IBS Center for Management Research

Revival of Tata Nano: Can the Worlds Cheapest Car Maintain

the Momentum?
This case was written by Aditya Shankar Mishra, under the direction of Debapratim Purkayastha,
IBS Hyderabad. It was compiled from published sources, and is intended to be used as a
basis for class discussion rather than to illustrate either effective or ineffective handling of a
management situation.

2012, IBS Center for Management Research

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2


Revival of Tata Nano: Can the Worlds Cheapest Car
Maintain the Momentum?
If it was out-of-the-box thinking that led to the birth of the Nano in 2003, it is a similar stream of
innovative marketing ideas that is now helping resuscitate the Rs1-lakh car after sales crashed to
a mere 509 units last November.
i

The Economic Times, May 10, 2011
When we started, around 80 per cent of Nano customers were buying it as a second car and 20
per cent were first-time buyers. Now the ratio is about 50:50 and ultimately, we are looking at 80
per cent first time buyers purchasing the car, which is what we had aimed when we started off.
ii

R. Ramakrishnan, Vice-President (commercial-passenger cars) of Tata Motors Ltd.,
in 2011
INTRODUCTION
In April 2011, the Tata Nano crossed the 10,000-mark in terms of unit sales. Its sales figure of
10,012 fetched it the sixth rank among passenger cars in India for the month as well as for the year
till then. Analysts felt that this was a remarkable revival for the Nano as its sales figure had
touched an all-time low just six months earlier in November 2010. Achieving this turnaround
was not easy. Analysts said that attractive and effective television advertisements, providing of
additional protection in the exhaust system of the car to avoid fire incidents, extended free of cost
warranty schemes, incremental rise in sales points in smaller towns, and introduction of the 90%
financing plan through its in-house vehicle financing unit Tata Motor Finance, had made the
turnaround possible. Since the Nanos launch in January 2008 at the Auto Expo, New Delhi, it had
been a talking point in the automobile industry across the globe for its design, cost and fuel
efficiency, and innovative ways of distribution.
Though its unique combination of lower cost and innovative features had given it the title of
wonder car for the people, its rising prices had been slowly pushing it out of the reach of its real
target customers. Experts noted that the Nano had been launched initially for middle class families
riding unsafely on two-wheelers on Indian roads, but a continuous price rise was making it
difficult for these families to migrate from bikes to the Nano.
A crack team led by R Ramakrishnan, VP (commercial-passenger cars), and Girish Wagh (Wagh),
vice-president & head (small car project) was credited with orchestrating the revival of the Tata
Nano. The team was keeping a close watch on the Nanos progress and was working to ensure that
there was a constant focus on the target customer segment. However, analysts said they had a long
and arduous road ahead in maintaining and building upon the sales momentum. In the future, other
car manufacturing companies were also planning to launch their low cost variants in India. The
challenge before the Nanos marketing team was how to counter those competitors and
simultaneously attract the low-income customers.
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3
BACKGROUND NOTE
The Tata Group, an Indian multinational conglomerate, was headquartered at Bombay House in
Indias financial capital, Mumbai.
iii
Founded in 1868, the company was in its fifth generation of
family stewardship in the first decade of the new millennium.
iv
It was the largest private corporate
group in India in terms of market capitalization and revenues. The total revenue of the Tata
companies, taken together, was US$67.4 billion in 2009-10, with 57% coming from business
outside India. The Tata companies employed around 395,000 people worldwide. The Groups
interests were spread over various industries such as communications and information technology,
engineering, materials, services, energy, consumer products, and chemicals. The Tata Group had
operations in more than 80 countries across six continents and its companies exported products and
services to 85 countries as of 2011.
The Tata Group consisted of 114 companies and subsidiaries in eight business sectors, 28 of which
were public listed companies. Various charitable organizations
v
held 65% ownership of Tata Sons,
the key holding company of the other 114 Tata Group companies, Companies which formed a
major part of the group included Tata Steel (including Tata Steel Europe), Tata Motors (including
Jaguar and Land Rover), Tata Consultancy Services, Tata Technologies, Tata Tea (including
Tetley), Tata Chemicals, Titan Industries, Tata Power, Tata Communications, Tata Sons, Tata
Teleservices, and the Taj Hotels. The 2009 annual survey by the Reputation Institute ranked the
Tata Group as the 11th most reputable company in the world.
vi
The survey included 600 global
companies. The Tata Group was a pioneer in establishing and financing numerous quality
research, educational, and cultural institutes in India. The Carnegie Medal of Philanthropy was
awarded to the Group in 2007 in recognition of its long history of philanthropic activities.
vii

Tata Motors Ltd., a part of the Tata Group, was earlier known as TELCO (TATA Engineering and
Locomotive Company). It was Indias largest automobile manufacturing company, with
consolidated revenues of US$ 27 billion in 2010-11. It was the leader in commercial vehicles and
among the top three in passenger vehicles in India. Tata Motors had products in the compact and
midsize car and utility vehicle segments. The company was the worlds fourth largest truck
manufacturer, the worlds second largest bus manufacturer, and had an employee strength of over
25,000. Between 1954 and 2011, Tata Motors had produced and sold over 5.9 million vehicles in
India. It had auto manufacturing and assembly plants in Jamshedpur, Pantnagar, Lucknow,
Ahmedabad, Sanand, Dharwad, and Pune in India, as well as in Argentina, South Africa, and
Thailand.
viii

Established in 1945 when it began manufacturing locomotives, the company manufactured its first
commercial vehicle in 1954 in collaboration with Daimler-Benz AG
1
. This collaboration ended in
1969.
ix
In 2005, Tata Motors was ranked among the top 10 corporations in India with an annual
revenue exceeding Rs.
2
320 billion. In September 2004, Tata Motors became the first company
from Indias engineering sector to be listed on the New York Stock Exchange.
x
In 2010, Tata
Motors surpassed Reliance to win the prestigious title of Indias most valuable brand in an
annual survey conducted by Brand Finance and The Economic Times.
xi

ABOUT TATA NANO
The Tata Nano, one of the most ambitious projects of Tata Motors, started in 2003. It was
envisioned by the Tata Group chairman Ratan Tata himself. He found that Indians lagged behind
in car ownership, especially compared to the European Union and the Americas. Just eight or nine
in a thousand people owned a car. Many of the Indians either owned a two wheeler or relied on

1
It was a German manufacturer of automobiles, motor vehicles and internal combustion engines; founded
in 1926. Since August 2007, the name of this company is Dailmer AG.
2
Rs. = Indian Rupees. As of September 2011, US$1 was approximately equal to Rs. 50.00.
512-011-1



4
public transport. It was this issue that prompted Ratan Tata to embark upon doing what people
thought was impossible.
xii
The mission was to design, conceive, and develop a car costing no more
than rupees one lakh
3
(Rs. 100,000) for the base model. The psychological price barrier of one
lakh immediately made news globally in 2006 when Ratan Tata announced this project at the
Auto Expo 2006 in New Delhi. Industry observers were skeptical and started questioning his
vision. They felt that the project would never take shape and that the car was doomed even before
it was born.
xiii

However, Ratan Tata delivered on his promise and on January 10, 2008, he unveiled the Nano at
the Auto Expo, Delhi. He said, 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. Tata Motors engineers and designers gave their all for about four
years to realize this goal. 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. 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,
4

Overnight, the Nano became the talking point of the global automotive industry. It made more
news than any other car launch had ever made. Leading automotive companies around the world,
who had never really considered Tata Motors a serious threat in passenger cars, had to go back to
their own drawing boards to take a relook at their strategies. Critics applauded India for this
achievement. However, some environmentalists questioned cringed at the idea and wondered if the
Nanos would not add to the already crowded streets of India, making them even more chaotic.
Some also doubted whether the Nano could have the best safety equipment given its low cost. But
according to Wagh, The Nano meets all regulations in the Indian market. The package protected
car also meets all future regulations in Europe as well, which includes offset frontal and side
impact.
xiv
Regarding the questions raised by environmentalists, R. G. Rajhans, Project Manager
(Body Systems), Tata Technologies, said, Currently, the car meets Bharat III norms, which are
applicable in 11 cities while it meets the Bharat Stage II norms in the rest of the country. We will
meet the Bharat Stage IV and Euro IV requirements as well.
xv
(Refer to Exhibit 5 for Indian
Emission Standards for Four-wheel Vehicles)
In Geneva 2008, the Nano made its first overseas premiere. The press kits for the Nano were
distributed within minutes and the demand was so high that Tata Motors had to get 7-8 times more
copies printed than it originally had. There was a big hype surrounding the car and the Nano won
several accolades and awards for its efficiency and design (Refer to Exhibit 2). So far, the path
had proved smooth for the Nano.
xvi

But then came a series of setbacks. The Tatas had to exit from Singur (West Bengal) on charges of
alleged irregularities in land acquisition.
xvii
Tata had planned the Singur factory especially for the
Nanos assembly line. This exit delayed the production of the Nano by six months. On March 23,
2009, Tata started production of the Nano from a makeshift assembly line at Pantnagar (UP) and
launched the car in three variants, priced between Rs. 123,000 and Rs. 175,000 approximately. The
one lakh (100,000) price was ex factory, India, for the non AC model. Meanwhile, Tata
announced the relocation of the Nano plant to Sanand (Gujarat).
xviii
When bookings opened on
April 9, 2009, Tata Motors dealers anticipated a huge surge of customers. The company printed
over two million booking forms and expected bookings to be more than 500,000. State Bank of
India
5
bought several thousand forms from the company expecting a rush of people looking to buy

3
Then around US$2500.
4
Ratan Tata Releasing Nano to World on January 10, 2008 at Auto Expo, New Delhi
5
State Bank of India (SBI) is the largest Indian banking and financial services company (by turnover and
total assets) with its headquarters in Mumbai, India.
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5
the Peoples Car. Yet with each passing day, the disappointment mounted. On April 25, 2009,
when the bookings closed, Tata Motors announced that it had received a total of 206,703 bookings.
But only 100,000 lucky customers would be getting delivery of the car till the last quarter of
2010.
xix

However, the issue which drew the most attention was that the maximum number of bookings
approximately 55 percent was for the top-end CX model and the least priced non AC model
received just 20 percent bookings.
xx
It was found that many of those who booked cars were either
rich people tempted to own a slice of automotive history or people with multiple cars, who wanted
a second or a third car for short work or congested city driving. Very few bookings came from the
original target customer i.e. first time aspirants for a car. The reason behind this, Tata dealers
claimed, was the booking amount, which was 95 percent of the cars ex showroom price. Experts
wondered how when the target market was the first time car buyer, they could be expected to
deposit Rs. 90, 000 while migrating from Rs.40, 000 bikes?
xxi
Industry observers felt that this flaw
in basic assumption had led to booking cancellations amounting to more than 50 percent of the
original short-listed applicants over June-August 2009.
xxii

THE DOWNFALL SAGA
The major problem was yet to come with the sales of Tata Motors much-publicized Peoples Car
witnessing a sequential fall in 2010. In July 2010, Tata Motors sold 9,000 units of the Nano. This
fell to 8,103 units in August, 5,520 units in September, and to 3,065 units in October (Refer to
Exhibit 3). In November 2010, a festival month during which it is considered auspicious to buy
new and big ticket items, the sale of Nano came down to just 509 units (85% drop from November
2009).
xxiii
This was despite the fact that the overall sales for the Indian auto sector rose by 45% in
October 2010. This resulted in the Tata Motors overall domestic sales in the passenger vehicle
segment falling by 25% to 15,340 units from 20,706 units in the same month of 2009. Even cars in
the high-end segment such as the Mercedes sold more than 500 units in the festive month.
xxiv

Analysts cited various reasons for the Nanos poor showing. Issues like production delays,
multiple fire incidents across India, increasing prices of the car, difficulty in getting loans from
banks, and the stigma attached to buying a cheap car etc. were cited as potential reasons.
xxv
But
some analysts felt that the problem had started with the launch itself. It was the great hype which
had created the bumpy road ahead, they said. The early hype predictably fueled early demand. On
the other hand, large initial demand required the company to build the car on a large scale. This
proved problematic when the company ran into the land acquisition row at Singur which resulted
in production delay.
xxvi

Right from the launch of the car, there were various cases reported of the Nano catching fire. The
number of such incidents had risen to six by August 2010. Experts blamed it on a faulty cabling
system which resulted in short circuit and smoke.
xxvii
The sixth incident of the Nano catching fire
was reported in the national capital New Delhi, just three months after a company probe declared
that the car was absolutely safe. The five previous incidents were reported from across the country
from Mumbai, Lucknow, Delhi, and Vadodara.
xxviii

Moreover, the customers also found that the car was not really selling for Rs.100,000 as it was
positioned. In fact, a fully equipped Nano sold for only about US$800 less than the Maruti-Suzuki
Alto, which had a bigger engine, more storage space, and a longer track record than the Nano.
xxix

Moreover, in 2010 itself, the company first increased the price of the car by Rs. 5000 due to BS IV
emission norms and after a few months, by Rs. 30,000 due to increased input costs.
xxx
Industry
observers said that the cheap car was no longer cheap and its safety too had come into question.
Though billed as peoples car meant for the low-income segment, people from this segment were
not buying it.
xxxi

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6
Besides the fire incidents and rising prices, the lack of financing options available to Nano
customers was also causing a dip in sales, analysts said. Banks were not willing to lend to low-
income customers as they were concerned that they might default on their payments. As per the
statistics, nine out of ten buyers of the Nano applied for a loan. Also, the rate of interest which
banks were charging for the Nano was around 20-22% as compared to 13-14% for other cars.
xxxii

Another issue was the label of the cheapest car on the Nano. A car, in India, was not a
consumable FMCG product but an asset and like all assets, a car was supposed to be a
valuable and long lasting product which would give maximum returns in the long run. The
Tata Nano was targeted at the mass and middle class India as a replacement for two wheelers.
Actually, for them, a car was an investment of their hard earned money. Dheeraj Sinha, the
Chief Strategy Officer, Bates 141
6
and author of Consumer India: Inside the Indian Mind and
Wallet, said, One reason Tata Nano has not taken off is because it was seen as a cheap car. Thats
a symbol enough to say that even that mass segment of buyers is seeking a premium, in the sense
that they are seeking an upgrade and not value for money. Value has to fall into place but it is one
of the drivers, not the only driver. Brands, in the rural space, need to add a bit of imagery to
themselves. Those consumers are reaching out to brands that are giving them that sense of
premium.
xxxiii

By the end of 2010, the Nano was being billed largely as a failure. According to Matthew C.
Keegan, who writes extensively on the Auto industry, Long term, the Tata Nano may only prove
to be a steppingstone for the Indian automaker as it develops a newer, safer, and more modern
entry-level vehicle. The Indian consumer is enjoying a higher standard of living which means their
options are expanding beyond cars that are ultra-cheap, of questionable reliability, and perhaps not
that safe.
xxxiv

REVIVING THE NANO
The sequential downfall of the Nanos sales figure compelled Tata Motors to rethink and revisit its
strategies. A eight- to ten-member crack team was put in place by Ratan Tata to address the
situation.
xxxv
The team took various steps.
ADDRESSING SAFETY ISSUES
As the major threat to the cars image was the fire incidents, engineers at Tata Motors made some
changes in the Nanos existing design. It was necessary to provide additional protection in the
exhaust system and in the electrical system. Therefore, additional foreign electrical equipment was
installed or foreign material left on the exhaust system. Tata Motors chief executive Carl-Peter
Forster said in November 2010 that the carmaker planned to install a cover on the catalytic
converter and fuses for electrical components to avoid short circuits in new models.
xxxvi
These
new features will be affixed in new models and also the existing buyers have an option to install
the same in its cars by not paying a single penny for it,
xxxvii
Tata Motors declared on November 9,
2010. Providing this enhanced design, the company reiterated that the robust design and state-of-
the-art components of the Tata Nano provided assured reliability, durability, and safety.
xxxviii

The company also announced that the Tata Nano would have a four-year or 60,000 Km (whichever
came first) companys warranty without any extra cost. This scheme was also extended to Nanos
that had already been sold. Other than the warranty, the new owners were given the option of
enjoying a comprehensive maintenance contract at the rate of Rs. 99 per month. According to the
company, because of this agreement, the owners would have the opportunity to save a lot on
maintenance costs.
7


6
Bates 141 is an Asia-devoted marketing communications network and part of WPP Group.
7
Loan on Tata Nano up to 90 Per Cent in 48 hours Announced by Tata Motors Finance
http://www.cardekho.com, December 15, 2010
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7
FINANCING
Tata Motors Finance (TMF), the Tata Motors vehicle Finance Branch, announced a special finance
scheme for the Tata Nano, in which a buyer could get an easy loan with selected documents in just
48 hours.
xxxix
This meant that the entire process of buying the Nano could be completed in less than
72 hours or three days. The fast track loan would finance up to 90% of the Tata Nanos on-road
price and the loan on offer at competitive interest rates could help buyers from its real target
market realize their dreams of owing a car.
xl
In addition to this, the company also entered into
financing arrangements with about 29 public sector banks, private banks, non-banking finance
companies, and cooperative banks, and its teams worked closely with financiers at the regional,
state, and branch levels. Tata Motors also organized Mega loan cum exchange events for existing
two-wheeler owners. Over one million 2-wheelers are sold in the country every month. We
expect bike buyers to account for a rise in Nano sales,
xli
said Ramakrishnan.
DISTRIBUTION REFORMS
It was then the turn of distribution reforms. Beginning July 2009 when dispatches to those who
had booked the car started, the company had delivered over 71,000 Tata Nanos by November,
2010.
xlii
Further, as the companys new plant at Sanand in Gujarat became operational, the
company added 10 more states to open fresh bookings in November 2010 and planned to go to
open sales by March 2011 backed by increased promotional efforts and additional tie-ups with 29
finance institutions to facilitate fast-track loans to borrowers.
xliii
The Nano was made available
through Tatas 874 outlets across the country. The company established 2010 F Class showrooms
in smaller towns and recruited 1,200 people to man them. These showrooms were about 500 sq ft
in size -- less intimidating than the 3,000-4,000 sq ft conventional showrooms -- and stocked only
one car. Tata Motors used an innovative way to make the Nano available in supermarkets by
selling it through selected Big Bazaar
8
outlets. Big Bazaar, a hypermarket chain, got 150 million
footfalls every year. It had 70 outlets in smaller cities and towns. Big Bazaar was able to sell 900
Nanos in February-April 2011.
xliv
Tata Motors focus on tier-II cities is a correct strategy since
these are natural markets for the Nano,
xlv
said Abheek Singhi, partner and director of The
Boston Consulting Group
9
.
MARKETING COMMUNICATION
Last, Tata Motors initiatives to spruce up the Nanos sales volumes were not just limited to the
finance fronts, distribution, and providing additional protection in exhaust and electrical systems in
view of some fire incidents. The company also worked very hard on the marketing communication
and promotional fronts.
xlvi
According to industry experts, better communication by Tata Motors
had helped it in posting better sales in December 2010. It was expected that Tata Nano sales would
observe an upsurge in 2011. The company also took steps such as having senior executives visit
the showrooms, boosting confidence, staff training, and much more. The dealers were asked to
educate the buyers about the cars added safety features and new standards.
xlvii

The Tata Nano, which till then was only being promoted through the print media and road shows,
was also promoted through TV commercials.
xlviii
The campaign sought to address the safety issues
and the aspiration of owning a car. The ads were targeted at improving the Tata Nano sales in the
market. The first ad launched on December 17, 2010, stressed key attributes such as speed, space,

8
Big Bazaar is a chain of shopping malls in India. As of 2011, there were 150 Big Bazaar stores across 80
cities and towns in India. Big Bazaar was designed as an agglomeration of bazaars or Indian markets with
clusters offering a wide range of merchandise including fashion and apparels, food products, general
merchandise, furniture, electronics, books, fast food, and leisure and entertainment sections. Big Bazaar
is part of Future Group, which also owns the Central Hypermarket, and is owned through a wholly-
owned subsidiary of Pantaloon Retail India Limited.
9
The Boston Consulting Group (BCG) is a global management consulting firm with offices in 42
countries.
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8
and sturdiness. It also sought to project the sentiments of anticipation and joy surrounding the
arrival of the Nano into a family. This was followed by a series of ads in 2011 targeted at scooter
owners which sought to convey the advantages of owning a car, such as privacy, intimacy,
enjoyment, and convenience. According to the company, the brief provided to the ad agency was
to speak the language of the consumers, while highlighting the Nanos features including space,
maneuverability, performance, mileage, safety, and durability. In addition to TV, the campaign
utilized the print media and the radio. The Nano was also promoted in the social media with a
Facebook page called Nano Diaries. According to Shweta Khosla, planning director, Grey
10
, The
Nano was supposed to make a car affordable to the poor man and therefore, an owner would be
labeled a poor man, right? Would it ever be aspirational to middle class India, then? The
communication turned all the questions and doubts on their heads. The ads unlock emotions which
are desired but not experienced; the people could be you or me.
xlix

A SPECTACULAR COMEBACK
Tata Motors efforts bore fruit with the sales figure showing signs of a revival after reaching its
lowest level in November 2010. Backed by the television advertisements, provision of additional
protection in the exhaust system, extended warranty schemes, incremental rise in sales point in
smaller towns, and the introduction of the 90% financing plan through its in-house vehicle
financing unit, TMF, this became possible.
l
Sales of the Tata Nano went up dramatically to 5,784
in December compared to 509 units in November 2010. Industry analysts like Abdul Majeed, Auto
Practice Leader in PricewaterhouseCoopers (PwC)
11
, said the various strategies coupled with
attractive and effective marketing communication had helped revive the Tata Nano. Effective
communication has helped the company post better wholesale and retail sales in December 2010.
We will see the sales numbers rising in the next few months,
li
said Abdul Majeed.
Not only this, it caused a lot of excitement when Nano sales recorded 10,012 numbers in April
2011. This was 184% higher than the 3525 units sold in the same month of 2010.
lii
For the first
time since it was launched, the Nano ranked 6th both in the month of April and year-to-date with
33,684 sales.
liii
Some industry observers said that the increase in sales was due to Tata Motors
'pushing' sales by incentivizing dealers. But the company denied this.
According to Ramakrishnan, about 50 percent of the new bookings were first time purchasers of a
car, as against just 20 percent when the car was initially launched. He said that the company was
looking at increasing the share to 80 percent first time buyers as originally envisioned.
liv
The world
had already acknowledged the Tata Nano as the cheapest car on earth as it had made it to the
Guinness Book of World Records 2009. The 54th edition of the record book, which was launched
at Londons Trafalgar Square, listed the Nano as the worlds cheapest car.
lv

THE ROAD AHEAD
Analysts noted that the Tata Nano had shown upward growth since the setback in November 2010.
Encouraged by the positive public response, Tata Motors was thinking of increasing the production
capacity for the Tata Nano. The existing capacity of 10,000 units each month in the Sanand plant
was planned to be increased to its full capacity of 275,000 cars per year. Many bikers were also
warming up to the prospect of owning a new Tata Nano for the price of an expensive bike.
lvi
Since
August 2010, Tata Motors had started the open sale (without any pre-registration) of the Tata Nano
and by December 2010, it was being sold in 12 states. The sale of the Tata Nano had since then

10
Grey (India) is the Advertising and Brand Consulting Company having head-office in Mumbai.
11
PwC (officially PricewaterhouseCoopers) is a global professional services firm headquartered in London,
United Kingdom. It is the world's second-largest professional services firm (after Deloitte) and one of the
"Big Four" accountancy firms.
512-011-1



9
picked up in five states and the company was also trying hard to reach out to its target customers in
other states through its outlets and other access points. Tata Motors was planning on coming out
with Big Bazaar like Special Nano Access points so that potential customers could test-drive the
Tata Nano. Tata Motors was planning to capture each and every nook and corner of the Indian auto
market with open sales by the first quarter of 2011.
lvii

Meanwhile, Tata Motor was also gearing up to launch the Nano in Western markets. Sale of the
Tata Nano Europa was expected to start in the European market in 2011. Tata Motors was also
planning to launch the Nano in the US in the future. In India too, new Nano models were to be
launched with new features. The Diesel variant of the Nano was expected to enter the Indian
automobile market soon. Tata Motors was also planning to launch the eco-friendly hybrid Nano in
the future.
lviii

While industry observers noted that the team at Tata Motors had succeeded in orchestrating a
spectacular revival for the Nano, they felt that Nano sales would stabilize at around 8,000 units per
month. This, they felt, would not be sufficient for the company to make a profit. Mahantesh
Sabarad, analyst at Fortune Financials
12
, said, The company would have to up the run-rate to
15,000 Nanos a month to achieve break-even. As sales grow, the marketing expenses are also
growing. So, the rising sales are not yet providing a margin uptick.
lix
They noted that while the
Nano had registered its best sales ever in April 2010, the automotive industry in April had grown
only 13%, after a 30% growth recorded in financial year 2011. With competition intensifying in
the market, analysts felt that players such as Maruti Suzuki were in a better position to reach
Indian car buyers and as such, it would be a long, hard road ahead for the Nano.
lx
They felt that the
company needed to be cautious about the price, as it was one of the most important factors with
the Tata Nano. The company needs to be cautious on the pricing front as any increase in the price
will reduce the gap between the nearest competitors, forcing the customers to make a switch,
lxi

said Majeed. The base model of the Nano was launched at Rs. 100,000 (Ex-Showroom Price)
which later went up to Rs. 140,880 (Ex-Showroom Price in Delhi). The new variants, which were
in queue for a launch, would be even more expensive. Thus, it was gradually slipping out of the
reach of its target customers who rode on two-wheelers and dreamed of owning the Peoples Car.
In the near future it would be interesting to see how the rising prices of the Tata Nano would affect
its positioning as the car for the masses.

12
Fortune Financials is a financial advisory company.
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10
Exhibit I
Profit and Loss Account of Tata Motors (In Rs. Millions)
Mar ' 11 Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07
Income
Operating income 480253.4 353732.9 256606.7 287679.1 266642.5
Expenses
Material consumed 346928.3 247594.9 190394.1 209318.1 195298.8
Manufacturing expenses 21473.5 16522.2 11715.9 12301.4 12003.6
Personnel expenses 22940.2 18361.3 15513.9 15445.7 13678.3
Selling expenses - 15832.4 12241.5 11794.8 10685.6
Adminstrative expenses 41198.3 22499.2 18670.5 19827.9 14881.6
Expenses capitalised - -7405.4 -9160.2 -11314.0 -5770.5
Cost of sales 432540.3 313404.6 239375.7 257373.9 240777.4
Operating profit 47713.1 40328.3 17231.0 30305.2 25865.1
Other recurring income 1832.6 4022.7 8415.4 3594.2 8872.3
Adjusted PBDIT 49545.7 44351.0 25646.4 33899.4 34737.4
Financial expenses 11439.9 12462.5 7049.2 4715.6 4557.5
Depreciation 13607.7 10338.7 8745.4 6523.1 5862.9
Other write offs 1061.7 1440.3 511.7 643.5 850.2
Adjusted PBT 23436.4 20109.5 9340.1 22017.2 23466.8
Tax charges 3847.0 5894.6 125.0 5475.5 6603.7
Adjusted PAT 19589.4 14214.9 9215.1 16541.7 16863.1
Nonrecurring items -1471.2 8185.9 797.5 3747.5 2271.5
Other non cash adjustments - - 152.9 - -00.7
Reported net profit 18118.2 22400.8 10165.5 20289.2 19133.9
Earnigs before appropriation 37459.5 39260.7 23996.2 30427.5 26901.5
Equity dividend 12742.3 8590.5 3116.1 5784.3 5780.7
Preference dividend - - - - -
Dividend tax 1928.0 1328.9 340.9 812.5 982.5
Retained earnings 22789.2 29341.3 20539.2 23830.7 20138.3
Source: Rediffmoney.com

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Exhibit II
A List of Some Awards and Achievements for Tata Nano
2009 Listed in Guinness Book of World Records as the worlds cheapest car
2010 Business Standard Motoring Indian car of the year
2010 Bloomberg UTV-Autocar car of the year
2010 Edison Awards, first place in the transportation category
2010 Good Design Awards, in the category of transportation
*The list is not exhaustive.
Compiled from various sources

Exhibit III
Sales Figure of Tata Nano (in Units)

Source - http://bestsellingcarsblog.com/2011/05/04/india-april-2011-tata-nano-over-10000-sales-for-the-
first-time/#more-5544, http://www.cardekho.com/, http://www.siamindia.com/, http://www.team-bhp.com/
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Exhibit IV

Source: Indian Car Firm Tata Offers Nano Safety Upgrades, www.bbc.co.uk, April 15, 2011

Exhibit V
Indian Emission Standards (Four-Wheel Vehicles)
Standard Reference Year Region
India 2000 Euro 1 2000 Nationwide
Bharat Stage II Euro 2
2001
NCR*, Mumbai,
Kolkata, Chennai
2003 NCR*, 12 Cities
2005 Nationwide
Bharat Stage III Euro 3
2005 NCR*, 12 Cities
2010 Nationwide
Bharat Stage IV Euro 4 2010 NCR*, 12 Cities
* National Capital Region (Delhi)
Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Ahmedabad, Pune, Surat, Kanpur, Lucknow,
Sholapur, and Agra
Source: http://en.wikipedia.org/wiki/Bharat_Stage_emission_standards
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End Notes:

i
Lijee Philip & Kala Vijayraghavan, Smart Selling Helps Tata Nano Sales Drive Past 10k Units Mark
in April, The Economic Times, May 10, 2011
ii
Tata Motors Seeking for Nanos Fresh Capacity, www.vicky.in, April 11, 2011
iii
About Us, www.tata.com June 3, 2011
iv
http://en.wikipedia.org/wiki/Tata_Group, June 3, 2011
v
Satish Virivinty, Ratan Tata Not on Forbes Magazines Billionaires List: A Reason Behind,
www.currentweek.net, June 3, 2011
vi
About Us, www.tata.com, June 3, 2011
vii
U.S. and Indian Philanthropists Recognized for Conviction, Courage and Sustained Efforts,
www.carnegiemedals.org, May 4, 2008
viii
Company Profile, www.tatamotors.com, June 3, 2011
ix
Cynthia Rodriguez, Tata Group / Tata Motors / Driving the Dream, http://web.archive.org, , October
11, 2010
x
Company Profile, www.tatamotors.com, June 3, 2011
xi
Indias Top 10 Brands, http://business.rediff.com, October 26, 2010
xii
End of the Road? www.team-bhp.com, December 1, 2010
xiii
Ibid.
xiv
Tata Nano: The Peoples Car from Tata Motors, http://tatanano.inservices.tatamotors.com, April 15,
2011
xv
Ibid.
xvi
End of the Road? www.team-bhp.com, December 1, 2010
xvii
www.team-bhp.com/forum/indian-car-scene/92985-tata-nano-november-sales-506-analysing-root-
cause-devising-solutions.html, April 15, 2011
xviii
Ibid.
xix
Ashish Kumar Mishra, Saving Tata Nano, http://business.in.com, January 4, 2011
xx
http://www.team-bhp.com/forum/indian-car-scene/92985-tata-nano-november-sales-506-analysing-
root-cause-devising-solutions.html, April 15, 2011
xxi
Ibid.
xxii
Ashish Kumar Mishra, Saving Tata Nano, http://business.in.com, January 4, 2011
xxiii
Buyers Put Brakes on World's Cheapest Car Nano, www.business-standard.com, December 3, 2010
xxiv
Tata Nano Car Sales Sink by 85%, www.bbc.co.uk, December 1, 2010
xxv
Kumar Pankaj, Tata Nano - What Went Wrong? http://ezinearticles.com, December 13, 2010
xxvi
Matt Eyring , Learning from Tatas Nano Mistakes, http://blogs.hbr.org, January 11, 2011
xxvii
Kumar Pankaj, Tata Nano - What Went Wrong? http://ezinearticles.com, April 15, 2011
xxviii
Tata Nanos Nov Sales One-sixth of Oct Figures, http://articles.economictimes.indiatimes.com,
April 15, 2011
xxix
Matt Eyring , Learning from Tatas Nano Mistakes, http://blogs.hbr.org, January 11, 2011
xxx
Kumar Pankaj, Tata Nano - What Went Wrong? http://ezinearticles.com, April 15, 2011
xxxi
Matt Eyring , Learning from Tatas Nano Mistakes, http://blogs.hbr.org, January 11, 2011
xxxii
Kumar Pankaj, Tata Nano - What Went Wrong? http://ezinearticles.com, April 15, 2011
xxxiii
Gokul Krishnamurthy, Not All Brands Need to Look Young, www.thehindubusinessline.com, June
7, 2011
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xxxiv
Matthew Keegan, Tata Nano Fails to Meet Expectations, http://ezinearticles.com, April 15, 2011
xxxv
Suresh Nandi, A Big U Turn by the Small Car, Tata Nano, www.deccanherald.com, May 21, 2011
xxxvi
Indian Car Firm Tata offers Nano Safety Upgrades , www.bbc.co.uk, November 10, 2010
xxxvii
Loan on Tata Nano up to 90 Per Cent in 48 hours Announced by Tata Motors Finance
www.cardekho.com, December 15, 2010
xxxviii
Tata Motors Finance Offers Quick Loan for Nano, http://www.business-standard.com, December
15, 2010
xxxix
Loan on Tata Nano up to 90 Per Cent in 48 hours Announced by Tata Motors Finance
http://www.cardekho.com, December 15, 2010
xl
Tata Nano Comeback Story: Nano Approval Time for Tata Nano Loans,
http://www.indiancarsbikes.in, April 15, 2011
xli
Suresh Nandi, A Big U Turn by the Small Car, Tata Nano, www.deccanherald.com, May 21, 2011
xlii
Tata Motors Finance Offers Quick Loan for Nano, www.business-standard.com, December 15, 2010
xliii
Nano Makes a ComebackAnd How? http://trak.in, April 15, 2011
xliv
After Tata Nano, More Cars Headed to Big Bazaar, http://indianautosblog.com, April 15, 2011
xlv
Lijee Philip & Kala Vijayraghavan, Smart Selling Helps Tata Nano Sales Drive Past 10k Units Mark
in April, The Economic Times, May 10, 2011
xlvi
Nano Makes a ComebackAnd How? http://trak.in, April 15, 2011
xlvii
Tata Nano Sales to Touch 5000 Units This Month, http://www.cardekho.com, April 15, 2011
xlviii
Rajni Sharma, Tata Nano New Ad Campaign in TV also to Boost Sales, www.infosera.com, October
17, 2010
xlix
Ashwini Gangal, Tata Nano: Bring Home Happiness, www.afaqs.com, January 14, 2011
l
Nano Makes a ComebackAnd How? http://trak.in, April 15, 2011
li
Tata Nano Bucked the Trend, Registers Ten Fold Sales Growth in December 2010,
http://www.wheelosphere.org, December 31, 2010
lii
Tata Nano Sales Discussion for April 2011, www.rushlane.com, May 2, 2011
liii
India April 2011: Tata Nano over 10,000 Sales for the First Time, http://bestsellingcarsblog.com,
June 3, 2011
liv
Tata Motors Seeking for Nanos Fresh Capacity, www.vicky.in, April 11, 2011
lv
Tata Nano Unknown facts, http://www.mohanbn.com, April 15, 2011
lvi
Lijo Mathai, Tata Nano Sales Pickup, www.indiandrives.com, April 15, 2011
lvii
Loan on Tata Nano up to 90 Per Cent in 48 hours Announced by Tata Motors Finance,
www.cardekho.com, December 15, 2010
lviii
www.tatanano.org, June 8, 2011
lix
Lijee Philip & Kala Vijayraghavan, Smart Selling Helps Tata Nano Sales Drive Past 10k Units Mark
in April, The Economic Times, May 10, 2011
lx
Matthew Keegan, Tata Nano Fails to Meet Expectations, http://ezinearticles.com, April 15, 2011
lxi
Tata Nano Bucked the Trend, Registers Ten Fold Sales Growth in December 2010,
www.wheelosphere.org, December 31, 2010
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