TATA NANO

Introduction
Tata Nano car is actually a rear-engined, four passenger city car built by Tata Motors, aimed primarily at the Indian market. The Tata Nano car which is often called as the peoples car was launched on March 23, 2009. The sales of the Tata Nano car kick-started from July 2009. Priced at a mere Rs.1, 15,000 which is equivalent to $2,421, the Tata Nano car has been a hit amongst the middle class till date, for whom the car was quite affordable. The introduction of the Tata Nano car received attention mainly because of two specific reasons. The car being priced relatively at a lower rate than other cars drew attention from the commoners. The other reason was the prolonged Singur (West Bengal) agitation, which the company Tata Motors had to face while setting up a factory in the area. Charges of land acquisition were drafted against them by the farmers and the company forcefully had to stop putting up the plant in Singur as a result of chaos and disturbance in the area. The introduction of the Tata Nano car was entirely planned out and designed by the chairman of the Tata Motors, Mr. Ratan Tata. Although several speculations regarding the Tato Nano car being a four-wheeled auto-rickshaw with no ample space or whatsoever did rounds in the media, still the Tata Nano car proved itself of being a properly built car. The Tata Nano car possesses extensive cost-cutting features that include a single wind screen wiper instead of a double one, it has no power steering, and the door opener was simplified et.al.

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After removing its base from Singur, Tata Motors had decided to set up a plant in Gujarat. No wonder the arrival of the Tata Nano car has stirred up a lot of news for a couple of years, but yes, the Tata Nano car is launched and is already gathering mixed reviews from the buyers.

Research objectives

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o To study about how a new product- Tata Nano was developed based on marketing theory of new product development. o To study about what made possible for Tata to develop and produce a car for just Rs. One lakh. o To study the objectives and target customers of Tatas one lakh car o To study on customers buying behavior and preferences and views about Tata Nano by various methods of data collection. o To study and compare between Tata Nano and Maruti 800 Limitation of Study: o There were lots of difficulties in getting the data. But utmost care was taken to maintain the quality aspect in the data. o The study is limited to time and cost Research Methodology: o Research methodology deals with the various methods of research. The purpose of the research methodology is to describe the research procedure used in the research. o Research methodology helps in carrying out the project report in by analyzing the various research findings collected through the data collection methods.

New Product development

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Meaning of Product E.g.:- Milk, Computer, Shoes, Service after sales, Railway services etc. a product can be divided into two categories: o o Tangible goods Intangible goods

Tangible products are known as goods that can be touched, felt and seen. E.g.:- computer, mobile phone etc Intangible products are known as services that cannot be touched and seen as the customer can feel and experience only after utilizing it. E.g.:- service after sales A product can be considered new under the following situations: New-to-the-world products New product lines Additions to existing product lines Improvements and revisions of existing products Repositioning Cost reductions

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Stages of New Product Development Before the introduction of a product into the market, it goes through several stages of development. These stages are known as stages of new product development. It includes the following: Idea Generation: Companies seek new ideas to enhance the performance of the existing products and to innovate new ideas. This stage is called idea generation stage. There are many sources for idea generation. It may be from customers, dealers etc. Employees throughout the company can also be a source of idea. Toyota claims that its employees submit two million ideas annually over 85% of which are implemented. Companies also find good ideas by researching competitors products and services. They can find out what the customers like or dislike about their competitors products. Ideas can also come from investors. External research, surveys industrial publications research and development etc. Idea Screening The main purpose of idea generation is to collect a larger number of ideas. However, not all ideas can be commercially viable. Therefore, the companies filter the less viable ideas with the help of systematic process. Companies can use various parameters to screen the ideas such as market size, technical capabilities, potential competition etc.
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Addressing the following issues will also help the companies to analysis the attractiveness of ideas. Whether the product idea match the existing products of the company. The degree to which the new product can cannibalize the sale of the existing product. Companys ability to produce and market the product. Buying behavior and the probable changes in the environment. While screening the ideas, an organization may commit two types or errors. Drop error where the firm rejects a very good idea. Concept Testing And Development: All ideas that survive in the process of screening will be studied in details. They will be developed into mature products. At this stage, the idea is submitted for the external evaluation to get a feedback from the market. It helps a firm are organization to collect important information like customers initial reactions towards the product development. During this stage, new product idea is described in the form of one or more benefit that is then presented to a sample of potential customers for reactions. Marketing Strategy:

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Following a successful concept test, the new product manager will develop a preliminary strategy plan for introducing new product in the market. The plan consists of three parts. The first part describes the target market size, structure and behavior for the first few years. The second part outlines the planned price distribution strategy and marketing budget for the 1st year. The third part of marketing strategy plan describes the long run sales and profit goals and the marketing mix strategy over time.

Business Analyses. After management develops the product concept and market strategy, it can evaluate the business attractiveness. Business analyses are the first in-depth financial evaluation of new product to be developed. Here management needs to prepare sales cost and profit projections to determine whether they satisfy company objectives. If they do, then concept can move to the development stage. SOWT analysis will be conducted at this stage by the organization. following: Total sales estimation:These are the sum of estimated first- time sales, replacement sales and repeat sales. Its method depends upon whether the product is one time purchase(an engagement It also includes the

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ring), an infrequently purchased products like toaster, auto mobile etc. or a frequently purchased products like consumer and industrial non durables. Estimation costs and profits. The R&D, manufacturing, marketing and financial departments estimates the costs. The profitability of the new product is estimated through various financial tools. The simplest technique is the breakeven analysis in which the management estimates how many units of the product the company would have to sell to break even with the given price and cost structure. If the management believes that sales could easily reach the break even number, it is likely to move the project into development stage.

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Product Development
In this stage, detailed technical analysis is conducted to know whether the product produced at costs is low enough to make the final price attractive to the customer. Here a working model or a prototype is developed to disclose all tangible and intangible attributes of the product. A product protocol is prepared which is a detailed downiest containing the important attributes that are expected in the product. Once the protocol has been developed, it is handed over to the research the development department to develop the prototype of the product. Test Marketing: The test marketing is the stage where the product is introduced in a few selected cities. During this stage, the company has to fate the following expense: High advertisement High manufacturing cost. High distribution cost etc. For testing the product, marketer needs to make the decision on the following issues. The no. of cities in which the product is to be tested.
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Geographic location of the cities. Time to carry ort test marketing Through this exercise, company can know the customer response, feedback, suggestions, complaints and any other changes required to be done for product modification. After successfully laughing the product in selected cities the company launches the new product in all other cities. There are certain methods of product testing:Alpha Testing: In this method, a group of target audience is selected from the employees of the company. Beta Testing: It is carried out at the customers site. Generally, it is applicable for industrial products where the customization takes place. Gamma Testing: It is carried out on a long term basis where the customers uses the product extensively and gives response after a long period of time. Say six months. Commercialization: The results of the test marketing help marketers to decide the changes that are needed in the marketing mix before entering into the market. It also helps the

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marketer to decide the amount of production distribution strategy, selling efforts and other issue like providing guarantees, service after sales etc. the product enters the market during the commercialization stage.

Introduction To Tata Motors

o

Tata Motors was established in 1945, when the

company began making trains.

o

It has its manufacturing base in Jamshedpur, Lucknow,

and Pune and soon one more plant is going too established at Singur, West Bengal.
o

Product

Manufactured

Passenger

Cars

and

commercial vehicle o o o
o o

Installed Capacity - 350,000-400,000 vehicles a year Investment - Rs 2,500 crore (Rs 25 billion) Turnover - $21.9 billion (Rs 967,229 million) Employees - 2,46,000/22001 Tata Motors had created the wealth Rs. 320 billion

during 2001-2006 and stood among top 10 wealth creators in India. New Product Development And Nano

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As seen before, A product can be considered new under the following situations: New-to-the-world products New product lines Additions to existing product lines Improvements and revisions of existing products Repositioning Cost reductions As far as Nano is concerned, it falls into new to the world products in the context that it has made a history for the cheapest car ever made without compromising on quality. I.e. best way value analysis. It can also be considered as new product in the since of cost reduction as its the first time in the history that such a cheap car is produced. The story of the Nano is not confined to its impact on the auto industry. It's a tale that illuminates the India of todayan eager, ambitious nation with a combination of engineering talent, a desire for low costs and value. Idea Generation And Nano A dream is born Says, I observed families riding on two- wheelers -- the father driving the scooter, his young kid standing in front of him, his wife seated behind him holding a little

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baby. Add to that the slippery roads & Night time too. It is downright dangerous. It led me to wonder whether one could conceive of a safe, affordable, all-weather form of transport for such a family. So when Tata Motors needed someone to take charge of the company's most ambitious plan yet to build the world's cheapest car ever Ravi Kant, who by then had become the company's managing director, again turned to Wagh. Wagh remembers what he learned marketing the little truck. "People want to move from two-wheelers to four-wheelers," he says. "Today they can't afford it." More and more can, but Indian car buyers today represent a tiny slice of a potentially giant market India has just seven cars per 1,000 people. India's auto industry has grown an average of 12% for the past decade, but just 1.3 million passenger vehicles were sold in India in the fiscal year ending March 2006. That means a billion Indians buy about the same number of cars in a year as 300 million Americans buy in a month. If four wheels cost as little as two wheels, that could change fast. About 7 million scooters and motorcycles were sold in India last year, typically for prices between 30,000 rupees and 70,000 rupees, about $675 to $1,600. Tata is targeting a price of 100,000 rupees one lakh, in Indian terms of measurement or about $2,500 at current exchange rates, for its small car. That sounds impossibly cheap in the West but remains three times higher than India's annual per capita income. The average pay for factory workers at Tata Motors is just $5,500 a year. Idea screening The next step was the screening of idea. How is this dream possible? What should they make?
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A scooter with two extra wheels at the back for better stability? An Auto-rickshaw with four wheels? A three wheeled car like a closed auto- rickshaw?? A four wheeled car made of Engineering Plastics? A Four wheeled rural car? Rolled up Plastic curtains in place of windows? Openings like Auto rickshaws from the side A four wheeled open car with safety side bars? But the market wanted a car and if they build a peoples car it should be a car and not something that people would say, Ah! Thats just a scooter with four wheels or an auto-rickshaw with four wheels & not really a Car. Trying to build a car cheap enough for motorcycle buyers seems to make sense now but seemed crazy several years ago when Rattan Tata, longtime chairman of Tata Motors and scion of the nation's giant Tata Group conglomerate, first mentioned his dream of building a one-lakh car in 2003. "They are still saying it can't be done," he says, insisting that it can and will.

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Concept Testing And Developing

Before starting the project, Wagh did something no one at Tata Motors ever had: He talked to customers. The three-wheeler men inevitably insisted on a cheap, dependable truck that could go from village to market carrying, say, a ton of onions or potatoes, one night, as sunset approached, Wagh stuck with one rickshaw driver. He says, "I kept asking the question. Why? Why? Why do you want a fourwheeler?" Wagh remembered. Finally, he got the real answer. It turned out it wasn't really a problem of transportation of vegetables If I had a four-wheeler, I would have better marriage prospects in my village," the young man said. Drivers of three-wheelers are looked down upon in India. Wagh realized that four wheels had emotional, not just practical, appeal. Thus the new product was now to be developed.

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But what type of product? The car to cost Rs. 1 lakh on road. The car should be built on a different platform than conventional ones. It must be meeting all the safety and regulatory requirements. It has to be built on a scale which shall be more than double the earlier launches of similar products and the ramp up must be smooth. The car has to be designed so that it can be exported to other countries as the domestic demand may not materialize as per projections. The car must be a beacon for the Indian Automobile industry and prove to the world that we are capable to take any challenge and come out worthy winners. That quest to build the world's cheapest car hasn't ended. The Nano should be available this fall, but the mission began back in 2003, when Rattan Tata, chairman of Tata Motors and the $50 billion Tata conglomerate, set a challenge to build a "people's car". Tata gave an engineering team, led by 32-year-old star engineer Garish Wagh, three requirements for the new vehicle: It should be low-cost, adhere to regulatory requirements, and achieve performance targets such as fuel efficiency and acceleration capacity. The design team initially came up with a vehicle which had bars instead of doors and plastic flaps to keep out the monsoon rains. It was closer to a quadricycle than a car, and the first prototype, even a bigger engine, which boosted the power by nearly 20 per cent, was still dismal. "It was an embarrassment," says Wagh.
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But failure didnt stop them they quickly realized it was necessary to bring everyone on board, "else it leads to last-minute heartache and delays". Every morning, he would spend an hour or two on the floor of the Pune factory, insisting that everyone involveddesigners, manufacturing teams, and vendor development peoplebe there to accelerate decision-making and problem-solving. Over time, Wagh's team grew to comprise some 500 engineers, an impractically large group to gather on a daily basis. So instead, a core team of five engineers gathered every day at three pm to discuss the latest developments. Each engineer represented a different part of the car: engine and transmission, body, vehicle integration, safety and regulation, and industrial design. The body had to be changed because Ratan Tata, over six feet tall himself, wanted it to be easy for tall people to get in and out of the car. "Imagine the plight of the body designerhe went through hundreds of iterations, then at the last minute the car length was increased by 100 millimeters!" Wagh says. The attention to detail paid off: When the car rolled onto the dais at the Auto Show in New Delhi in January, and Ratan Tata stepped out of the driver's seat with ease, it made an immediate impact. What shook the automobile world most was the fact that the designers seem to have done the impossible: The sleek, sophisticated Nano doesn't look flimsy or inexpensive. If it had been an upgraded scooter on four wheels, Tata still would have been applauded for making a family of four safer on Indian roads. The Nano, however, affords both safety and status. "The innovation wasn't in technology; it was in a mindset change".

Details of Nano

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Specs: Engine: 624 cc / 33 bhp 4 doors, 5 seater (and yes 4 Wheeled too) Rear Engine Weight: 600 kgs Mileage - 22-23 km/liter Variants: Standard Deluxe (with AC) Future: Diesel Variant Exports outside India or assembly plants outside Comparison 8% less in length (bumper to bumper) with respect to Maruti 800 21% more in inner space with respect to Maruti 800 Looks: Front side looks more like Matiz (or Spark as we now call it) back side looks more like India with those long tail lights. Insight: People often criticize something that is making waves everywhere. This has also been the case with Tata Nano. Competitors, safety regulators, environmentalists and most others conceived the problems that India will face, when such a car is available, much before the actual launch of the car. This will result into:

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OLD GENERATION

NEW GENERATION

SWOT Analysis
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STRENGTH Brand name TATA Cost price low Fuel efficient Safe

WEAKNES Low power Not a status symbol Delay in manufacturing Limited features

OPPORTUNITIES

Large market for selling Awareness in the market First car in low range Can hit in global market THREATS Company rival Not sure to hit in rural and semi-urban areas

Business Analysis
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Cost :

Since the car had to be built within a cost of Rs. 1 Lac, no conventional design would work as the costs shall be higher and so the entire car has to be redesigned. What makes Nano so less expensive can be well understood from the following diagram:-

The design has to question the need of each and every component from the point of view of its necessity of existence and also the minimum requirements of its functionality. Value Engineering concepts have to be deployed to finalize the minimum requirements.

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Disruptive Technology: Is a Technology that brings radical change by introducing new ways of doing things usually at a Technology that is: Significantly cheaper than existing Technology. Is much higher performing? Has greater functionality and Is more convenient to Use. Brings to market a totally different Value proposition than the one available and can change the Paradigm about a product. The Guiding factor was that the cost has to be minimized for each component yet maintaining its basic functionality. The Alternatives are: Reduce Consumption of Material being used. Alternate Suppliers to get same material at fewer prices. Use alternate materials. Eliminate use of Material. Eliminate a process Or a Combination of the above. The design was outsourced to Italy's Institute of Development in Automotive Engineering, but Tata himself ordered changes along the way. Most recently he vetoed the design of the windshield wipers. His solution: a single wiper instead of two, giving the car a cleaner look. THE COST REDUCTION PARADIGM Value Engineering Alternatives:

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The target was very clearly defined that within the given cost structure of 1 Lac all the components have to be allocated a maximum price and the same had to be achieved using the available alternatives. The Guiding factor was that the tax structure, on materials and manufacturing, must support the final cost of Rs. 1 Lac The Decisions were: Establish factory in a tax free zone. Get the tax advantages on infrastructure development. Get the suppliers to establish base near the factory. Get special concessions from State Govt. In short select a manufacturing location where all the advantages could be achieved. In short select a manufacturing location where all the advantages could be achieved. Total sales estimation Now the question was, how much to produce It was estimated that the demand for the peoples car shall be at least twice the demand for Maruti 800, the lowest end car. Initial projections were at about 500 K cars per year. The basic reason was the conviction that the target price shall redefine the 4 - wheeler segment.

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The price decision of Rs 1 lakh is definitely going to make a lot many people transit to 4-wheeler fold and that shall explode the demand. F only 10% customers of 9 Million two wheeler market transit to 4-wheelers it shall amount to 50% of the passenger car market share. It was decided to set up plants with 5 lacs cars per annum capacity and ramp the same up in stages, in line with increase in market demand. Product Development And finally the product was developed with the following features. Engine Capacity Bosch 624 c.c. twin cylinder Low capacity, Lighter, sufficient with better Power Rear Engine to reduce the transmission length using a balancer shaft. 4 Speed Manual Gear Box All Aluminum Engine Higher thermal conductivity than cast iron, Lighter and so better mileage Engine Management System by Bosch Superb control over emission and smooth acceleration. Dimensions L: 3.1m, W: 1.5m, H: 1.6m Less length but more inner cabin space due to height. Comfortable leg room. Independent Front & Rear Suspension McPherson Strut in Front & Coil spring & trailing arm in rear.

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Better ride than Maruti 800. Single piece ribbed steel body with safety features such as crumple zones, intrusion resistant doors, seat belts, strong seats & anchorages. Safety requirements are adequately met. Single Wiper in place of two. Cost effective yet functionality is met Tube less Tires Instrument console in the centre Elegant to look at and can be used both in Left Hand & Right hand version. The list goes on and on. The Final verdict. THE CAR COSTS Rs 1 lac Test Marketing and Commercialization Nano is soon going to launch by the end of April. It will be commercialized in whole of India. It is mostly targeted to the middle class and lower middle class people. The effects of Nano and its commercialization will be soon known after it comes into the market.

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Some myths about Nano

When Nano was introduced, it surprised everyone. It had so many features but the cost was as low as Rs. 1 lakh. This was really amazing. Due to this, many competitors, governments and others opposed Nano. Moreover, its not a new thing that whenever a new concept is developed, people oppose. They find more limitations then seeing the benefits. Following are some myths about Nano. But these are then proved to be wrong. Myth no 1 Nano is an unsafe car The car has an all steel body. It meets the mandatory Frontal Impact requirements. It also meets the Side Impact requirements although they are not mandatory in India. Myth no 2 Nano will greatly increase the Pollution Level The car is Bharat IV and Euro IV compliant although these norms, which are stricter than the present Bharat III norms, are yet to be introduced. It has lower carbon footprint, 20 mg / Km of Carbon Dioxide emission as compared to 45mg / Km, emitted by most of the two wheelers.

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Its Multi Port Fuel Injection system is controlled by an intelligent Bosch Engine Management system which controls the combustion cycle precisely to ensure compliance to all emission norms.

Myth no 3 Nano will struggle to perform Although the car has 33 bops as the maximum horsepower it has a low kerb weight of 550 Kg and so has a higher power-to weight ratio when compared to many existing cars running on Indian roads. The car has a matching acceleration to Maruti 800 and also a good top speed. Although the manufacturers have estimated 90 Kms as the maximum speed the car can go up to 105 Kms per hour top speed. Myth no 4 Nano has very little leg room Although the car is 8% smaller than Maruti 800 it has lot of extra leg room at front as there is no engine compartment. This also leaves sufficient knee room at the rear. The car has a tall boy type design so there is lot of head space and also enough Shoulder room. The mono volume design and the wheels having been put at the corners have freed up lot of in- cabin space and although the car may be registered as a four-setter, three slim adults can sit comfortably at the rear. Myth no 5 Cheap means Uncomfortable
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More comfortable than some of the cars selling at even twice the price. Leaves sufficient knee room at the rear. Easy to get in & out of the car because of perfect seat height from the ground. Suspension systems are good and the trailing arms with coil springs are not found in cheap cars. Rear. Myth no 6 Its very difficult for a rear - engine car to work. Rear engines work in many cheap as well as expensive cars. Auto-rickshaws at one end and Formula One cars on the other extreme all use rear engines. Maruti Omni too has a rear engine, under the seat and no one has been burnt due to that. Cooling is easier in Nano as compared to some vans and there are the air ducts on either side behind the edge of the doors, which allow air to seep in for both cooling & for intake. Myth no 7 There is a shortage of storage space. There is some storage space although not much. The rear seat with parcel shelf folds to allow accommodating a large suitcase. Small articles can be placed under the bonnet also. Myth no 8 Cutting Corners is evident everywhere Cost cutting is done by smart designing rather than taking out the essentials.
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One wiper has been taken out but the functionality is intact. Wind shield washer fluid jets are mounted on the wiper itself rather than the body. Wheels are held by three bolts instead of four.

Impasse at westbengal

The slogans on signs in Singur -- the West Bengal site where Tata Motors plans to manufacture the Nano, its $2,500 small car -- say it all. Most are in Bengali, but the few in English capture the overriding sentiment. "Nano No No," reads one. "Atta not Tata," says another. Atta, which is flour made from whole wheat, refers to the core question of the dispute, Should fertile farmland be requisitioned for industrial purposes? Does food get priority or factories? According to faculty at Wharton and the Indian School of Business, the impasse over the plant in West Bengal threatens to increase the Nano's production costs and could delay its entry into the domestic market. Moreover, they say, it will likely impact investment in the region, as outside companies shy away from antiquated land laws and political disruption. As things stand today, work has been suspended at the Nano plant. Tata has closed shop because, as chairman Ratan Tata told journalists in Kolkata (formerly Calcutta): "I can't bring our managers and their families to West Bengal if they're

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going to be beaten, if there is going to be violence constantly, if their children are afraid to go to school." Tata has faced trouble ever since it got the go-ahead for the plant on May 18, 2006. Just a week later, there were angry demonstrations by farmers objecting to the "forcible" acquisition of land for the project. The Trinamool Congress, a political party led by Mamata Banerjee, who has been spearheading the agitation against the Left-ruled West Bengal government and the plant, even staged a hunger strike. Matters came to a head recently, with the Nano due to roll out in October this year. On August 24, the Trinamool Congress started an indefinite protest at the factory gates and stopped all access to vehicles. On September 3, Tata suspended work and said it was evaluating alternative sites outside West Bengal. Since then, the Trinamool Congress has called off the protest on the basis of unspecified promises by the state government. Talks have been held between the two sides, though Tata Motors has been left out of the discussion. In a statement on September 8, the Tata Group said: "Tata Motors is distressed at the limited clarity on the outcome of the discussions between the West Bengal state government and the representatives of the agitators in Singur. In view of the same, Tata Motors is obliged to continue the suspension of construction and commissioning work at the Nano plant. We will review our stated position only if we are satisfied that the viability of the project is not being impinged, the integral nature of the mother plant and our ancillary units are being maintained, and all stakeholders are committed to develop a long-term congenial environment for smooth operations of the plant in Singur."

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Jitendra Singh, a Wharton management professor who is currently dean of the Nanyang Business School in Singapore, characterizes the standoff in Singur as "essentially political blackmail." He says the issue is broader than how it will impact Tata's ability to deliver a $2,500 car. "While India has made a great deal of progress and the economy is doing well, the weak leg continues to be its political system," he says. There may yet be a face-saving formula worked out and Tata could resume operations. But it is clear that trouble will strike again. The first Nano will roll out of some other existing Tata Motors location. The plant in Singur, even if it goes through, will play second fiddle. Some are more optimistic. "I don't think that the Tatas will actually pull out unless the situation worsens a lot," says Rajesh Chakrabarti, assistant professor of finance, at the Hyderabad-based Indian School of Business (ISB). "I think they will find a solution." Paying a Price If Tata Motors does pull out of Singur, it could cause the project cost to increase and therefore impact the company's ability to produce a low-cost car. But other factors have also changed in the external environment, points out John Paul MacDuffie, Wharton management professor and co-director of its International Motor Vehicle Program. "A lot of things have happened to threaten the $2,500 price point," he says. "Commodity prices have been going through the roof, and there are other cost increases that are going to affect everybody. The real question is: What cost increases are idiosyncratic and distinctive only to Tata that might erode any kind of advantage they have?"

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Singh agrees that the current crisis will eventually show up in the cost of the car. But he says he wouldn't be surprised if Tata pulls out. "Of course, it will cost them to do that, but better to do it now than to be open to blackmail in the future. There will be a one-time relocation cost, but I'm sure he will find another state willing to take the project." MacDuffie believes the new costs brought on by the Singur standoff could compel Tata to take a second look at its competitive edge in the domestic Indian market. "There may be some Maruti products at the low end of the market that will continue to be very strong price competitors because they have such high volume and they have long-established facilities, which are probably all paid for in India," he says. Maruti will be the one to contend with as Tata tries to rein in the Nano's costs. "Suzuki, Maruti's parent and the source of the design, is renowned in Japan for having extremely cheap designs and extremely cheap tooling, and they are very effective in running on the edge of what keeps things from breaking down in order to [have] a cost competitive position in the Japanese market," says MacDuffie. "That know-how will make Maruti a formidable competitor at the low end of the market." MacDuffie suggests that Tata needs to focus on limiting the Singur damage to Nano's costs even as it fights competition on other fronts. "If they can keep these idiosyncratic cost increases from becoming too large and avoid too much delay, and also avoid too much publicity that tarnishes them in a reputational sense, they should be in a good position for the Nano to have a large impact first in India," he says.

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But the Singur problem seems to have no easy resolution. Tata has been given 997 acres of land, acquired by the state government under the Land Acquisition Act of 1894. (This was challenged, but the courts have ruled that the acquisition is legal.) Of this, some 645 acres is for the mother plant and another 290 for a vendor park which will host various ancillary units for the Nano. The remaining 60-odd acres are with some state government agencies. The Trinamool Congress and its partners were, in the beginning, opposed to the entire acquisition. Today, it has no problems with the mother plant. But it wants the vendor park moved elsewhere and the land returned to the farmers. Tata, on the other hand, says that the economics of the project won't work if the ancillary units are moved out. The Rs. 100,000 Nano would end up with a heftier price tag. "As part of the proposed integrated auto cluster in Singur, about 60 key auto ancillary suppliers to the Nano have taken possession of land in the integrated complex and have invested about $110 million towards construction of their plants and procurement of their equipment and machinery," says a Tata statement. "The project's auto ancillary partners, who had commenced work at their respective plants in Singur, were also constrained to suspend work in line with Tata Motors' decision." Tata has also made significant investments. But Ratan Tata is prepared to write them off. "If anybody is under the impression that because we have made this large investment of about Rs. 15,000 million ($328 million), we will not move, then they are wrong," he told the Kolkata Press conference. Political Baggage

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Speaking to a Tata Group magazine last year, Ratan Tata elaborated on how the Singur problem evolved. "I think Singur has been an exceptionally unfortunate and unique situation," he said. "The problems there are mainly political -- between two political parties -- and we've been caught in the crossfire. The land acquisition was not our doing; the West Bengal government managed that. There was no problem when it was offered to us or when we accepted. Singur becoming an issue was an out-of-the-blue happening. The solution lies in sitting down with the state government and talking about compensation, retraining, reemployment and the rest, with Tata Motors being made a party to this activity. Instead, what we've got is a chorus of negatives, loose talk of returning the land, women and children blocking roads, and guns, bullets and firings." The state government has offered to provide 400 fertile acres elsewhere in the state to the agitating farmers, but there are no takers. Banerjee, herself, believes she is on a winning horse politically and is not prepared to make any concessions. In 2007, she had witnessed the popular appeal of the land issue when trouble broke out over a proposal to set up a chemical hub over 14,000 acres in Nandigram, a rural area 70 km from state capital Kolkata. This was to be situated in a special economic zone (SEZ), a 50:50 joint venture between the state-owned West Bengal Industrial Development Corporation and the Salim Group of Indonesia. It was once again Banerjee's Trinamool Congress that campaiged against land acquisition. The protesting villagers and farmers took over administration of the area, under the banner of the Bhumi Uchhed Pratirodh Committee (Committee against Land Evictions). On March 14, 2007, some 4,000 armed policemen were ordered to move in. At least 14 people died in clash. The site of the proposed chemical hub has since been moved from Nandigram. Meanwhile, in subsequent

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elections to the zilla parishad (a district-level governing body), the Left was badly beaten by the Trinamool -- the first time in 30-plus years that the Marxists have lost in the region. "All players are trying to revise their understanding of the ground realities based on what they have witnessed in the past few weeks," says Chakrabarti of ISB. "It is a political-economy kind of problem." He adds, however, that part of it is also pure saber-rattling. "The companies are just taking a stance and putting pressure on the political players because they know that the politicians want their investments." There have been no corporate casualties as yet, but there are some indicators of trouble. "We are yet to take any decision," says Infosys director of human resources T.V. Mohandas Pai. "We will have to relook and rethink because we are concerned about the safety of our employees." Infosys, the country's second-largest information technology company, has been planning to invest $110 million on a software development park near Kolkata. It has yet to receive the 80 acres promised by the state. The Times of India reports that another IT giant -- Satyam -has decided to pull out of a special economic zone (SEZ) it was planning to set up in West Bengal. "What impact this episode has on other corporate investments into West Bengal depends on what stage of finalization their plans are in. But it will certainly be a dampener on new players coming into the state, especially because the controversy has been [going on] for such a long time and has also gotten so much publicity," says Chakrabarti. "At the same time, one also needs to realize that not all investments require large amounts of land. Also, there are other players who have done their own land acquisition without getting the government involved. It is only

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when the industrial players try to cut a deal with the ruling government and the opposition manages to launch a strong enough protest that all hell breaks loose."

An Impact on Investments India Inc. is worried about the impact on investment flows. According to a statement by Reliance Industries chairman Mukesh Ambani: "A fear... is being created to slow down certain projects of national importance. The Nano project is a unique and innovative initiative which will establish India's position as a small car hub. Indian Industry must be encouraged to make such large investments in order to build the country's competitiveness as well as support job creation." "The Nano car is a statement of the coming of age of Indian manufacturing, and places India's innovation skills high up on the world map," says Jamshyd Godrej, chairman and managing director of Godrej & Boyce and past president of the Confederation of Indian Industry (CII). "It is, therefore, very unfortunate that the entire project is facing a political situation which it does not warrant." Nano's moving out would be a setback for not just West Bengal but also the entire country, says Godrej. Adds CII chief mentor Tarun Das: "The adverse impact is not restricted to Singur or West Bengal but will resonate in India's global image." "Any delay will jeopardize the general investment climate in the country by undermining the confidence of foreign investors in the present difficult times, when a severe recession is threatening the global economy," says Indian Merchants Chamber president M.N. Chaini.

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Even Union Commerce and Industry Minister Kamal Nath is concerned about the impact on investor confidence, particularly in West Bengal. "We have to attract investments," he says. "Incidents and such events obviously shake the confidence of the investor, especially in the particular state in which it is." India hopes to get $40 billion in foreign direct investment (FDI) this year; in the January-June period, the actual FDI inflow was $20 billion. Will the Nano effect impact this? "While the Singur issue has made headlines the world over, I don't think this will be a very major issue at an international level," says Chakrabarti. "Many other states have invited the Tatas to set up the Nano plant." Multiplier Effect Will the Nano's problems hurt the Indian automobile industry and its ability to fuel economic growth elsewhere as in the U.S. or other developed economies? MacDuffie feels that while the two situations are not strictly comparable, there could be lessons for India in the area of infrastructure investments. "A lot of what made that multiplier effect possible in the U.S. post-war economy was the decision by the federal government and the willingness to use some of the riches of those post-war years to invest very heavily in infrastructure. That allowed the car to have a transformative impact on a lot of the economy, on where people lived and on how they spent their leisure time and the like," he says. MacDuffie points to the construction of the U.S. interstate highway system as one of the most visible manifestations, adding that many other public investments increased the economic feasibility of dispersed growth into the suburbs possible. "There were deliberate choices to invest in infrastructure for the automobile rather

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than for mass transit and railroads and such -- of course with the auto companies trying to influence that. If the government of India really wanted to gain that kind of multiplier effect they would need to be willing to make similar investments in infrastructure." Even as the controversy was at its height, non-resident Indian (NRI) and steel baron L.N. Mittal was holding a meeting of the company's top managers in Delhi. "One can face this kind of problem in any other country," said Mittal of Singur. "But the country as a whole is interested in growing. [Singur] does not give us nightmares. And we will not revisit our plan in India because of the Singur episode." Mittal admitted, however, that his projects were facing some roadblocks. He plans to set up two integrated steels plants in the states of Orissa and Jharkhand. But land acquisition, mining permissions and other approvals have kept the projects on the drawing board. The cost of the plants, announced in 2005 and 2006, has ballooned from $20 billion to $30 billion. "The more the delays, the more the cost overruns," says Mittal. Another NRI, Vedanta Resources chief Anil Agarwal, has also expressed his confidence in India. He has just announced a $9.8 billion global investment plan; of this, $7.6 billion is earmarked for India. Antiquated Land Laws But even as the world keeps knocking at India's doors unfazed by Singur, there is a larger question that the controversy has given rise to: the whole issue of land acquisition. "We certainly need to revisit the land acquisition law," says

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Chakrabarti. "It is very antiquated particularly because it does not take into account major projects that change the value of land dramatically. The current law still works fine if one wants to build a road or railway that needs just a small stretch of land, but it does not fit the current situation of acquiring land for industrial purposes." The law dates back to 1894; although there have been amendments, they have clearly been inadequate. Companies and governments have taken their own route, depending on circumstances. The Jindal Group, for instance, is setting up a steel plant in Salboni in West Bengal. It has paid compensation up front. It has also offered free shares in the new company to all the people dispossessed of their land. Sajjan Jindal, vice-chairman and managing director of JSW Steel, says that had he been in Ratan Tata's shoes, he would have offered the recalcitrant farmers double their holdings nearby. But Jindal had it relatively easy. At Salboni, some 90% of the 4,800 acres required was already with the state government. It was possible to be more than generous with the other owners. Yet, despite their very high standards and ethics, the Tatas seem to have been embroiled in more than their fair share of land acquisition rows. Among projects in suspended animation or abandoned are a $550 million titanium project in Tuticorin in Tamil Nadu, several projects in Orissa steered by Tata Steel, and a port in the same state in partnership with engineering giant Larsen & Toubro. At Kalina Nagar in Orissa, where a $3.4 billion steel plant has been planned, there were violent clashes between the police and tribals. Some 14 tribals were killed in police firing in January 2006. (Incidentally, in July of this year, the Tatas also pulled out of four major projects in Bangladesh, which borders West Bengal. The $4 billion
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plan had made no progress since proposed in 2004.) For the Tata Group, the sun is setting in the east. MacDuffie recalls another such crisis in Brazil in the mid-1990s, when the rules of the game suddenly changed for the automobile industry. Encouraged by strong economic growth at the time, the Brazilian government offered favorable tax treatment to small cars with engines below a certain size. "Suddenly, that part of the market just took off," he says. "All of these multinational companies came flooding in to build capacity in Brazil." According to MacDuffie, a wave of optimism ran across the global automobile industry that Brazil would go on to offer generous government subsidies to open new plants. The unions too were willing to be "somewhat flexible in allowing innovative work arrangements," he recalls. "Suddenly there were multinationals that were trying out innovative production concepts in Brazil that they hadn't ever tried in their home countries. Volkswagen opened what they called a modular factory and General Motors followed suit with something similar." All that enthusiasm was short-lived, and the Brazilian government withdrew those incentives. Havoc followed. "In a very short period of time, lots of companies had all these unused capacities," says MacDuffie, adding that the momentum was such that the investments kept pouring in even after the favorable market conditions shifted. "They just couldn't shift gears quickly enough to withdraw and the consequences were paid later." Among the casualties in Brazil was a joint venture Chrysler and BMW had formed to build an engine plant, MacDuffie notes. "That got started late, and it just

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absolutely never got off the ground and eventually it was closed and all the equipment was sold to a Chinese firm." In India, other business houses are also facing unexpected changes in the playing field after making initial investments in projects. South Korean Pohang Steel's $10 billion steel plant at Jagatsinghpur has run aground over acquisition of forestland. Goa has scrapped all the SEZs -- 15 had been planned -- after agitators against the takeover of farm and forest land threatened to target tourists, the lifeblood of the state. The same scene is being played out in many parts of the country. In early September, villagers in Potka (Jharkhand) humiliated and publicly paraded surveyors of Bhushan Steel & Power. The company wants 3,400 acres for a proposed steel and thermal power project. "The crisis faced by the Nano project will certainly lead to major problems with other mega projects, like the $2.7 billion Nandagudi SEZ in Karnataka, the $6.6 billion Raigad SEZ in Maharashtra, the $2.6 billion Dadri (power project being implemented by Anil Ambani's Reliance Energy) in Uttar Pradesh, the $8.7 billion Gurgaon-Jhajjar (gas pipeline project) in Haryana, and the $8.8 billion (ArcelorMittal) Keonjhar project in Orissa. India at this stage can ill-afford such a loss," says Chaini of IMC. There are no easy answers. In Maharashtra, at the Reliance SEZ project in Raigad district, a referendum is being conducted in 22 villages. Farmers will be voting on whether to give up their land. Reliance wants 25,000 acres for this mammoth project. The polling is a state government initiative; as with the Tatas at Singur, Reliance has been kept out of the loop.

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Reliance has been negotiating with the farmers on its own, unlike at Singur where the state government is doing the job. As with Singur, one of the issues is compensation. Reliance is offering Rs. 1 million ($21,900) per acre; the farmers say the land is worth four times as much. In Singur, farmers were paid $18,600 per acre of single-crop land and $26,250 for double-crop land. That was a premium, to-the-market rate. But, with the Nano plant making progress, the rate shot up to $87,500 per acre. The farmers feel they have been taken for a ride. Every project that involves land acquisition will, going forward, most likely face resistance; farmers will hold out for a better deal. In Singur, only 1,200 farmers out of 12,500 with less than 300 acres have not accepted the compensation. According to Jindal of JSW, this is the reason dispossessed farmers should be made shareholders in the project. Tata has offered jobs and training, but that is clearly not enough. The Singur controversy continues, and agitation is likely to resume. The Economic Times, meanwhile, contends that even the Leftists now feel that they are better off without the Nano. If they give in to Banerjee's demands, they will -as in Nandigram -- lose seats to the Trinamool Congress in the coming general elections. On the other hand, if they sacrifice the Nano, they can blame the party for any setback to the state's industrialization efforts. Whatever the rhetoric might be, new jobs will only come from factories, not farms. "Whether Tata stays or goes, both will be favorable for us politically," says West Bengal transportation minister Subhas Chakraborty. "If Tata stays, we take the credit and if they pull out, we will blame the Trinamool."

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Impasse Effecting Tackled

Press Interview Conducted by Times of India:TOI: It must be a relief for you that you have finally found a place for your plant. Tata: It is not a sense of relief but satisfaction that it is all settled, that we are not orphans looking for a home. I think its a continuing process. We left one place and have come to another. But we will look forward to the new location with a great deal of enthusiasm because, hopefully, we will have an environment where we can do what we set out to do, which is, not just manufacture a car but be a good corporate citizen in the process. TOI: Far from your project being an orphan without a home, states were falling over each other to offer you great villas. What was special about Gujarats offer? What clinched it for the state? Tata: I think what made a difference was the fact that Gujarat has been able to define the land and give us the possession. Land is the main thing that takes much time. Gujarat has done it in an unbelievably fast manner and given all approvals and permissions with great speed. You know if it were possible to transport or move the plant in a day we could have been in business the next day at this location in Gujarat. But we are not dealing with something that can be moved in a day. TOI: How long it has taken to seal the deal? Tata: I was not directly involved in the process. We will have to ask Ravi Kant (Tata Motors MD).

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Ravi Kant: It took a few days. TOI: What would a few days mean? Ravi Kant: I would say about 10 days. TOI: When did you finally decide that it would be Gujarat? Tata: We finally decided last night. Let me say the entire process started when problems started growing in Singur. We had offer letters from many CMs who knew that we had problems in West Bengal. As soon as we made the announcement, I guess it was on August 22 when I made the announcement that we would move if the situation did not improve, we had letters from four or five states and we responded to each of the letters. I think most of us were travelling at that time. When we came back, we started picking up the letters and actually talking to the states about land land being the main issue. And so I think probably sometime in September, we started looking at land, studying what these states had to offer etc. Indeed, we had to look for an insurance policy. It was not an emergency from our side until it came very close to saying we were going to move from Singur. And then it became very urgent to settle something else fast. Ravi has been running around from one state to another. It was important that one team travelled from one state to another so that they can compare. The chief minister of Gujarat moved very fast. Gujarat enjoys the reputation of being an investor-friendly state. So we decided this was really the place where we have everything in order. With all other states, despite all their good intentions, there were many things yet to be settled. So we decided to move forward with Gujarat and everything was put in proper place.

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TOI: Will the Sanand plant be the mother plant? Tata: Yes, this is the mother plant. TOI: At the last Vibrant Gujarat summit in 2007, you said You are stupid if you are not in Gujarat. What took you so long to come here? Tata: We were in Gujarat even at that time as we have Tata Chemicals here. But we didnt talk of this project at that time, although I think Mr Modi told me jokingly, You are having trouble there. You come here and I will give you everything. Now, we are here, as luck would have it. TOI: Will you be able to deliver the Nano on time despite the Singur setback? Will the initial production of the car come from your plants at Pune and Pantnagar? Tata: Yes. We already have a makeshift operation in place. It is important to tell the world that in spite of all that has happened we will bring out the Nano within the same window (the last quarter of this year). TOI: What made you go to West Bengal in the first place? Buddhadeb Bhattacharjee? Tata: Did you say Mamata? (Laughs) Yes, it was Mr Buddhadeb Bhattacharjee. I have known him literally from the day he took over as chief minister from Jyoti Basu. We were at that time with the Haldia Petrochemicals Complex and because we had a problem, not with the state government, but with Purnendu Sen, we withdrew. At that time, I met Mr Bhattacharjee and was extremely impressed with his sincerity. And that sincerity has been there throughout. He told me that I should not withdraw and I told him we must but we would come back with a bigger investment to West Bengal because I believe he was doing the right thing. Then

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one day when we were inaugurating the cancer hospital in Kolkata he said why you dont bring your automotive project to West Bengal. I told him the incentives you have will not match with what other states are offering. And both he and Nirupam Sen (industry minister) set themselves the task of meeting what was needed. To be honest, he first offered us land at Kharagpur. But then that was far from Kolkata. I told him that if we wanted the project to be showcased to the world as a world-class enterprise, we should have it at a location where we could bring in our best people, give them the best schools, best colleges etc. In deference to my wish, he showed several plots out of which we found Singur most suitable. Unfortunately, what followed was something unexpected while we had something wonderful going. It would have brought investments to a part of a country which has been neglected. It was a forerunner of future investments in that part of the country. TOI: What is the loss to the Nano project because of time overrun? Tata: First of all, all the equipment will come good. So there is no loss on equipment. One may ask what have you left behind and how much of it is totally wasted. You can retrieve a fair amount of the fixed assets that you may have and relocate it. It is our view that in terms of the current year we will not have to reflect any appreciable loss in our books. We have also not discussed with the state government what we would do with the land because its still leased to us. The state government wants us to look at other projects, which we have agreed to do. We just said that we will do it if the environment is conducive, otherwise we will not. So its not that we have walked out of West Bengal and left a crater or a barren piece of land behind.

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TOI: Gujarat has not been known to offer special incentives to industry. What was your experience? Tata: I think as far as we are concerned whatever we needed and was getting in West Bengal, it has been matched here. We are very pleased with the package and the speed with which, more than anything else, the package has been finalized. TOI: You are embarking on this project at a time when there is a global economic downturn. There is a liquidity crunch in the country too. What is your outlook regarding the global slowdown? How long do you think it will last? Tata: The global slowdown is affecting. It is percolating like a coffee machine down to industries that were not directly involved in the crisis. We ourselves here are facing a downtrend because of a tightness of credit. If it opens up, as there are some signs of doing, I think we will see some recovery. But the US and Europe are still reeling under writeoffs and writedowns and defaults, which is creating a kind of domino effect in other industries. And nobody seems to know where or when it will bottom out. TOI: Would you have an assessment of how long the slowdown might continue in India? Tata: No, I am not any more qualified than some others, although I think nobody knows how long it would be to bottom out. TOI: From Bengal to Gujarat, its the same country and two very different stories. What lessons do you draw as a senior business leader?

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Tata: I dont know how much problem that we faced was really that of the famers. I would just say that political opposition and political aspiration should always be subordinated to the better welfare of the country or the state. I dont know who would be the losers. You have talked about us being one of the losers in the sense of losses owing to time overruns. But I wonder what we have left behind. I am sure West Bengal can attract other investments and will attract other investments and we will be as supportive as we can in attracting new investments. But what about the people who had aspirations for jobs? The people who have made this issue of land-for-land will they prosper? Has anything been done to increase their yields, their income levels? Many of them are below subsistence levels they say so themselves. On the one hand, they talk of drinking their money away or not having money, and on the other hand, they talk of having their land back. I mean are we doing anything to improve their lot? These are the questions that come to my mind. So, political opposition should hold the country first and not themselves. Thats all I am saying. TOI: Mr. Tata, thank you.

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10 Facts That put Nano into the Limelight

The Peoples Car! It is indeed a deserving title bestowed upon Tata Nano, the worlds cheapest car introduced on the ramp recently. Link of this car with reputed Tata Empire of India itself states the glory of Nano, which has been in news for long. And there are more than few aspects of this car that certainly enforced the eyes of international audiences to stick to the grand launch of this super-affordable compact car of the year. If you have been fascinated by the view of this splendid road-runner, here are the 10 most interesting facts about this small wonder of the world.

What Triggered the Idea? Indian roads are often seen flooded with two-wheelers, carrying small families in the form of father, mother and two or three children. The idea of designing a safe drive for such families inspired Ratan Tata, the Chairman of Tata groups and the brain behind Nano, to introduce a compact car with five seats. The dream called
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Nano was put into reality to provide a safe and comfortable, yet economical car for those hailing from the lower segment of the middle class. But, the luxurious appearance of the car can certainly encourage even affluent individuals to get attracted towards it. Nano Whats in the Name? Whats the story behind this wonderful car being called Nano. In one of the Indian languages, Gujarati, the word translates to small. Rattan Tata, the uncrowned king of Tata Empire, belongs to Gujarat state of India and hence, the name has been adopted from the geniuss mother tongue. Another reason for choosing the name is to reflect the high technology performance of the car. Price Yes! We Need to Mention It is no more a hidden truth that Tata Nano enjoys the status of being the cheapest car in the world, but the discussion remains deficient without mentioning it once again. Available at the price of 100,000 Indian rupees, equivalent to $2,000, the car costs a little more than the famous auto-rickshaws spotted on the Indian roads. Hence, it definitely calls for a pleasing change expected to be seen on the roads of the country. Promising a Compact Drive Tata Nano perfectly fits the frame of Indian roads, which are famous for high traffic loads and traffic jams. Nano is expected to bring some improvement, because of its compact size and impressive dimensions to facilitate the person sitting on the driving seat. What we can expect is the introduction of more compact cars in the country, only after Nano confirms its success with time.
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Most Eagerly Awaited Car Tata Nano became the hot topic for Indian as well as the international media since the first news was released regarding the car. The people had been eagerly waiting for the car to make its debut and it became clear from the statistics measured from the official website of the car. While the official website of Tata Motors experienced 7.9 million hits on the day of Nano revelation, the Tata Nano website recorded 4 million hits in the time period of 30 hours. You can expect the heavy load these websites must have faced in all these months. Guinness Book Entrant of 2009 And as the 54th edition of prestigious Guinness Book of World Records 2009 was released, Tata Nano became successful in entering the list deservingly. Being a great performer, a compact vehicle and most importantly, the cheapest car of the world, Nano was righteously endowed with this honor. Low Design Cost is the Secret What makes Tata Nano the cheapest car of the world at present? The credit goes to the low production costs of Indian manufacturing industry, which enabled the engineers to subtract certain features, without compromising with the performance of the car. Steel was removed efficiently and less sheet metal was consumed to manufacture this car. Also, the tubeless tires, light-weight engine and many other features brought down the production cost impressively and hence, the world saw the dawn of a profit-oriented car. Environment Friendly Small Angel

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Tata Nano is expected to contribute fewer pollutants than the most popular twowheelers of the country. With impressive tailpipe emission and low generation of carbon dioxide, the car can contribute to remove the black spots from the pollution-oriented image of the country. Stupendous Demand for Nano The demand for Tata Nano seems to scale new heights and the company expects to run out of stock to fulfill the demand. Hence, only 100,000 car buyers will be entertained with the car, by selecting them at random. Nearly 30,000 booking locations in the country have been chosen to sell the number between April 9 and April 22. Comparison with Most Popular Family Car Maruti 800 has been the favorite family car in India so far and hence, its comparison with Nano is inevitable. To begin with, Nano costs half the price of Maruti 800. Apart from this, the bumper to bumper length of the former is 8% less than the latter. Finally, Nano has 21% larger seating capacity as compared to the Maruti model. Certainly, there are many more features which can enforce the Indian audience to change their preference.

The Tata nano a unique strategy

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The Tata Nano creates buzz in India and around the world. The worlds cities should aspire to a sustainable future that is not necessarily dependent on cars. India experienced an automotive breakthrough last week: the release of the Tata Nano, the most economic vehicle in the Indian market, and arguably, in the world. The so-called peoples car has received praise from many sources, such as The Economist: Despite the Nanos size (it is a bit over ten feet, or three metres long) its interior is surprisingly spacious. This is no accident. The car is the pet project of Ratan Tata, the Tata groups revered chairman, who is over six feet tall. Accordingly, the Nano is optimised for the 95th percentile of American men. In South Asia, this makes the car downright cavernous. When it comes to performance, the Nano goes from zero to 100kph (60mph) in a languid 30 seconds, but it is surprisingly enjoyable to drive. And with a petrol consumption of 67mpg, few cars can match its fuelefficiency.

And the San Francisco Chronicle:

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Dont dismiss the Nano as a small, poor mans car that will cause a mere ripple on the world market. The Nano is a radical innovation, with the potential to revolutionize automobile manufacturing and distribution. The tiny Nano incorporates three innovations, which together make it huge. First, the Nano uses a modular design that enables a knowledgeable mechanic to assemble the car in a workshop. Thus, Tata can outsource assembly to independent workshops that can then assemble the car on buyers orders. This innovation not only removes costly labor from the manufacturers side but also allows for distributed entrepreneurship on the dealers side. Second, the low cost of the Nano comes from a combination of its no-frills design and its use of numerous lighter components, from simple door handles and bulbs to the transmission and engine parts. The lighter vehicle enables a more energyefficient engine that gets 67 miles to the gallon. From the perspective of the automotive industry, the release of the Tata Nano is remarkable indeeda success of Indian ingenuity and, hopefully, a business hit. The Nano, and vehicles like it, will help in reducing energy consumption in India and decreasing local and global emissions, compared to the business as usual scenario, due to the cars high efficiency. Cars like the Nano will also improve the quality of life for those able to afford it. (It is important to note that the privileged few who can afford the Nano still comprise a minority in India and the rest of the developing world.) But the Nano is not enough to solve mobility and urban development problems of cities in a sustainable way. Much more is needed.

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The problem is that more cars no matter their size or propulsion bring more congestion, accidents, sprawl, and, if they rely on fossil fuels, more local and global pollution. Cities should aspire to a sustainable future that is not necessarily dependent on cars (and the highways and parking spaces that come along with them.) This argument is very well expressed by organizations like Indias Center for Science and the Environment, which recently issued a press release that says they are against all cars, and not just the Nano. Our cities dont need more cars; they need better public transport. Cities can be more successful and livable if they pursue some of the following types of strategies:

active transport (i.e. bicycling, walking) mixed-use and denser development with better public spaces integrated mass transit innovative infrastructure and manufacturing that includes nice ideas like the Nano car-use demand management, for example:
o o o

downtown parking and driving restrictions congestion and pollution charges equitable taxes that cover externalities of these restrictions, not the subsidies in fuel

I recommend implementing the above strategies as a baseline response, even if the individual Nano car releases less emission than the two-stroke motorcycle or the heavy vehicles used in the U.S.

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Supporting better vehicles is not enoughand is even wrongfor society, as a whole.

Industry Interaction

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Q) Worlds Cheapest Car on Fire-Literally-This is the heading given to the News article in The Independent-London, (Motoring) on October 27th 2009. This is shocking indeed! What are your viewpoints on the same? The article is reproduced below for your perusal: The world's cheapest car, the Tata Nano, is under fire in India as reports emerge of some of the models bursting into flames recently due to alleged circuit problems. Three fires have been reported spontaneously occurring in the steering columns of Nanos in India, where 7,500 vehicles have been delivered since July. No injuries have been reported but one customer has refused to allow Tata to inspect the car and instead filed a police report, according to US financial newspaper The Wall Street Journal. Tata announced October 26 that they will undertake a pre-delivery audit of all new cars and will examine cars already in customer use, but have avoided the dreaded "recall" word thus far. The Indian automaker blamed the problem on a short circuit in the switch that controls the headlights, windshield wipers and dashboard indicators. The tiny Nano is called "The People's Car" due to its historically low price of around Rs 115,000 (1,700). The car has already received an overwhelming 200,000 pre-orders in India and has revolutionized the way the world looks at lowcost automobiles. Nearly 100,000 Nanos are expected to be sold domestically in 2010, with export plans in place for Nigeria in 2010 and Europe in 2011, provided it passes safety

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testing. In July, Tata announced its intentions to sell the Nano in Latin America, via Italy's Fiat group, which has a strong presence there. Ans) Such incidents have occurred with many car models, not only the Tata Nano. In fact, cars getting jammed, heating up and totally bursting and exploding are instances that have occurred in major car models the world over. The reason may be attributed to defective circuits, improper mechanics handling the car or a host of other factors. However, once a car is on the road and is working, that is the timetested fundamental that the car is travel-worthy. From the Management Perspective, the Production System Efficiency and the Quality Control Checks must be in place to safeguard the Manufacturer. Tata has all that and more. Q) The introduction of the Nano received media attention due to its targeted low price. The Financial Times reported, "If ever there were a symbol of Indias ambitions to become a modern nation, it would surely be the Nano, the tiny car with the even tinier price-tag. A triumph of homegrown engineering, the $2,200 (1,490, 1,186) Nano encapsulates the dream of millions of Indians groping for a shot at urban prosperity." The car is expected to boost the Indian economy, create entrepreneurial-opportunities across India, as well as expand the Indian car market by 65%! Do you feel the Nano has lived up to these expectations? Ans) The Nano is living up to these expectations and much more. It is also an outstanding example of Indias brainpower, talent, creativity and mindset. The

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concept itself is an intangible asset and heritage that India has bequeathed to the world! Nothing can stop the strength of an idea whose time has come! Q) Following is a copy of the article carried by The New York Times on the Tata Nano. On January 10, 2008, 10:24 am . We request you to go through the article and comment on the same, with respect to the Tata Nano as the worlds cheapest car.

Tata Nano: The Worlds Cheapest Car

Ratan Tata, chairman of Tata Motors, displaying the Nano in New Delhi on Thursday. (Photo by Money Sharma/European Pressphoto Association) Tata Motors today took the covers off the worlds cheapest car the Nano. Over the past year, Tata has been building hype for a car that would cost a mere 100,000 rupees (roughly $2,500) and bring automotive transportation to the mainstream Indian population. It has been nicknamed the Peoples Car. Over the

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course of the New Delhi Auto Expo, which began this week, anticipation had grown to fever pitch. With the theme from 2001: A Space Odyssey playing, Ratan Tata, chairman of Tata Motors drove the small white bubble car onto Tatas show stage, where it joined two others. The Tata Nano could sell for around $2,500 They are not concept cars, they are not prototypes, Mr. Tata announced when he got out of the car. They are the production cars that will roll out of the Singur plant later this year. The four-door Nano is a little over 10 feet long and nearly 5 feet wide. It is powered by a 623cc two-cylinder engine at the back of the car. With 33 horsepower, the Nano is capable of 65 miles an hour. Its four small wheels are at the absolute corners of the car to improve handling. There is a small trunk, big enough for a duffel bag. Today, we indeed have a Peoples Car, which is affordable and yet built to meet safety requirements and emission norms, to be fuel efficient and low on emissions, Mr. Tata added. We are happy to present the Peoples Car to India and we hope it brings the joy, pride and utility of owning a car to many families who need personal mobility. The base price for the Nano will be 120,000 rupees, including road tax and delivery. Higher level models will cost more and come with air-conditioning. Sun visors and radios are extra.

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The nearest priced competitor is the Maruti 800, which costs roughly twice as much as the Nano. In comparing the Nano to the Maruti 800, Mr. Tata said, It is 8 percent smaller bumper to bumper and has 21 percent larger seating capacity than Maruti 800. The Hindustan Times reports reactions from a couple of Tatas competitors, Maruti and Hyundai: Jagdish Khattar, a former head of Maruti 800 manufacturer Maruti Udyog Ltd., says its too early to say whether the Nano will overtake the original. Its a good product but its still too early to say whether it will overtake the 800 because it caters to a totally new market segment, he said while watching a live telecast of Tatas press conference after unveiling of the Nano. But clearly, at least one other manufacturer was worried. An official of Hyundai Motors, which unveiled an LPG version of its Santro Thursday, was more circumspect. We definitely see it as impacting our sales, he said in halting English, preferring to maintain anonymity. Anand Mahindra, managing director for Mahindra & Mahindra, Tata Motors primary competitor, said before the unveiling, I think its a moment of history and Im delighted an Indian company is leading the way. The Nano will go on sale in India later this year with an initial production run of 250,000 a year. Tata says it will offer the Nano in other emerging markets in Latin America, Southeast Asia and Africa within four years.
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Ans) The Tata Nano is not only the cheapest car, it is an idea that has carried the entire world in its sway! For the first time in the history of mankind, an organization has developed a wonderful car that the common man who cannot afford a costlier one can buy and use with pride! The quality has not been compromised; rather, it is a gesture of Corporate Social Responsibility! Of course, it is a competition to car manufacturers the world over; which is not surprising. As a result the heat is intensifying with competition and even Hyundai Motors, General Motors and several Companies have seen it as affecting their competition. This is because the Tata Motors, through its winning strategy has eliminated all competition. Indeed, THE WINNER STANDS ALONE!

Newspaper Article The Tata Nano: Product or Social Innovation?

On March 23, 2009 Tata Motors launched the world's cheapest car, simultaneously revolutionizing the rules of automobile manufacturing and creating a massive new market where none had existed before.

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Until now, most automobile multinationals have focused their efforts on the top 10% of the Indian population, attempting to market "de-featured" versions of their global product lines. Tata Motors, however, focused on the 75% of the Indian population which still travels using two-wheelers (motorcycles, scooters) and three-wheelers, at a price point of about $1,500. By delivering a $2,000 car, Tata Motors has changed the game. We can now expect a huge customer migration from Honda and Suzukipowered two-wheelers to Tata's Nano. By unlocking this new market, Tata Motors plans to give the Indian masses access to a passenger car, the same way Henry Ford democratized the automobile in the U.S. at the turn of the 20th century with the invention of Model T. The Tata Nano represents a discontinuous shift in the very concept of the automobile. Let's look at the historical and social perspective of this remarkable achievement: - The Tata Nano shows the power of visionsetting a very high barto create a Rs1-lakh ($2,000) "peoples car."

Ratan Tata explains his vision: "I observed families riding on two-wheelers the father driving the scooter, his young kid standing in front of him, his wife seated behind him holding a little baby. It led me to wonder whether one could conceive of a safe, affordable, all-weather form of transport for such a family. We are happy to present the Peoples Car to India and we hope it brings the joy, pride and utility of owning a car too many families who need personal mobility." Tata knew who

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his customer was from the very beginning. He set a clear goal with emotional appealsimilar, in many ways, to JFKs man on the moon mission. - The Tata Group is one of the oldest groups in India, perhaps over 100 years old. It is very difficult for a 100 year old person to be nimble, fast, and innovative! What's truly remarkable here is that an old line company has fundamentally transformed itself in its quest to make its vision a reality. Tata did not even make a consumer automobile 10 years ago. In fact, until 1993, India had only two automobile companies, both simply assembled with left over technology from European automobile manufacturers. Add to this the fact that once the Indian economy opened up in 1993, almost every global automobile company entered India. In this context, Tata Motors' achievement becomes even more impressive. - The price of the entire car$2,000is less than the cost of a DVD player in a BMW! A friend pointed out to me that one Tata Nano equals thirteen iPod Nanos from Apple. At this absurd price point, the Tata Nano visibly demonstrates that phenomenal success in business is not a function of resources. If that were the case, the multinationals would own the Indian market. It is not resources but imagination that is the key to success. The Tata Nano is living proof that it is still possible to challenge the assumptions of an industry and change the game entirely. - More than the product, Tata Motors will fundamentally revolutionize the distribution model, the go-to-market strategy. The car has a modular design, The modules will be made in a central manufacturing plant and sent as kits to be locally assembled by hundreds of thousands of entrepreneurs closer to the customers. As I write this, Im having a flashback to IKEA and what it did to the furniture industry. Again, Ratan Tatas words: we're looking at small satellite

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units, with very low breakeven points, where some of the cars could be assembled, sold, and serviced. We would encourage local entrepreneurs to invest in these units, and we would train these entrepreneurs to assemble the fully knocked-down or semi-knocked-down components that we would send to them, and they would also sell the assembled vehicles and arrange for their servicing. This approach would replace the dealer, and therefore the dealer's margin, with an assembly-cumretail operation that would be combined with very low-cost service facilities. This is what I call mass customizing the automobile taking the product to the customer as opposed to the big box retailers who want the customer to come to the store. Tata Motors will learn more about customer needs and tastes than anyone in the world. The Tata Nano is as much a distribution revolution as it is a product revolution. - So far we assumed India was nothing more than a place for low cost call centers and IT outsourcing. That image has been shattered by the Tata Nano. The Tata Nano will not stay inside India. It will soon disrupt automotive markets in other emerging markets and even in Europe. The SMART car, for example, is in for a challenge. Combine this with the fact that in 2008, Tata Motors acquired the prestigious British brands Jaguar and Range Rover. Fifty years after the British quit India; an Indian company comes to the rescue of these prestigious British brands. The irony of it all. And the innovation engine that Ratan Tata has created is not finished. Already, there is talk of an all-green electric car. The Tata Nano is a signal that India will indeed compete as a technology leader in manufacturing.

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- Another remarkable yet relatively unsung story in the Tata Nano saga is the political dimension. When people compare India and China, they usually conclude that Chinas centralized political process and single party rule help in rapid decision-making whereas Indias democracy is an Achilles heel that puts speed bumps on economic growth. Indian politicians can, and often and will slow things down in order to gain votes. Mr. Ratan Tata has, by his actions, fundamentally changed the equilibrium between Indian industry and politicians, in favor of industry. In 2007, the state government of West Bengal allocated 1000 acres for the Tata Nano project. Tata Motors started constructing their manufacturing plant and spent a significant amount of money on the project. In a purely a political ploy to revive their sagging popularity, politicians from the opposition party went on a strike demanding that Tata return 400 acres to the agricultural farmers. The politicians thought Mr. Ratan Tata would cave in since he has already sunk huge investments. Instead, Ratan Tata chose to abandon his partially completed manufacturing plant in West Bengal and shifted his factory to Gujarat. For the first time in India, the industrial sector showed that they are more powerful than the politicians. In fact, following the Ratan Tata lead, several other Indian companies withdrew their investments in West Bengal. West Bengals farmers are now upset with the politicians since they lost compensation for their land and more importantly, they lost the opportunity to get jobs in the Tata Nano factory. Thanks to Ratan Tatas leadership and courage, there is strong speculation that the proindustry political party will win the national elections scheduled next month! In my opinion, Ratan Tatas standing firm against Indian politicians is as much a signature event as Mahatma Gandhi standing against the British to win India freedom in 1947.
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Finally, there is something greater than business at play here as well. Ratan Tata embodies the spirit of a new, enlightened capitalism. Heres what he had to say on values a few years ago: "What I feel most proud of is that we have been able to grow without compromising any of the values or ethical standards that we consider important. And I am not harping on this hypocritically. It was a major decision to uphold these values and ethics in an environment that is deteriorating around you. If we had compromised them, we could have done much better, grown much faster, and perhaps been regarded as much more successful in the pure business sense. But we would have lost the one differentiation that this group has against others in the country. We would have been just another venal business house." And again: "I think it is wrong for a company in India to operate in exactly the same way, without any additional responsibilities, as if it were operating in the United States, let's say. And even in the United States, I think if you had an enlightened corporation that went into the Deep South, you would see more of a sense of social responsibility, of doing more for the community, than the company might accept in New York City or Boston. Because it is inevitable that you need to be a good corporate citizen in that kind of environment. And companies that are not good corporate citizensthose that don't hold to standards and that allow the environment and the community to sufferare really criminals in today's world." Through his actions in the Tata Nano project, Ratan Tata has demonstrated that capitalism can have a soulthe profit mission and the social mission do not conflict and can, in fact, be pursued simultaneously. As I mentioned earlier, Ratan Tata incurred enormous losses in shifting the factory from West Bengal to Gujarat.

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Yet in the new location, Tata is not only putting up an automobile plant but they are also voluntarily investing in the community by building hospitals, by building schools, by improving the infrastructure, by recruiting local people for the plant, and by starting an engineering school to train and develop local people to operate an assembly plant. This has been Tatas philosophy wherever they do business. He does not subscribe to Milton Friedmans dictum: The only objective of a business is to make profit.

Conclusion
After the study of various aspects I found that Nano Car Is Definitely Not For:-

Someone looking for better performance Someone who is looking to impress

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Someone who want to speed trial on Sunday Someone who is looking for long drives.

But Nano Car Is Defiantly For

Someone who is looking to buy a car but cannot afford much price. A students who want to go college, tuition instead of bike etc. Someone who depends on second hand car. For a house wife who can buy a car with her own savings. Someone who depends on scooter. So Nano is not a basically a luxury cars but it can fulfilled the all capacity for middle class people. Impact Of Tata Nano On Life Of Common Man In India every one can afford a Nano, just as we buy any electronic appliances for a home uses. Decrease in price of second hand car. High traffic on roads due to sale of exceeds car on roads. Increase in loan on car installments.

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Tata has succeeded in value engineering of the product and its great success for tatas. Its something on which India can feel proud of. Nano has been developed effectively. The Tatas have been since long, a Company reputed for their sound ethics, Corporate Governance and well-designed Social Responsibility. They are philanthrophists whom the nation and the world looks up to. The Tata Nano, the Peoples Car, the first of its kind in the world, has been succinctly expressed by top Managerial People the world over, as a successful Blue-Ocean StrategyWhere you dont tackle the competition, you eliminate it. That is exactly what the Tata Nano has done, by creating and capturing new markets and the stream of Population as target audience who can afford the Tata Nano! SO of course, they are under the eyes of major car manufacturers the world over, who cannot help but applauding such a wonderful strategy and creation!

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Bibliography

Book Name - Winning at new product Author Name - Robert G. Cooper

Book Name - Lean, Rapid, and Profitable New Product Development Author Name - Robert G. Cooper and Scott J. Edgett

http://www.thaindian.com/newsportal/business/tata-nano-car-anoverview_100235031.html#ixzz0WO32GuQW

http://tatanano.inservices.tatamotors.com/tatamotors/