Friday, March 21, 2008

Ratan Tata on some issues that the Tata Nano raises


Think big with the small car: Ratan Tata
The Economic Times — January 17, 2008

Ever since the Nano debuted last week, Tata Motors chairman Ratan Tata has faced all manner of questions. From environmental (congestion/ pollution/emission) issues to the problems at the company's under construction plant in Singur, West Bengal. Normally reticent, he has painstakingly answered all of them. Here are some excerpts from some of the non-spec specific questions that he had to field at the Auto Expo.

The Nano project was delayed because of the political agitation and later other issues. Will Tata Motors be able to wrap things up as per schedule? And will the car itself undergo any more evolution?

There is always last minute engineering that gets done. The main issue is that we have built the plant. It was flooded earlier last year but thankfully before the machines and equipment were installed. The water receded and construction is now on in full swing both from our side as well as the vendors.

The problem in Singur was not of our making, It was unfortunate. I hope we can improve the quality of life in the Hooghly district as a good corporate citizen should. We have already started to do that and I hope the plant will attract more industries and create more job opportunities for the local populace.

Isn't the Nano very cramped on the inside?

A small car is a SMALL car. If one is looking for a limousine this is not the car to buy. If one is looking for a three-box sedan, this is not the car to buy.

How eco friendly will this vehicle be?

We've not made a claim to be the most eco-friendly in the world. We are in compliance with emission norms in India and this current engine meets BS3 and is capable to being scaled up to Euro 4 as well. There is a cost attached to being a totally green car. At the end of the day, all the things you ask for may not be there in this vehicle because we had a cost target. And that would include some of the green stuff as well.

Will the margins make sense on this car? Will you make money on the Nano?

We are a socially responsible company, but we are not a philanthropic trust. We will make profits. As for margins there would be several uptrim versions and we will have our margins spread over those versions.

There has been widespread apprehension that this car would create congestion because of its sheer numbers...

All the question of congestion implies that we will seek the global market with millions of these vehicles. We don't have the resources to do that. But we are country of a billion people. Most Indians are denied connectivity and this is a way.

But India's roads are in terrible shape already. Can they take another 250,000 units of this car? Isn't a more efficient public transport system the answer? It took me one hour to go from south Delhi to Pragati Maidan today and the traffic was a nightmare...

India desperately needs a mass transport system and better infrastructure. But those are issues that we don't deal with. I would be concerned if our vehicle created absolute chaos all over India. If you faced chaos today it did not include these clearly there are other issues involved.

But my point is should the masses be denied their individual transportation rights? This car is not targeted at a particular segment of consumers. But having said that I hope it will change the manner in which one travels in semi urban and rural India.

Now that your dream project has rolled out, time for you to retire and do the things you have always wanted to do?

Everybody has a desire of stepping aside, of wanting to do what one always wanted to do, to change gears. I have some responsibilities which I have to fulfill before I do that.

Will this car give established players in Europe, Asia and US the heebie jeebies?

I don't think anyone should have sleepless nights. This was achieved by a bunch of young engineers. And if we could do it, it can be done by anyone, probably better. The largest element of cost in a car is material cost. India is not the cheapest on that count due to the tariff structure. But labour is inexpensive and productive. And engineering inputs are very viable.

How can a company that makes the world's cheapest car bid for two of the most expensive and exclusive marques in the business, Jaguar and Land Rover? Where is the fit?

Everybody seems to imply that if you are at the low end of the market, how can you look at high-end cars. But no one asks Unilever for instance how they can make and sell cheap soaps in India or Africa and also expensive cosmetics elsewhere in the developed world.

But the rating agencies have given a thumbs down to the Jaguar-Land Rover deal...

Rating agencies have a clinical, mathematical view of things. That's what they do. So that's alright.

Will the Rs 1 lakh price tag increase? Is this is an introductory price?

No it is not. The price we have announced is the price we are launching the car at.

Does that mean the price will remain constant?

I never said the price will never rise. But I can't say if it did, when. I remember when the Maruti van was first launched I bought one of those for Rs 50,000. I used it for many years. Of course now that product is not available at that price. Our endeavour with the Nano will be to hold our price as much as possible.

How is Tata Motors getting ready to handle the exponential increase in volumes that this car will bring?

The Nano project is not a separate entity. With the Indica it was an issue because we were getting into cars for the first time from being a truck player. Now it's a question of simply expanding that infrastructure.

The car was earlier supposed to come with continuously variable transmission but has now come with a 4-speed manual...

The CVT is not ready for unveiling. But it will be there. We are working on it.