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Telco to grow through mergers and acquisitions

Tata Engineering and Locomotives Limited or Telco has targetted acquisitions and mergers as a major driver of its future growth strategy.

However, Telco is yet to shortlist the companies for the purpose, senior company officials said.

''This is part of the exercises to strengthen the Tata empire. We will now see more action in restructuring in terms of acquisitions, mergers and divestments. This will take place from time to time,'' a Tata official said.

The officials further pointed out that Telco has decided not to launch its much-awaited mid-size car this year even as efforts are on to prepare a Station Wagon on the Indica platform. The Station Wagon is among the three variants of Indica that the company is planning to introduce.

"We had promised to introduce several variants of the car and work is already on for the Station Wagon. We are working on the modalities and firm plans are yet to be finalised,'' he said. The company is also yet to finalise a time-frame for launching the variant.

Regarding the mid-size offering, the sources pointed out that the car would not be launched in the current year in view of the present stagnant market conditions and internal economics. ''However, it has certainly not been put off or delayed. We are keen on foraying into the segment and will come out with our model at the appropriate time,'' he said, adding that no specific time-frame has been set for the launch.

The mid-size car was earlier scheduled to hit the Indian roads in the second half of 1999. This was as part of the company's plan to roll out a new passenger car model every year.

Telco had recently announced that there were no plans to hive off the Indica car project. However, it does intend to spin off its non-core businesses by end 1999-2000. These would include units such as forge, foundry and assemblies for gearbox and axles.

Hiving off non-core business would help Telco reduce its fixed costs. Non-core businesses constitute 20-25 per cent of Telco's production costs. The company would retain its painting, welding and assembly operations.

Telco is also contemplating to make the indica available off-the-shelf towards the last quarter of this fiscal. A final decision on the same would be taken once the company despatches the entire lot of 60,000 units.

''We have already achieved 3,500 units per month production target and would be hiking it up to 6,000 units per month by August. At this level, we are also likely to exceed the target.''

Once the company crosses the targetted 60,000 level, it is likely to either call in for fresh bookings or offer the car off-the-shelf.

Stating that all its vehicles, including the commercial vehicle line-up, would be Euro-II compliant by April 2000, the officials said the Indica would sport a multi-point fuel injection and would be introduced in the domestic market by the year-end. Other passenger vehicles will also be introduced simultaneously.

Telco is India's largest manufacturer of commercial vehicles. It introduced India's first indigenously developed passenger car -- the Indica -- in December 1998.

UNI

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