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The road ain’t getting better for Tatas’ auto parts biz

 WinifredScripps
  63
 May 21, 2024

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TACO seems to be a son of Tata Chairman N Chairman Chandrasekaran vision inconsistency.

Putting on the brakes: According to media reports, the Tata family could be kicked out of auto component manufacturing company Tata Auto Systems (TACO), either in whole or in part. The move won’t come as a surprise to industry watchers as TACO’s struggling growth in the Indian market doesn’t seem to be in sync with Tata Sons chairman N together with Chandrasekaran’s vision of a ‘top company’.

A TACO spokesperson denied reports of a stake sale in an online response to a query from The Economic Times.

Does the stake sale make business sense? Yes: Tatas, Hero Group and TVS Group auto component companies have underperformed the industry from 2011 to 2016. (Mahindra and Mahindra CIE, the auto components company owned by Mahindra Auto Components, did better, with Spanish company CIE acquiring a controlling stake in the company for $116 million in 2013; see chart).

TACO net profit was negative, with revenue growth to-6% from FY2011 to FY2016, but operating income (excluding other income) was down-14% (CAGR) over the same period. Industry net sales and operating profit grew 13% and 12%, respectively.

Is a comeback possible? Difficulties:Contributed 45% of TACO’s standalone sales, according to Tata Motors’ FY2016 report. The component supplier has failed to establish significant partnerships with other major OEMs.

“Maruti, which controls half of the passenger car market, has no intention of partnering with Tako,” said an industry source, who did not want to be named.” . This could be due to weak market share of Taco and One. The main reason for the underestimation of factory openings.

Does Tata support Tata Towers? TACO?Well ……: Strengthening the supply chain is key for Tata Motors to aggressively reduce costs and modernize its fleet. This could put further pressure on TACO. Industry research firm IHSS Markit recently published a list of suppliers for Tata’s latest compact SUV, the Nexon, showing that Tacho supplies only exterior door trim panels, interior instrument panels and charge air coolers. Controller.

Yes, you read that right. Even Tata is gradually dropping TACOO. parts.

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