Tata Engineering & Locomotive Company

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Tata Engineering & Locomotive Company

THE COMPANY
The Tata Engineering & Locomotive Company (commonly known as Telco), is India's largest private sector company in terms of revenues and market capitalisation. It is also one of the 6 largest manufacturers of commercial vehicles in the world. Telco is a part of Tata Enterprises, which is the largest industrial group in India, employing assets of Rs.267 million (US$7.6 billion) in a wide range of businesses including Automobiles, Steel, Information Technology, Telecommunications, Energy, Chemicals, Hotels and Tea
Telco was incorporated in 1945, to manufacture steam locomotives. Today it has a domestic market share of 68% in the MCV/HCV segment, 64% in the LCV segment and 32% in the multi-utility segment. Telco has been exporting its products since 1969 and currently exports about a tenth of its output. Export markets include the Middle East, Africa and Southeast Asia, as well as developed countries in Europe like France, UK and Spain. It is intended that exports should account for 20% of the automobiles sold by the Company.
The analysis of the macroeconomic environment can be done by PEST model:
P-Political
A rigid and closed system has always been the main hurdle for growth of industry in India, which is virtually plagued by legislation and legal procedures. The complex bureaucratic style of working in this otherwise democratic country has always been a handicap for automobile industry. The stringent laws especially regarding foreign investments had deprived India from global technology and services.
The early nineties liberalisation saw some major policy changes of the government-
ü Depreciation of the rupee and promoting foreign trade.
ü Exim scrips to be replaced by partial and later full convertibility of the rupee on trade account.
ü Liberalisation of trade policies.
ü Opening up of a number of areas to the private sector.
ü Deregulating the banks' and financial institutions' lending rates.
ü Reduction of statutory liquidity ratios.
ü Freeing of the capital market from government control.
ü Abolition of the office of the Controller of Capital Issues.
ü Implementation of the National Renewal Fund.
ü Slashing of fiscal duties on a number of items meant for industrial production.
The international exposure led to a general increase in the awareness level of the masses. The demand for quality and environmentally friendly automobiles led to strict legislation. Certain states of the union passed legislati...

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