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Tata-Fiat JV to restructure operations

Discussion in 'Fiat India News' started by ramjn, Nov 6, 2012.

  1. ramjn

    ramjn Staff Member Janitor

    Linea 1.3
    MUMBAI: Days after Tata Group partnered Montezomolo family of the Fiat group to bid for international luxury hotel chain Orient-Express, the two groups are looking to revive their Indian joint venture, Fiat India Automobiles, by setting off accumulated losses of Rs 300 crore and restructuring its operations.

    High points

    - As part of its restructuring, the manufacturing joint venture plans to charge Fiat a specific fee for building its cars, they said.

    - This follows the formation of National Sales Company of Fiat, which will now independently market and sell all the Fiat products in the country. Earlier, all the profits or losses incurred by Fiat on the marketing front were borne by the manufacturing joint venture.

    - Fiat Group India Automobiles Limited is starting with a corpus of Rs 50 crore to manage the working capital needs of the marketing company. As of now, the company is in the process of appointing independent dealers across the country. It aims to have 70-90 dealerships in the next 18 months time.

    - Experts say this move is likely to strengthen the balance sheet of the manufacturing venture and may help manufacturers to reduce losses, break even into profits and leverage the balance sheet to raise loans for future to meet expansion.

    - The venture has been taking steps to improve capacity utilisation, especially of diesel engines that it supplies to Maruti Suzuki, Premier and export markets. The firm plans to manufacture close to 2 lakh engines, which means a capacity utilisation of 80%. But Fiat cars continue to struggle in India.

    Source - Tata-Fiat JV to set off Rs 300-cr losses, restructure operations - The Economic Times
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