Tata Motors is confident that the exit of Carl-Peter Forster as Group CEO is unlikely to have any serious impact on India's biggest automobile company.
A Tata Motors spokesperson said: “It would be wrong to credit Jaguar Land Rover’s turnaround to Forster. The turnaround in the business commenced 24 months ago (July quarter of 2009), following the successful efforts made by the management team to cut costs and the successful introduction of the new Jaguar XJ and XF sedans and different Land Rover products progressively, including the Evoque. The Jaguar Land Rover business has been following the operating plans put in place after Tata Motors took over the business.”
Analysts, however, are not so sure. Forster’s resignation is a “setback” as the company struggles to boost sales at home in India, while the debt crisis in Europe slows demand for Jaguar cars, Deepesh Rathore, managing director for IHS Automotive, told Bloomberg.
“He was one of the strong pillars for JLR,” said Pramod Amthe, an analyst with the Royal Bank of Scotland Group Plc in Mumbai. “His exit as the head of the business is definitely negative. Investors may not get the same level of comfort they used to get from talking to Carl.”
An analyst with a brokerage firm based in Mumbai said: “Forster brought with himself a rich automotive experience. Nobody knows where the replacement will come from or how long will it take. Forster knows the US and Europe markets very well and JLR will have to depend on them for sustained demand.”
That concern was partly reflected on the stock market. Reacting to the news of Forster's exit, Tata Motors stock on the Bombay Stock Exchange slumped 5.84 per cent before closing at Rs 146.4, down 4.14 per cent. The fall was much more than the Sensex slide.
The company’s American Depositry Receipts (ADRs) plunged 9.2 per cent to $15.35 on Friday on the New York Stock Exchange, but recovered on Monday to trade at $13.05 on NYSE on Monday — down by two per cent. However, Tata Motors GDR listed on the Luxembourg Stock Exchange was trading at $16.93, up 4.65 per cent, against $16.17 on Friday.
A section of indsutry insiders said, over the last many months Tata Motors under the leadership of Forster, Ravi Kant (vice-chairman) and Ralph Speth (CEO of JLR) had put in motion a series of developmental programmes for the future range of Jaguar and Land Rover products. These new products of JLR are expected to hit the markets over the next few years in a phased manner. Additionally other plans of JLR such as integration of existing manufacturing facilities in the UK and opening of new satellite plants in India and China are already underway.
Forster, who took over as group CEO in February 2010, had been widely regarded as the person responsible for new market penetration and successful turnaround of the premier brands. He was also given a seat on the board last year, but quit on September 9, citing personal reasons.
