Samsung Turnaround Strategy

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How Telco is implementing the much-needed turnaround
Financial Express - July 2, 2001

In India, for decades, automobiles and Telco, have been almost synonymous. So, when the 56 year old Rs 8,164 crore Telco made a jaw-dropping, record-making Rs 500 crore loss this fiscal, it brought in an avalanche of mixed responses. For consumers and admirers, it was a feeling of disbelief. From investors and analysts, it brought in sharp criticism. And for the company itself, it highlighted the need for deep introspection. Why did Telco come to such a pass? According to Mr Ravi Kant, executive director, commercial vehicles business unit, Telco, the Rs 500 crore loss is a combination of operating loss and one-time charges. So, the actual operating losses amount to around Rs 270 crore which can mainly be attributed to drop in volumes of mainly the heavy and medium commercial vehicles.

Mr Praveen Kadle, senior vice president, corporate affairs adds, that the company has been massively hit by the recession in the industry as there was a general economic slowdown where increase in fuel prices did not lead to a commensurate increase in freight rates. Besides, equalisation of sales tax almost doubled the cost of acquisition of a truck.

On the financial side, besides low earnings before interest, depreciation and tax, the company could not recover the cost of emission compliance by switching from Euro 0 to Euro I norms. Besides, there was negative extraordinary income as against Rs 134 crore earned out of sale of shares. Mr. Rajiv Dube, general manager, passenger cars and utility vehicles, Telco, adds that passenger car is a new item in the book of accounts. Says Mr. Dube, " When the investment is reflected in the books of accounts, it has been hit by decline both in passenger car section as well as commercial vehicles for the year 2000-01."

The turnaround strategy
In this background, the top brass of the company have now chalked out a blue print attacking various...
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