Monday, February 4, 2008

Nano: From the Chairman's desk

Home arrowChairman's Desk arrowThink big with the small car: Ratan Tata

Think big with the small car: Ratan Tata

As published in The Economic Times (Web Edition)

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 sisue 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 a 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 cant 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.

Tata 'NANO' - The People's Car from Tata Motors

Home arrowChairman's Desk arrowRatan Tata's speech at the unveiling ceremony of the 'Nano'

Ratan Tata's speech at the unveiling ceremony of the 'Nano'




Excerpts from Ratan Tata's speech at the Nano unveiling ceremony

Ladies and Gentleman, thank you for being with us on this memorable occasion. There are no celebrities at this function nor any dance routines. The center of attraction for this morning's event is the new Tata car which we are unveiling.

We're going to take you on a small journey. A journey that symbolizes the human spirit of change, the will to question the unquestionable, the drive to stretch the envelope.

Ladies and gentleman, I invite you to join me in this journey of innovation and evolution. The quest to lead and the quest to conquer. It is this quest that led to the first manned flight by the Wright brothers. Today, thousands of aircrafts travel the skies carrying millions of passengers across the globe in safety and comfort. The same quest for leadership and conquering new frontiers led to landing man on the moon, an unheard of and unbelievable achievement at that time.

Innovation and evolution led to the creation of a bicycle which the rider pedaled to move faster than walking. Later, innovation motorized the bicycle to create the motorcycle and the scooter, providing motorized transport for up to two persons. The ENIAC computer in 1945, considered among the highest powered at that time filled an entire room. Today, the power of that huge machine is exceeded in the personal computer that sits on our desks or in fact, that we carry as laptops in our briefcases.

There are solutions for most problems. The barriers and roadblocks that we face are usually of our own making and these can only be demolished by having the determination to find a solution, even contrary to the conventional wisdom that prevails around us, by breaking tradition.

Today's story started some years ago when I observed families riding on two wheelers, the father driving a scooter, his young kid standing in front of him, his wife sitting behind him holding a baby and I asked myself whether one could conceive of a safe, affordable, all weather form of transport for such a family. A vehicle that could be affordable and low cost enough to be within everyone's reach, a people's car, built to meet all safety standards, designed to meet or exceed emission norms and be low in pollution and high in fuel efficiency. This then was the dream we set ourselves to achieve. Many said this dream could not be achieved. Some scuffed at what we would produce, perhaps a vehicle comprising two scooters attached together or perhaps an unsafe rudimentary vehicle, a poor excuse for a car. Let me assure you and also assure our critics that the car we have designed and we will be presenting to you today will indeed meet all the current safety requirements of a modern day car.

Of late, when it became known that we will in fact be making such a car, the attention has moved to questioning the pollution it would create. Let me again assure those who have concern for the environment that the car we present to you today will meet all current legislated emission criteria and will have a lower pollution level than even a two wheeler being manufactured in India today.

Concerns are also now being expressed about the congestion that could be caused by the existence of our small car in large numbers. I believe this needs to be put in the right perspective. There is no doubt that India is woefully behind its neighbours in infrastructure. The government is endeavoring to address this situation with its new road policy. Looking ahead, five years from today, were we to produce and sell 5,00,000 small cars every year, we would then, at the end of five years constitute approximately 2.5% of all passenger vehicles in the country. This could hardly be considered the nightmare of congestion that is being raised today about our new small car.

Despite what the critics said, despite what our antagonistic did, we pursued our vision to give India an affordable people's car that had not been produced anywhere in the world. In fact, a car that most people said could not be manufactured for that kind of price. But we never took our eyes of our goal. Today we will present what a young group of engineers and designers gave their all, for about four years to achieve.

Anyway I have said enough ladies and gentlemen, now I give you the new car from Tata Motors, the people's car that everyone has been waiting for.

Ladies and gentlemen, thank you again for being with us. We are very pleased to present these cars to you today. They are not concept cars. They are not prototypes. They are the production cars that will roll out of the Singur plant later this year. And these will come in several variants. You have today on the stage one basic car or standard car and two deluxe cars which will have air conditioning also. Yes there will be air conditioning.

This is been referred to as one man's dream and indeed it was. But it took a tremendous amount of team work to convert this or translate this into reality. And I think it would be but fair and fitting to recognize and acknowledge the achievement of young group engineers who undertook the challenge for four years and great sacrifice to themselves and produced this car. I'd like to acknowledge Girish Wagh who headed the team. Girish, would you come up here? And some of his team members who are here with him. There are close to five hundred people in the team and obviously not all of them can be here, so on behalf of all of us we would like to acknowledge, on behalf of the company what the team has been able to do. All five hundred of them. I would also like to ask Ravi Kant (Managing Director, Tata Motors Ltd.), Prakash Telang (Executive Director (Commercial Vehicles), Tata Motors Ltd.) and Rajiv Dube (President (Passenger Cars), Tata Motors Ltd.) to join me up here at this time.

Let me say something about the car. The cars you see, as you can, are four door, they will seat four to five persons, they are powered by a 33 horse power, 624 cc engine. In size, externally it is approximately 8% smaller, bumper to bumper, than the Maruti 800. But internally it is 21% larger in passenger space. Fuel economy in terms of mileage, it'll be around 20 kilometers per liter or approximately 50 miles a gallon.

As I said earlier, much has been said about emission and much has been said about congestion and safety. Let me address the emission and the safety issues. In emissions as I mention, the car has, in fact passed the full frontal crash test that is required in this country (India). But it is also been designed to pass the offset and the side crash which is required internationally. So that the car can, in fact, be sold internationally.

In terms of pollution, it today confirms to Bharat III and in fact today with this engine will indeed meet Euro IV which is not yet required in this country (India).

We decided we'd call it Nano because it connotes high technology and small size. So we stayed with the name.

Finally all of you have been conjecturing about the price. And since we commenced this exercise four years ago, we are all aware that there has been a very steep increase in input prices of steel, tires and various and sundry other inputs. Bearing all this in mind, I would like to announce today that the standard car will in fact have a dealer price of One Lakh Only (100,000 INR), VAT and transport being extra. Now having said that, I just want to say that that is because a promise is a promise and that's what we would like to leave you with.

Chithra KarunaKaran
Ethical Democracy As Lived Practice