truckin technoloy keeps pace with that of
cars and, in some aspects, oes beyond. In Europe, there are accepted
norms on power-to-weiht ratio, which means trucks ha#e to be made
in such a way that they can carry hea#ier loads at hiher speeds. This
ensures 2uicker turnaround times for operators and, thereby, increases
operational efficiency. "etreadin of tyres, a common practice in India,
is banned in some countries. 7#erloadin, too, is not allowed. Some
Asian countries like %orea ha#e had similar reulations for almost a
decade, thouh the enforcement isn:t as touh as it is in Europe.
India, of course, continues to la behind. /ut now, some like
S.B. Sinh belie#e that chane is round the corner. Sinh is a senior
fellow at the .elhi-based Indian 8oundation of Transport "esearch and
Trainin, which researches the commercial #ehicles business in India
and also ad#ises the surface transport ministry on reulatory issues.
Sinh says; EToday, the truckin business in India is about short-term
profits. That:s brouht in a lot of unscrupulous players who
compromise on safety and cause damae to infrastructure. All to make
a 2uick buck.E In fact, a few state o#ernments like Andhra Bradesh
and %arnataka ha#e now leitimised o#erloadin by le#yin a new
cess. The result; thouh operators make 2uick profits and companies
benefit throuh lower cost of freiht, a lot of time is wasted ettin
from place to place. 8or instance, it could take a truck (-- days to et
from Mumbai to 4hennai, when it could ha#e easily been done in two
days. So how will India et out of this #icious cycleH Sinh says there
are three factors that could trier a new re#olution on Indian roads.
8or one, the o#ernment is concerned about the risin costs of
maintainin the newly built hihways and is, hence, brinin in a host
of new measures. It will shortly implement the Euro III emission
norms, which will force truck manufacturers to uprade enines. At the
same time, the 4entral o#ernment is workin on a new leislation to
put an end to o#erloadin. This is e5pected to push truck makers to
de#elop more powerful enines, which will allow trucks to carry more
loads. Two, to ensure dri#er safety, new rules are already in place for
cabin desin. The idea; to desin comfortable and stron cabins that
help ease dri#er fatiue and also safeuard human life. Three, in a bid
to curb noise pollution, truck manufacturers will ha#e to reduce the
#ehicular noise to C3 decibels @at 1* kmphA by April ne5t year, from
the current le#els of 3- decibels @at(-kmphA.
17
Effecti#ely, this means that to remain profitable, truckers will
ha#e to carry hea#ier loads more 2uickly on e#ery trip. 7ne easy,
efficient solution; simply switch o#er to multi-a5le #ehicles in the lon
run. Multi-a5le trucks carry up to three times the loads of a two-a5le
truck at nearly the same speeds. Truckers see the #alue in this. Multi-
a5le and tractor-trailer trucks are the fastest-rowin truck sement
today, with +* per cent of total sales. In fact, Swedish truck maker
<ol#o:s India stratey hines on this, e#en thouh its trucks cost (--
times more than the Tatas: two-a5le trucks.
This could well ha#e been Tata Motors: Achilles heel. /ut now,
the knowlede and e5pertise that the .aewoo ac2uisition brins could
help it uard its home turf better.
18
!atest about the roduct rofile and
roduct !aunches
The first %orean Euro III-desined and manufactured truck rane
to be introduced in the domestic market
En#ironment-friendly, hih performance, electronic enine
mounted that meets Euro III standards, comfortable and safe
9eadin maker of commercial #ehicles has plans to e5port to
Middle East, Africa and Asia includin India
.aewoo 4ommercial <ehicle 4ompany 9imited now rechristened
Tata .aewoo 4ommercial <ehicle 4ompany 9imited @T.4<A after
Doinin Tata Motors, an Indian automobile company last March, is
introducin its hea#y-duty truck model :Go#us: into the %orean market.
Tata .aewoo 4ommercial <ehicles newly launched truck features hih
performance, en#ironment-friendly electronic enine, a new look cabin
and a host of other con#enience and safety features. The hih
performin electronic enine is specially desined to enable
T.4< to compete with world-famous truck manufacturers. It
is desined to meet the riid en#ironmental safety standards of Euro
III. Startin this >uly, :The %orea )**(:, an en#ironmental reulation to
be applied to medium to hea#y-duty trucks and buses, will ban the
production of #ehicles that mount normal Euro II enines. This
standard is more riid than >apans, and is similar to Euro III. T.4<
has used /oschs 4ommon "ail fuel inDection system for the first time
in %orea on hea#y-duty trucks and de#eloped a new enine that
satisfies Euro III and %orea )**( standards. The new truck is more
reliable, safer and more fuel-efficient than e5istin enines. There are
also upraded safety features like the >ake brake system, A/SNAS"
and emerency steerin system @ESSA that ha#e been introduced. The
#ehicle hosts web mountin chassis, a new style cabin and comfortable
eronomic cabin interior desin.
$n#eilin the new product, "atan G. Tata, chairman, Tata
Motors, said, E6e are #ery pleased that a new #ehicle complyin with
Euro III reulations is bein launched by Tata .aewoo 4ommercial
19
<ehicle. This will enable it to compete well in %orea and beyond %orea
in other international markets. It will strenthen the company.E
%wan-7k 4hae, president and 4E7, Tata .aewoo 4ommercial
<ehicle, said, EGo#us is an e5cellent truck that is bein put on sale in
the %orean market for the first time since .aewoo Doined Tata Motors
which is the 1th larest commercial #ehicle manufacturin firm in the
world. Go#us is the most en#ironment friendly, reliable and safe truck
from T.4<. 6e e5pect to launch more products in the near future.E
It is bein ensured that o#er +-* Tata .aewoo Sales, Ser#ice and Barts
offices throuh the country would pro#ide efficient ser#ices to our
customers and set new standards of customer satisfaction and deliht.
The company has chaned its name to :Tata .aewoo 4ommercial
<ehicle 4ompany 9imited:, "a#i %ant was appointed chairman, %wan-
7k 4hae, 4E7 and president, and Bra#een %adle was appointed as
director on the board of Tata .aewoo 4ommercial <ehicle
20
"hat the Future #olds
Amon other thins, the Tatas had planned an ambitious entry
into 4hina, the world:s fastest rowin 4< market. 8or o#er a year,
Tata Motors had tried hard to break into that country throuh possible
Doint #entures and technoloy transfers. /ut none of these options
succeeded - Tata Dust did not ha#e rele#ant products in the fastest-
rowin sements of the market. 6ith their e5pressway system in
plan, the 4hinese were no loner interested in low-powered trucks that
made up the Tata Motors raneF they wanted more sophisticated
trucks. That:s e5actly what .aewoo brins to the table. .aewoo makes
hea#y trucks with payloads of 3 tonnes and abo#e. These are touh
machines for de#eloped countries with ood road infrastructure. These
machines, powered by enines of '-* and more horsepower, run at
+(* kmph e#en with loads of +) tonnes. 6ith the .aewoo trucks, Tata
can now enter not only 4hina and %orea, but also markets like Italy
and Spain. So, instead of bein seen as a niche player makin small
trucks, the Tatas can now enter all the bi, sophisticated markets with
a full product rane. Also, the Tata rane of +-tonne pickups could find
a new market in %orea and the rest of the reion. .aewoo isn:t present
in that sement yet. @7ne-tonne pickups form the biest sement of
the market in that country.A
In fact, the ac2uisition has sinificance for the whole of Indian
manufacturin. This is the first real test of whether India can raduate
from makin low-cost, low technoloy products for de#elopin markets
to makin products for de#eloped markets as well. As 4hairman "atan
Tata says in an inter#iew with /6 @See :Tata Motors =as A 6ay To
!o...:A, Tata Motors has a distinct home market disad#antae. The
Indian truckin market is years behind Europe, the $S and e#en
%orea. So how does a predominantly Indian manufacturer leapfro to
the ne5t le#el and catch up with its lobal peersH
At the same time, the .aewoo ac2uisition will also show whether
Indian manufacturers can make the transition to a truly international
mindset. Most firms still prefer to :e5port and sell: instead of thinkin
about local manufacture-assembly-and-sellin. There are some like
Sundaram 8asteners who ha#e set up a new plant in 4hina. And /harat
8ore ac2uired a !erman forins plant earlier this year. /ut both
these players primarily make components abroad. Got many ha#e
taken on the challene of makin and sellin products under their own
21
brand name in a forein market to local consumers - as Tata plans to
do in %orea within the ne5t si5 months.
Then there are other lessons to be learnt. .elicate labour
neotiations and the issue of trust they raise are Dust a few of them.
Tata Motors can learn a lot from .aewoo, especially about how to
crank up its product de#elopment and desin skills. Also, there is a bi
ap between the producti#ity le#els of %orean and Indian workers.
About 1** workers in %orea make trucks that are stroner than what
+,*** workers in >amshedpur make. 6ill Tata Motors ha#e the humility
to learn from a company it bouhtH

/ut if it does play its cards riht, this deal can catapult the
Tatas: 4< business into the lobal leaue. ". Seshasayee, M. of Ashok
9eyland, India:s second-larest commercial #ehicles manufacturer,
says; EMost certainly, there is a demonstration effect. E#ery #isible
success - and failure -will be seen as representati#e of the
industryNcountry concerned.E Already, the deal has put Tata Motors on
the international map for auto M?A deals. A few days ao, a
representati#e from an East European o#ernment called the company
out of the blue, askin whether it would be interested in buyin a
stake in an auto company in that country. Says Tata Motors e5ecuti#e
director Bra#een %adle; EIt has opened a few doors that didn:t e5ist
e#en a few months ao.E
/ut despite all the feel-ood spirit, for the Tatas, manain cultural
interation will be tricky. $nlike the senior team at .aewoo, who ha#e
international e5perience, the Tatas ha#e ne#er had a cadre of
manaers trained in lobal markets. They don:t ha#e the e5perience or
the maturity to see throuh a lobal ac2uisition. Then there is the
basic difference between Indian and %orean cultures. 8or instance,
some Tata manaers say, Bresident 4hae does not share information
with them. That could be due to the %orean work ethic. %oreans tend
to be hierarchy-consciousF a senior manaer seldom minles with
anyone other than his peers.
At the same time, the onus is clearly on impro#in .aewoo:s
performance. In )**', .aewoo had sales of &)'+ million and pre-ta5
profits of &, million. At the net le#el, it made a meare profit. %adle
says he plans to reco#er the in#estment alon with the opportunity
cost within fi#e years. Some Tata manaers e#en feel they can pull it
off in three years.
There:s a #ery ood reason for their optimism. The clues lie
22
inside the three-storied .aewoo Technical 4entre. =ere, 3*-odd
enineers are workin on desins that will make the e5istin .aewoo
products suitable for new international markets. .aewoo has a product
line-up that neatly complements the Tatas:. /y tweakin e5istin
models, Tata belie#es it can take the .aewoo products into newer
markets like 4hina, South Africa, Turkey and the Middle East. @That:s
because each truckin market has its nuances and, hence, re2uires
customi0ation. In %orea, .aewoo:s trucks are customised for nearly
e#ery customer.A
In South Africa, Tata Africa recently set up a distribution
network to sell its entire rane of #ehicles. Gow, it will also sell
.aewoo trucks. A small team from Tata Motors has been to Turkey to
study that market. /ased on its assessment, the Tatas will decide on
an entry and a product line. In the Middle East, the Tatas e5pect the
.aewoo trucks to be sold without much modification. In effect, in the
ne5t '-( years, e5ports should account for )- per cent of .aewoo:s
turno#er, up from 3 per cent currently.
There is a stron reason for the e5port focus. The %orean
market for hea#y trucks has stanated in the last few years at +-,***
#ehicles a year. And .aewoo:s marketshare had fluctuated between ))
per cent and '- per cent for the last si5 years.
/ut there:s an opportunity here for Tata. .aewoo is absent from
the sinle-larest sement in %orea:s 4< market - the +-tonne pickup.
This +-*,***-unit sement is monopolised by =yundai and its
subsidiary, %ia. The Tatas make pickups slihtly bier than +-tonne in
India. Thouh they are different from the %orean +-tonners, the Tatas
could still pull off a coup here. Gearly +3 months ao, the Tatas bean
workin with a European firm for a sub +-tonne pickup based on an
international desin. As it turns out, the specifications of that #an-like
#ehicle were similar to what the %orean market needs. Sources say the
Tatas are close to buyin the rihts to the product desin and the tool
room, and could brin the product to the %orean and Indian markets in
the ne5t si5 months.
The biest bet will, of course, be 4hina, the fastest-rowin
4< market in the world. %ant:s 4hina stratey has been a work-in-
proress for the last +3 months. /ut the Tata products did not fit in,
i#en the modern 4hinese infrastructure. /esides, the low-end 4hinese
trucks were far cheaper than the Tatas:. And the marins were simply
too small for the Tatas to make a profitable entry. /ut now, with a
fuller product portfolio - thanks to the .aewoo product line-up - the
23
Tatas e5pect to ain critical mass more easily.
Talks are on with a local company for assembly. And by this
time ne5t year, the first set of trucks from the Tata-.aewoo combine
could roll onto 4hinese hihways.
It will be an e5citin Dourney to watch. Tata Motors: $SB has
been to pro#ide the cheapest solution to truckers. 8or the %oreans, it is
the power and desin that matter. Toether, can they make a robust
truckin solution for the worldH Says %ant; E6ith this deal, Tata Motors
has ac2uired all the attributes of a lobal company. It is the first step
to bein one.E

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