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India gets its people's car

autos Updated: Mar 23, 2009 20:13 IST
Sanjoy Narayan and Agencies
Highlight Story

Tata Motors has commercially launched its people's car, Nano, promising to stick to the Rs 1,00,000 price tag for the base model.

"From today onwards, the product will be available in the showrooms... There will be three versions - the base version, which is the one we promised to the people of India and two upper tier versions...," Tata Group Chairman Ratan Tata told a news conference in Mumbai.

The higher-end versions would have air-conditioning, power brakes and power windows, among others.

"We hope this day we will usher in a new form of transport," Tata said, adding that the endeavour was never to build the cheapest car but to provide an affordable form of transportation. He, however, hastened to add that "we made a promise and that we've kept the promise."

The bookings will commence on April 9 and deliveries are expected by early-July.

Six years ago, at the 2003 Geneva Motor Show, Ratan Tata unveiled plans to launch a car that would cost just Rs 100,000. The reaction was pure disbelief. Privately, many rival carmakers — Indian and foreign — ridiculed the idea as being impossible to achieve. That, of course, was the least of the challenges that Tata has faced in his efforts to make his dream come true.

Last year, the Nano project got nearly derailed when fiery protests erupted in West Bengal, the original site for the car factory. Gujarat quickly replaced West Bengal and, save for the minor hiccup of a delay, the project was safe. Today, as the Nano is launched, Ratan Tata’s huge dream is being fulfilled.

How to buy the Nano
Price: Estimated on road price is between Rs 1.3 lakh and 1.8 lakh across the three variants
Where to get it: At Tata Motors dealerships across the country. A fee of Rs 300 may be levied for making an application for the car
The waiting: Between six and 14 months. The initial production will be as low as 3,000 cars per month while demand is expected to be as high as 20,000 cars per month. The waiting period will come down only after the mother plant in Sanand gets operational next year
Other variants: Prototypes of diesel and CNG variants are ready but will not be launched before 2010. Hybrid and electric versions also in the works
The Nano apart, the past 18 years that he has been at the helm of the Rs 150,000 crore ($26 billion) group have been a series of challenges for Tata (71), making his stint as chairman not unlike the experience of a man running the gauntlet.

<b1>Take 1991, when he got his current job. He was then 54, hardly a spring chicken, but ran into a face-off with the ‘old guard’ at Bombay House, the group’s headquarters. When he tried to implement the group’s retirement policy for chief executives and directors, it turned into a very public spat with Russi Mody, former boss of Tata Steel. In those early years, much of Tata’s challenges were internal. Satraps such as Mody, Darbari Seth and Ajit Kerkar dominated the group and many of Tata’s strategies and plans faced resistance. Yet, Tata soldiered on till one by one the old guard fell in line and exited.

Then came the challenge of restructuring what had become a sprawling, cumbersome group. Tata’s ascendance to the top job coincided with India’s newly liberalised economic policies and in the emerging environment many of the group’s businesses were unviable, while others were unwieldy.

Companies like Tata Oil Mills and Lakme that were in the fast-moving consumer goods (FMCG) businesses were sold off. Lumbering giants like Tata Steel were in dire need of being pruned to become more efficient and many other companies needed a close hard look.

Those early years were not easy for Tata. While younger business groups made the most of the 1990s, grabbing new growth opportunities, Tata had to spend a major part of the decade setting the house in order. Besides putting the retirement policy for the old satraps in place, his other task was to increase the group’s shareholding and, hence its control over companies in its fold.

Still, Tata wanted to take Tata global — acquire international businesses and operate in unfamiliar markets. One dominating dream was to make cars, something Tata has always been passionate about. Transforming Telco (now Tata Motors) from making trucks and commercial vehicles into a carmaker wasn’t an easy challenge and like the stages of evolution, Tata set about the task in phases — first building pseudo cars like the Sierra and the Estate, which were only a step ahead of trucks, in the early 1990s to 1995 when he announced the first truly Indian car that that he famously said would be “a car with the Zen’s size, the Ambassador’s internal dimensions, the price of a Maruti 800 and with the running cost of diesel”. That was the Indica, which hit the roads in 1998 and became an almost overnight success.

Since 2000, Tata has turned his attention to global markets, pulling off ambitious acquisitions, like UK’s Tetley Tea, several hotels, telecoms firms and steel businesses. But the biggest of them was 2007’s buyout of US steelmaker, the Corus Group, for which it paid $12 billion. More recently, in March 2008, the Tatas bought Jaguar Cars and Land Rover, paying $2.3 billion for those famous automobile brands.

Acquisitions such as these as well as the group’s pioneering efforts in information technology services globally have made Tata the most widely known Indian brand in the world. But it has also thrown up another challenge for the group. To finance the spate of high-value takeover, the Tata group’s companies have had to borrow heavily, expecting, of course, that the higher profits generated by the new businesses would help pay back the debt. It is estimated that Rs 100,000 crore of debt lies on the books of the major Tata companies. The fact that the group earns more than 60 per cent of its revenues from global markets makes it highly geared to the global economy, which is in the throes of the worst recession in many decades.

Ratan Tata is now in the twilight of a career that has been a series of challenges. And while his achievements at Tata group have been remarkable, one cannot but help feeling that he has been unlucky as well. If instead of being given the reins of the group at 54, he’d got a shy at it 10 years before that, would his script for the Tata group story that we’ve seen unfold have been different? As the Nano rolls out on India’s dusty streets and Ratan Tata mulls about who will succeed him, perhaps the same thought may cross his mind.