During the following two years the company reduced its cost base, became less dependent on cyclical markets and expanded its presence outside India.
One of the key lessons was the need to change the mindsets of the most experienced employees. The company opened their eyes to the realities of the market by getting them to listen to customers' views, as well as encouraging them to examine competitors' products in detail to see why many customers preferred them.
The company also tapped into the restless energy of its younger employees. In fact, the decision to aim for a more ambitious cost-cutting target of 10% was instigated by this group. After two years, a Rs5 billion ($113 million) loss was turned into a Rs5 billion profit.
Leading change: an interview with the managing director of Tata Motors
McKinsey Quarterly online, January 2007