Tata Motors may buy Spanish bus design firm

Tata Motors, after a major acquisition in the truck segment, is now planning to acquire a Spanish bus-building and designing firm to strengthen its capabilities and global presence in the bus segment.

Company sources said discussions were at a preliminary stage and it is still not clear whether Tata Motors would go in for a complete takeover or restrict itself to a stake in the company.

A Tata Motors spokesperson said: "As a part of our globalisation efforts, we are talking to companies across the globe, but it would be inappropriate to mention names at this stage."

Incidentally, another domestic commercial vehicles major, Ashok Leyland, has a joint venture with Spain's largest bus body-building company, Irizar.

Tata Motors does not want to miss the bus as far the export opportunity in the global bus market is concerned. Like the Daewoo Commercial Vehicles' acquisition, industry sources see the Spanish plan as a part of Tata Motors' strategy to strengthen its footprint in other markets.

While Daewoo brought to the table product development and integration capabilities, the Spanish deal will fortify Tata Motors' design skills in the bus business and equip it with a range of buses saleable in south-east Asia, Europe and other global markets.

Tata Motors is already assembling buses in Ukraine in partnership with Etalon, Ukraine's second largest bus body building company. The company also has plans to source buses from Daewoo's bus company.

Tata Motors does not have a bus body building facility of its own and outsources the job to the largely unorganised bus-body building sector. The company has plans to flag off bus body-building operations in the country in the next fiscal.

Tata Motors has embarked on a drive to consolidate its bus building vendors by standardising procurement, processes and quality.

Meanwhile, the company is aiming to derisk revenue prospects by focussing more on exports. It expects 20 per cent of its top line in terms of volumes to come from markets outside India in the next two years.

Sales outside India increased to 7 per cent of Tata Motors' total unit sales in 2003-2004 compared with 4.5 per cent in 2002-03.

The company has developed a global strategy, which is a combination of mergers and acquisitions as well as joint venture agreements.

For the current financial year, Tata Motors is eyeing a bigger contribution from Tata Daewoo Commercial Vehicles (TDCV) in South Korea. A company executive said no specific targets had been fixed for the South Korean venture as yet.

"Last financial year, TDCV exported only 29 vehicles as the consolidation was effected only in the last two days of the financial year." He said the Korean company would contribute a significant portion of the total exports this year.

The product range of TDCV includes cargo and dump trucks, mixers, tractor trailers and special purpose vehicles with engine power ranging from 215 HP to 400 HP.

TDCV recently launched its "Novus" line of MHCVs featuring a high performance Euro III compliant, environment-friendly electronic engine, a new look cabin, and a host of other convenience and safety features.