Project Study Report

On

“THE STUDY ON PERCEPTION OF PEOPLE ABOUT NANO CAR IN

JAIPUR CITY”

Submitted in partial fulfillment for the

Award of degree of

Master of Business Administration

Submitted By: - Submitted To:-

Rishabh Modi Faculty Name:-Ms. KAJAL SITLANI
MBA Part 2 Designation: - Senior Lecturer

2008- 2010
I RISHABH MODI here by declare that the project report entitled “The Study on
Perception of people about NANO car in JAIPUR city” under guidance of
Ms. KAJAL SITLANI submitted in partial fulfillment of the requirements for the award
of the degree of MASTER OF BUSINESS ADMINISTRATION TO RAJASTHAN
TECHNICAL UNIVERSITY, KOTA is my original work.

Signature :
Date :
Place : JAIPUR

2
 In order to make my grand project I acknowledge a special thanks to all those
people without whose supports it would not be possible for me to complete my report.

First of all I really thankful to my APEX INSTITUTE OF MANAGEMENT AND

SCIENCE because of them I could achieve the target. I express my sincere thanks to
our Principal Sir Mr. G.S, Bhatnagar and my project guide Ms. KAJAL SITLANI who
had guide to me throughout my project.

I would also thankful to the TATA MOTORS for giving me this opportunity to
work on “NANO” car in JAIPUR city.
Also I would like to express my inner feeling for all the people for co-operating
and helping me throughout the project.
Last but not the least; I am thankful to my parents and friends who have
provided me with their constant support throughout this project.

RISHABH MODI
MBA (SEMESTER – IV)
APEX INSTITUTE OF MANAGEMENT AND SCIENCE

3
The professional training is the internal part of an M.B.A. program. It helps the
students understand practical aspects of Business Management in a better way as a
part of my M.B.A. program at APEX INSTITUTE OF MANAGEMENT AND SCIENCE.

“Marketing Research is the systematic and objective identification, collection,

analysis, dissemination, and use of information for the purpose of improving decision
making related to identification and solution of problems and opportunity”

“Perception is the process, by which an individual selects, organizes and interprets

information inputs to create a meaningful picture of the world around as”

To be a Master of Business Administration student is a matter of pride because we

are in a field, which helps us to develop from a normal human being into a disciplined,
and dedicated professional. One has to be a good learner to sharper knowledge in the
particular field to achieve and attain the desired goals and heights. I conducted to gain
an understanding of what goes in to mind of the customer about “NANO”. To find the
perception of people on “NANO” in the JAIPUR city, I used research questionnaires as
the research and data collection tools. The responses were collected from 300
respondents from various areas of JAIPUR.
I had learned lot during my Grand Project on perception of people on Tata’s “NANO”,
and I hope this will be helpful to find out perception of people on “NANO” car in
JAIPUR city.

4
 The grand project study on a “The Study on Perception of people about NANO car
in JAIPUR city” was based on customer survey. The main objectives of the project
are

 To know the perception of people about “NANO” car in JAIPUR

city.

 To know about awareness of products.

 To know about factors affecting purchase decision of “NANO”.

 To know acceptance level of people in JAIPUR City.

 To know how purchase decision of “NANO” varies from different

Income group.

For this project customer research was carried out at various area of JAIPUR City. In
this customer research, I had learnt about difference in customer’s perception about
TATA”s NANO in JAIPUR City.

At the end it is submitted to “APEX INSTITUTE OF MANAGEMENT AND SCIENCE”.

5
 CHAPTER: 1
INTRODUCTION

6
 Sr. CONTENTS PAGE
NO. NO.
1. INDUSTRY PROFILE 8
2. COMPANY PROFILE 16
3. THEORITICAL BACKGROUND 31
4. IDENTIFICATION OF THE STUDY 73
5.1 MARKETING RESEARCH PROBLEM 73
5.2 SCOPE OF THE STUDY 73
5.3 OBJECTIVE OF THE STUDY 73
5.4 LIMITATION OF THE STUDY 73
5. RESEARCH METHODOLOGY 74
6. INTERPRETATION AND ANALYSIS 77
7. INTERPRETATION OF RESULTS 99
8. CONCLUSION 101
9 ANNEXURE 102
9.1 BIBLIOGRAPHY 103
9.2 APPENDICES 104

LIST OF TABLES & GRAPHS

TABLE/ ASPECT
GRAPH NO.
1. SHOWING GENDER CATEGORY

7
2. SOWING AGE GROUP OF RESPONDENTS.

3. SHOWING INCOME GROUP OF RESPONDENTS

4. SHOWING OCCUPATION LEVEL OF RESPONDENTS.

5. SHOWING NO OF RESPODENTS WHO ARE HAVING

VEHICLE OR WHO DO NOT HAVE IT.
6. SHOWING PREFERENCE FOR RS. 1 LAKH CAR

7. SHOWING NO. OF RESPONDENTS WHO ARE AWARE

ABOUT “NANO”
8. SHOWING PREFERENCE OF THE RESPONDENTS ABOUT
“NANO”
9. SHOWING NO. OF RESPONDENTS WHO PLAN TO BUY
“NANO” WITHIN 1 TO 2 YEAR
10. SHOWING THE NO. OF RESPONDENT’S PREFERENCE
ABOUT MODEL OF THE “NANO”
11. SHOWING OPINION FOR “NANO’S” MILEAGE
12. SHOWING ATTRIBUTES PREFERENCE GIVEN BY
RESPONDENTS WHILE PURCHASING “NANO”
12.1 BRAND NAME
12.2 AFFORDABILITY
12.3 SHAP/DESIGN
12.4 SAFETY
12.5 COMFORT
13. SHOWING THE PREFERENCE OF THE RESPONDENTS ON
“NANO” COMPARE TO SECOND HAND CAR
14. SHOWING HOW PURCHASE DECISION OF “NANO” WILL
AFFECT TO RESPONDENTS STATUS
15. SHOWING NO. OF RESPONDENTS WHO BELIEVE “NANO”
AS A DREAM CAR.

8
 CHAPTER: 2
COMPANY PROFILE
 2.1 History of the Organization

 2.2 Board of Directors

 2.3 Branches

 2.4 Certification

 2.5 Mission & Values

9
1. Literature Review

1.1 Introduction
The automobile sector is a key player in the global and Indian economy. The
global motor vehicle industry (four-wheelers) contributes 5 per cent directly to the total
manufacturing employment, 12.9 per cent to the total manufacturing production value
and 8.3 per cent to the total industrial investment. It also contributes US$560 billion to
the public revenue of different countries, in terms of taxes on fuel, circulation, sales
and registration. The annual turnover of the global auto industry is around US$5.09
trillion, which is equivalent to the sixth largest economy in the world (Organisation
International des Constructeurs d' Automobiles, 2006). In addition, the auto industry is
linked with several other sectors in the economy and hence its indirect contribution is
much higher than this. All over the world it has been treated as a leading economic
sector because of its extensive economic linkages.
India’s manufacture of 7.9 million vehicles, including 1.3 million passenger cars,
amounted to 2.4 per cent and 7 per cent, respectively, of global production in number.
The auto-components manufacturing sector is another key player in the Indian
automotive industry. Exports from India in this sector rose from US$1.0 billion in 2003-
04 to US$1.8 billion in 2005-06, contributing 1 per cent to the world trade in auto
components in current USD.
In India, the automobile industry provides direct employment to about 5 lakh
persons. It contributes 4.7 per cent to India’s GDP and 19 per cent to India’s indirect
tax revenue. Till early 1980s, there were very few players in the Indian auto sector,
which was suffering from low volumes of production, obsolete and substandard
technologies. With de-licensing in the 1980s and opening up of this sector to FDI in
1993, the sector has grown rapidly due to the entry of global players.
A rapidly growing middle class, rising per capita incomes and relatively easier
availability of finance have been driving the vehicle demand in India, which in turn, has
prompted the government to invest at unprecedented levels in roads infrastructure,

10
including projects such as Golden Quadrilateral and North-East-South-West Corridor
with feeder roads.2 The Reserve Bank of India’s (RBI) Annual Policy Statement
documents an annual growth of 37.9 per cent in credit flow to vehicles industry in
2006.3
Given that passenger car penetration rate is just about 8.5 vehicles per
thousand, which is among the lowest in the world; there is a huge potential demand
for automobiles in the country.
There are two distinct sets of players in the Indian auto industry: Automobile
component manufacturers and the vehicle manufacturers, which are also referred to
as Original Equipment Manufacturers (OEMs). While the former set is engaged in
manufacturing parts, components, bodies and chassis involved in automobile
manufacturing, the latter is engaged in assembling of all these components into an
automobile.
The Indian automotive component manufacturing sector consists of 500 firms in
the organised sector and around 31,000 enterprises in the unorganised sector. In the
domestic market, the firms in this sector supply components to vehicle manufacturers,
other component suppliers, state transport undertakings, defence establishments,
railways and even replacement market. A variety of components are exported to
OEMs abroad and after-markets worldwide.
The automobile manufacturing sector, which involves assembling the
automobile components, comprises two-wheelers, three-wheelers, four-wheelers,
passenger cars, light commercial vehicles (LCVs), heavy trucks and buses/coaches.
In India, mopeds, scooters and motorcycles constitute the two-wheeler industry, in the
increasing order of market share. In 2005-06, the Indian auto sector had produced
over 7.6 million two wheelers and 1.3 million passenger cars and utility vehicles.
India is a global major in the two-wheeler industry producing motorcycles,
scooters and mopeds principally of engine capacities below 200 cc. It is the second
largest producer of two-wheelers and 13th largest producer of passenger cars in the
world. Tata figures among the ten largest global manufacturers of LCVs, heavy trucks,
buses and coaches, while it is among the top 25 in passenger car manufacturing.

11
 The two-wheeler industry in India has grown at a compounded annual growth
rate of more than 10 per cent (in number) during the last five years and has also
witnessed a shift in the demand mix, with sales of motorcycles showing an increasing
trend. Indian two wheelers comply with some of the most stringent emission and fuel
efficiency standards worldwide. The passenger car segment has been growing at a
rapid pace -- from over 6,50,000 vehicles sold during 2001 to over a million vehicles
sold during 2004-05, showing an annual growth rate of 17.36 per cent.
With this general introduction, Section 1.2 presents a review of recent literature
on the Indian auto industry and appraises it critically. Section 1.3 attempts to identify
the gaps in the literature and highlights the contributions of this study.

1.2 Literature Review

As noted by NMCC (2006), competitiveness of manufacturing sector is a very
broad multi-dimensional concept that embraces numerous aspects such as price,
quality, productivity, efficiency and macro-economic environment. The OECD
definition of competitiveness, which is most widely quoted, also considers employment
and sustainability, while being exposed to international competition, as features
pertaining to competitiveness. There are numerous studies on auto industry in India,
published by industry associations, consultancy organisations, research bodies and
peer-reviewed journals. In this section, various studies on the Indian auto industry are
reviewed, under different heads pertaining to competitiveness, namely, global
comparisons, policy environment and evolution of the Indian auto industry,
productivity, aspects related to supply-chain and industrial structure and technology
and other aspects.

1.2.1 Global Comparisons

The Investment Information and Credit Rating Agency of India (ICRA, 2003)
studies the competitiveness of the Indian auto industry, by global comparisons of
macro-environment, policies and cost structure. This has a detailed account on the
evolution of the global auto industry. The United States was the first major player from
1900 to 1960, after which Japan took its place as the cost-efficient leader. Cost

12
efficiency being the only real means in as mature an industry as automobiles to retain
or improve market share, global auto manufacturers have been sourcing from the
developing countries. India and China have emerged as favourite destinations for the
first-tier OEMs since late 1980s. There are only a few dominant Indian OEMs, while
the number of OEMs is very large in China (122 car manufacturers and 120
motorcycle manufacturers). According to this study, the major advantage of the Indian
economy is educated and skilled workforce with knowledge of English. Our
disadvantages include poor infrastructure, complicated tax structure, inflexible labour
laws, inter-state policy differences and inconsistencies. The drivers of Chinese
economic growth are FDI, labour productivity growth, which was 1.5 times higher than
that in India in the last decade, and domestic demand. Fiscal pressure is mounting on
the Chinese government, while India is in a better state. Based on comparisons of
cost composition to pinpoint the areas in which the Indian auto industry is at a
disadvantage, this study recommends a VAT regime, speedy procedures, imports
duty cuts on raw materials, common testing and design facility, labour reforms,
upgradation of design and engineering capabilities and brand building.
ICRA (2004a) analyses the implications of the India-ASEAN Free Trade
Agreements for the Indian automotive industry. ASEAN economies are globally more
integrated than India. The current size of Indian and ASEAN market for automobiles is
more or less the same but the Indian market has a larger growth potential than the
ASEAN market due to the low level of penetration. The labour cost is low in India but
the stringent labour regulations erode this advantage. The level of infrastructure is
better in India than Indonesia and the Philippines but worse than that in other ASEAN
countries. The financial and banking sector is better in India than in the ASEAN
countries. The study notes that there is a huge excess capacity in ASEAN countries,
in comparison with that in India, which will help them to tackle the excess demand that
may arise in future. The study finds a 20-30 per cent cost disadvantage for Indian
companies on account of taxation and infrastructure and 5-20 per cent labour cost
advantage over comparable
ASEAN-member-based companies. Similar findings are noted in a study by the

13
Automotive Component Manufacturers Association of India (ACMA, 2004), particularly
in comparison with Thailand. ICRA (2004b) analyses the impact of Preferential Trade
Agreement (PTA) with MERCOSUR6 on the automobile sector in India. This study
finds a significant threat of imports in sub-compact and compact cars and certain auto-
components. There is huge excess capacity and intense competition in MERCOSUR
countries, propelling them to look for export opportunities. This is true especially of
Brazil, which has a well developed auto-component sector with huge economies of
scale. Further, weak currency in all MERCOSUR countries provides a natural tariff
barrier. In addition, MERCOSUR countries have an equitable arrangement within
themselves to have a balanced trade, with fair level of exports and imports. The Indian
auto industry could gain from this PTA with MERCOSUR only if it is assured of the
balanced trade, as MERCOSUR countries practise among themselves. ICRA (2005)
studies the possible impact of FTA with South Africa on the Indian automobile
industry. The study finds that there are a few policies in South Africa that indirectly
subsidise the auto industry, unlike India, in terms of financial grants. Hence it is
suggested that India could minimise losses only if it goes for inclusion of certain auto
components, which involve huge logistic costs of imports, creating a natural protection
(for example, stampings, glass, seats, plastics and tyres) and those in which India
enjoys economies of scale and is cost-competitive (e.g. castings and forgings) in this
FTA. If South Africa is ready to discontinue the schemes such as Motor Industry
Development Programme (MIDP), India could include all automotive components in
this FTA. There should be a minimum local content of 60 per cent and the agreement
should not be trade balancing as India will not gain much in that case.

1.2.2 Policy Environment and Evolution of Indian Auto Industry

In this section, studies on the policy environment pertaining to the Indian auto
industry and its evolution over the years have been reviewed. Pingle (2000) reviews
the policy framework of India’s automobile industry and its impact on its growth. While
the ties between bureaucrats and the managers of state-owned enterprises played a
positive role especially since the late 1980s, ties between politicians and industrialists
and between politicians and labour leaders have impeded the growth. The first phase

14
of 1940s and 1950s was characterised by socialist ideology and vested interests,
resulting in protection to the domestic auto industry and entry barriers for foreign firms.
There was a good relationship between politicians and industrialists in this phase, but
bureaucrats played little role. Development of ancillaries segment as recommended
by the L.K. Jha Committee report in 1960 was a major event that took place towards
the end of this phase. During the second phase of rules, regulations and politics,
many political developments and economic problems affected the auto industry,
especially passenger cars segment, in the 1960s and 1970s. Though politicians
picked winners and losers mainly by licensing production, this situation changed with
oil crises and other related political and macro-economic constraints.
The third phase starting in the early 1980s was characterised by delicensing,
liberalization and opening up of FDI in the auto sector. These policies resulted in the
establishment of new LCV manufacturers (for example, Swaraj Mazda, DCM Toyota)
and passenger car manufacturers.7 All these developments led to structural changes
in the Indian auto industry. Pingle argues that state intervention and ownership need
not imply poor results and performance, as demonstrated by Maruti Udyog Limited
(MUL). Further, the non contractual relations between bureaucrats and MUL dictated
most of the policies in the 1980s, which were biased towards passenger cars and
MUL in particular. However, D’Costa (2002) argues that MUL’s success is not
particularly attributable to the support from bureaucrats. Rather, any firm that is as
good as MUL in terms of scale economies, first-comer advantage, affordability,
product novelty, consumer choice, financing schemes and extensive servicing
networks would have performed as well, even in the absence of bureaucratic support.
D’Costa has other criticisms about Pingle (2000). The major shortcoming of Pingle’s
study is that it ignores the issues related to sector specific technologies and regional
differences across the country. Piplai (2001) examines the effects of liberalisation on
the Indian vehicle industry, in terms of production, marketing, export, technology tie-
up, product upgradation and profitability. Till the 1940s, the Indian auto industry was
non-existent, since automobile were imported from General Motors and Ford. In early
1940s, Hindustan Motors and Premier Auto started, by importing know-how from
General Motors and Fiat respectively. Since the 1950s, a few other companies

15
entered the market for two-wheelers and commercial vehicles. However, most of them
either imported or indigenously produced auto-components, till the mid-1950s, when
India had launched import substitution programme, thereby resulting in a distinctly
separate auto-component sector.
Due to the high degree of regulation and protection in the 1970s and 1980s, the
reforms in the early 1990s had led to a boom in the auto industry till 1996, but the
response of the industry in terms of massive expansion of capacities and entry of
multinationals led to an acute over-capacity. Intense competition had led to price wars
and aggressive cost-cutting measures including layoffs and large-scale retrenchment.
While Indian companies started focusing on the price-sensitive commercially used
vehicles, foreign companies continued utilizing their expertise on technology-intensive
vehicles for individual and corporate uses. Thus, Piplai concludes that vehicle industry
has not gained much from the reforms, other than being thrusted upon a high degree
of unsustainable competition.
In August 2006, a Draft of Automotive Mission Plan Statement prepared in
consultation with the industry was released by the Ministry of Heavy Industries and
Public Enterprises. This was finally released as a report in December 2006. This
document draws an action plan to take the turnover of the automotive industry in India
to US$145 billion by 2016, accounting for more than 10 per cent of the GDP and
providing additional employment to 25 million people, by 2016. A special emphasis is
laid on small cars, MUVs, two-wheelers and auto-components. Measures suggested
include setting up of a National Auto Institute, streamlining government/ educational/
research institutions to the needs of the auto industry, upgrading infrastructure,
considering changes in duty structure and fiscal incentives for R&D. Similarly, NMCC
(2006), which lays down a national strategy for manufacturing, recognises the
importance of the Indian automobile and auto-component industry, particularly the
latter, as a competitive knowledge-based industry with immense employment
generation potential.
McKinsey (2005) predicts the growth potential of India-based automotive
component manufacturing at around 500 per cent, from 2005 to 2015. This report
describes the initiatives required from industry players, the Government and the

16
ACMA to capture this potential. This study was based on interviews and workshops
with 20 suppliers and 7 OEMs and survey with ACMA members. Increase in cost
pressures on OEMs in developed countries, coupled with the emergence of skilled,
cost-competitive suppliers in Low Cost Countries (LCCs), is likely to facilitate further
acceleration of sourcing of automotive components from LCCs. The analysis identifies
strong engineering skills and an emerging culture of cost-competitiveness as the
major strengths of the Indian auto component sector, while its weaknesses include
slow growth in domestic demand and structural disadvantages such as power tariffs
and indirect taxes.
The policy recommendations of this study include VAT implementation, lower
indirect taxes, power reforms, tax benefits linked to export earnings, duty-cut for raw
material imports, R&D incentives for a longer period, establishment of auto parks,
benefits for export-seeking investments, human resources development and
modernisation fund for new investments in auto clusters. Industry players have been
advised to improve their operational performance, determine their strategic posture as
one among those identified in the study, improve capabilities in line with their posture
and invest very rapidly in a planned manner. ACMA needs to promote India as a
brand, enable sourcing from India by global customers and promote the quality and
productivity efforts of the auto component firms in India.
ACMA (2006) notes that India’s joining the WP (Working Party) 29: 1998
Agreement for global harmonisation of automotive standards, coupled with the funding
of National Automotive Testing and Research Infrastructure Project (NATRIP) by the
Government of India, has increased prospects of the Indian auto industry rising up to
global standards in the near future, in all aspects.
Narayanan (1998) analyses the effects of deregulation policy on technology
acquisition and competitiveness in the Indian automobile industry during the 1980s
and finds that competitiveness has depended on the ability to build technological
advantages, even in an era of capacity-licensing. In a liberalised regime, this would
depend on firms’ ability to bring about technological changes, as inferred from the
behaviour of new firms in the sample considered. Further, vertical integration could
score over subcontracting in a liberal regime. This is probably because of the entry of

17
new foreign firms that produce technologically superior and guaranteed quality
vehicles and choose to produce most of the components in-house.8 Narayanan
(2004) analyses the determinants of growth of Indian automobile firms during three
different policy regimes, namely, licensing (1980-81 to 1984-85), deregulation (1985-
86 to 1990-91) and liberalisation (1991-92 to 1995-96). Unlike the prediction by
Narayanan (1998), this study finds that vertical integration is detrimental for growth in
a liberalised regime as it potentially limits diversification.
Narayanan (2006) also finds that vertical integration plays a positive role in a
regulated regime, while it is not conducive for export competitiveness in a liberal
regime. Kathuria (1995) notes that the time-bound indigenization programme for
commercial vehicles in the 1980s facilitated the upgradation of vendor skills and
modifying vehicles to suit local conditions, which demand functional efficiency,
overloading capabilities, fuel economy, frequent changes in speed and easy repair
and maintenance. Kathuria also mentions that the choice between vertical integration
and subcontracting crucially depends on the policy regime: In a liberal regime, vertical
integration may not work.

1.2.3 Productivity

Sharma (2006) analyses the performance of the Indian auto industry with
respect to the productivity growth. Partial and total factor productivity of the Indian
automobile industry have been calculated for the period from 1990-91 to 2003-04,
using the Divisia- Tornquist index for the estimation of the total factor productivity
growth. The author finds that the domestic auto industry has registered a negative and
insignificant productivity growth during the last one and a half decade. Among the
partial factor productivity indices only labour productivity has seen a significant
improvement, while the productivity of other three inputs (capital, energy and
materials) haven’t shown any significant improvement. Labour productivity has
increased mainly due to the increase in the capital intensity, which has grown at a rate
of 0.14 per cent per annum from 1990-91 to 2003-04.

18
1.2.4 Aspects Related to Supply Chain and Industrial Structure
In this section, the studies that examine the aspects pertaining to local and
global auto supply chains as well as the structure of the Indian auto industry are
reviewed. Humphrey (1999) compares the impact of globalisation on supply chain
networks in the auto industry in Brazil and India. According to Humphrey, global auto
industry hubs were situated in three regions, namely, North America, Western Europe
and Japan. Brazil and India are examples of the countries which could develop the
indigenous auto industry despite not being situated very close to any of these regions.
Hence, Humphrey compares the auto industries in these two countries. This study
considers auto industry as a producer-driven commodity chain, wherein global auto
assemblers control the entire supply chain from components to dealerships.
While the global auto assembly majors used to produce 60-70 per cent of the
value in house till the 1980s, various phenomenal developments have started taking
place since the 1980s, such as the emergence of independent dealers and rise of
catalogue suppliers who supply their standard and indigenously designed
components/modules to many assemblers. Brazil and India had liberalised auto
investments and tariff structure since 1990. Prior to 1991, India had a much more
protectionist regime than Brazil, in terms of licensing and quantitative restrictions on
both imports and domestic production. Inflows of auto FDI occurred in both the
countries since the mid-1990s. Further, Brazil and India have emerged as preferred
suppliers for global auto assemblers. When the global auto assemblers entered India
and Brazil, the phenomenon of ‘follow-source’9 was also happening. Now, there are
parallel global networks of both assemblers and Tier-1 suppliers. Even Indian
component suppliers have opportunities to enter the global auto supply chains, mainly
in low technology products made to detailed drawings but the space for domestic
industry is diminishing. With the global centralization of product engineering, skill
requirements are likely to be immense in process engineering, particularly in
assemblers and Tier-1 component manufacturers.
Sutton (2000) compares the auto-component supply chains in India and China,
based on field surveys. In both these countries, the supply chain has developed very
rapidly at the level of car makers and Tier-1 suppliers, with quality levels close to

19
world standards, largely driven by the entry of multinational car makers. But, the Tier-2
suppliers are still not up to the global standards. The domestic content requirements,
based on the infant industry argument, have helped the international car makers in
enhancing the production capabilities of the domestic players effectively, as shown by
increases in auto-component exports from India and China. Of the top ten exporting
firms in India and China, five and six are domestic ones, respectively. Enhanced
supply-chain capabilities have benefited the domestic auto-makers as well, such as
Mahindra and Mahindra in India, who have been able to capture a sizeable market
share with their indigenously designed and assembled MUV.
Some leading component producers in China and India strategically use highly
capital intensive techniques such as robotics, occasionally, despite the low wages,
mainly on account of their concerns to achieve high levels of quality. This in
combination with employing high-quality workforce even at shop floor is another
strategic choice of a few leading firms in India, to promote exports. Many Tier-1 firms
follow the standard Japanese work practices to improve quality and minimise costs.
Interactions between carmakers and component suppliers have also helped the latter
improve quality.
Addressing a larger question of the impact of Foreign Direct Investment (FDI)
on the domestic industry and economy, Tewari (2000) studies the automotive supply
chain of Tamil Nadu, based on field surveys. Studies such as Humphrey (1999) show
that entry of global auto majors in India and Brazil have impeded domestic firms,
because of ‘follow source’, while this study shows evidence for the fact that medium-
sized firms, which entered in the mid-1990s in Tamil Nadu have formed networks with
smaller domestic suppliers and helped them upgrade their technologies. These
medium-sized suppliers require more support from the government, since they play a
crucial role in facilitating the development of the domestic auto industry. Joint ventures
and technical tie-ups with overseas suppliers have been the strategies that were
followed by well-performing auto component manufacturers, long before the global
auto majors entered India. These relationships and the entry of foreign OEMs not only
promote employment and income, but also diffusion of technologies and knowledge to
the entire supply chain, including smaller firms.

20
 Veloso and Kumar (2002) provide an overview of the major trends taking place
in the global automotive industry, emphasising on the Asian market. Consumer
preferences, government regulations and intense competition have been driving the
firms towards new technologies, modernisation, research and changes in design and
production. Market saturation in Triad regions (the United States, Western Europe and
Japan) and rapid emergence of markets in Asia have led to increasing diversity in
market needs. As a result, there are many models and segments coming up rapidly.
Auto majors have started adopting a global perspective and reorganising their
vehicle portfolio around product platforms, modules and systems. They are also
minimising the number of suppliers, by opting for bigger ones, based on cost and
quality competitiveness, R&D capacity and proximity to development centres. Mergers
and acquisitions are taking place for consolidation. Suppliers have been taking new
roles, as systems integrators, global standardiser-systems manufacturers, component
specialists and raw material suppliers. These roles are based on their focus, market
presence, critical capabilities and types of components and systems.
The automobile industry in India had been facing the problem of overcapacity
by 2000 and the auto-component sector was not so developed as to be able to deliver
products of world-class quality. Chinese tariff and quota policies, coupled with local
content regulations protect the auto industry in China immensely. However, the
Chinese auto industry suffers from fragmentation, lower quality, lack of technological
upgradation and managerial skills. Consolidation and liberalisation that are happening
recently in China are expected to promote its auto industry. Auto industries in the
ASEAN and Korea have recovered quickly from the Asian crisis of 1998. This report
concludes with some aspects that any study on auto sector should focus on, such as
evaluation of the capabilities of auto-component supply chain – both large and small
suppliers, strategies of OEMs, cost, delivery, dependability, quality, product
development, process development, flexibility, facilities/equipment, technology,
process, workforce and organisation, logistics and supply chain, research and
engineering and interfaces.
ACMA (2006) presents the recent trends in the Indian auto industry as a whole
and their implications for automotive supply chain in India. The market-oriented growth

21
and 10 growing automobile industry in India have ensured bright prospects for the
Indian auto-component sector, which is vibrant and competitive. Huge future growth
potential of the automobile industry and increased access to consumer finance may
lead India to a place among the top five automotive economies by 2025. Most of the
ACMA members have at least one standards certification. They are embracing world-
class modern shop-floor practices. The auto-component sector has been showing
high rates of growth of production and exports, with a comprehensive production
range, transforming as an attractive OEMs Tier-1 supplier. Many leading OEMs and
Tier-1 companies have plans of sourcing from Indian auto-component manufacturers,
who are scaling up, establishing partnerships in India and abroad, acquiring foreign
companies and establishing green field investments overseas.
Proficiency in understanding technical drawings, understanding of different
global standards, appropriate automation, flexibility in small-batch production and use
of Information Technology (IT) for design, development and simulation are some of
the growing capabilities among Indian auto-component manufacturers. India is
expected to emerge as the next big automotive R&D base, given its IT capabilities
coupled with automotive domain knowledge and shifting of automotive design centres
to India, by global MNCs, as it is a potentially excellent base for prototyping, testing,
validating and producing auto-components.

1.2.5 Technology and Other Aspects

Kathuria (1996) analyses the Commercial Vehicles (CV) industry in India in a
detailed manner, dwelling on the concepts of vertical integration and subcontracting,
production technology and technological change. After an overview of the global auto
industry, Kathuria traces the developments in the Indian auto industry from the 1950s
to 1991. To evaluate the competitiveness of Indian commercial vehicles
manufacturers in the domestic market, growth trends, structural trends, market
shares, profitability, productivity ratios, prices, quality, dealer network and
performance are analysed. Macro and micro performance of India’s vehicle exports
with major markets and Indian vehicle characteristics have been outlined, along with
an analysis of global demand patterns.

22
 Domestic resource costs and global comparison of prices, credit and service
are the other international trade-related aspects analysed in this study. On vertical
integration, the analysis leads to the conclusion that the Indian CV industry needs to
learn from the international experience to get into subcontracting and buying-in. Lack
of scales and high inventories had impeded the competitiveness of Indian CV firms in
the 1980s.
R&D capabilities and new product ranges were the result of the challenges
arising from time-bound indigenisation programme, but still Indian technology frontier
remained far below global levels. Further, different firms have followed very different
strategies and hence the impacts on their technological capabilities were also very
different. However, success of Indian firms despite such a wide range of strategies is
partly due to the protection available to them in the domestic market. Kathuria
concludes that the Indian auto industry in general, and CV industry in particular, have
a lot to learn from the global auto industry, in terms of best-practice technology and
vertical integration and supplier relationship. The study rightly predicted that the
industry would see heightened activity and recommended that the government should
ensure that the domestic firms do not lose out because of the unrestricted entry of
highly competitive foreign firms.
Narayanan (1998) finds that during the 1980s, technology acquisition through
imports of technology and in-house R&D efforts explains much of differences in
competitiveness, as measured by changes in market share, at the firm level, in the
Indian automobile industry.
Based on an econometric analysis, which considers technology acquisition,
skill intensity, component imports, firm size, product differentiation, age and vertical
integration as the determinants of competitiveness, Narayanan finds that
competitiveness has depended on the ability to build technological advantages, even
in an era of capacity licensing. This is facilitated by complementing imported
technology with in-house R&D efforts.
Narayanan (2004) uses two-way fixed effects estimation of the firm growth as a
function of variables capturing technology, such as R&D expenditure as a proportion
of sales, foreign equity participation and import of capital goods. Role of technology

23
depends on the technological regime in which the firm operates. In a licensed regime,
firms with foreign equity grow faster because of better access to resources and
technology. In a deregulated regime, import of capital goods has been the technology-
related variable that triggered growth. In a liberal regime, growth is positively
influenced by the intra-firm technology transfer.
Narayanan (2006) analyses the determinants of export intensity of Indian
automobile firms using a Tobit model, taking the variables discussed in Narayanan
(1998) and Narayanan (2004) as the determinants. This study is based on the
premises that there is a systematic difference in the characteristics and performance
between the firms that export and those which sell in the domestic market, mainly in
terms of technology acquisition, which in turn depends on the policy regime.
Technology acquisition, firm size, vertical integration, capital intensity, imports of
components and policy regime are found to be the main determinants of export
competitiveness, by this analysis.
The studies reviewed so far were of a wide range in terms of objectives,
methodologies used and conclusions arrived at. Some of them aim at studying very
specific aspects of the Indian auto industry such as global comparisons to examine
the implications of FTAs, productivity, technology and supply chain, while others dwell
on more general aspects such as strategies, competitiveness, evolution of the
industry, structure of the industry and policy aspects pertaining to the Indian auto
industry. These studies are based on field surveys, interviews, secondary data
sources, econometric analysis and descriptive analysis. Their conclusions vary widely
on specifics, but there is almost a consensus that the Indian auto industry has a bright
future due to various factors considered, except Piplai (2001), who argues that the
competition in the auto industry in India is highly unsustainable.
The studies by ICRA, ACMA and McKinsey, which focus on global
comparisons and policy environment of the auto industry, are based on quite realistic
and practical approach, but lack analytical and quantitative rigour. When looked from
a neutral perspective, it clearly emerges that most of the findings of these studies
seek some degree of protection for the auto-component sector. They are justified in

24
some ways because of the immense protection offered to the auto-component sectors
in the competing countries.
However, a more analytical and quantitative approach is required to arrive at
concrete conclusions on protection, because tariff barriers will be removed at some
point of time in future and the industry needs to gear up to face the free trade regime.
Narayanan (1998, 2004 and 2006) studies the issues related to technology in
the Indian automobile industry econometrically. These papers are based on sound
econometric theories and the results have been critically analysed based on
evolutionary theoretical framework. However, these studies suffer from a few common
problems. First, the dataset used, which is CMIE Prowess database, does not cover
all the major players in the automobile industry, including Toyota. Hence, this study
could have been supplemented by an analysis on the major companies that have
been left out, through field surveys, interviews or annual reports. Secondly,
considering automobile industry in isolation is not sufficient, since the auto-component
sector in India has been playing a key role in the automobile industry, throughout the
period considered in these papers.
Thirdly, vertical integration is proxied by the share of value-added in total sales,
in these papers. This may not be sufficient because vertical integration and sub-
contracting are too complex to be captured by a single variable based on value-
added. Value-added could be high, as a share of output, despite the absence of
vertical integration, because of the fact that several activities other than component-
manufacturing such as painting, assembly and welding take place within the
assemblers’ factories. Further, the conclusion by Narayanan (1998), that vertical
integration is a preferred strategy in a liberal regime, based on the premises that
foreign firms, which enter in this regime, produce technology intensive and high-
quality products, for which they need to produce components inhouse, is likely to be
misleading. This is because of the fact that these foreign firms have imported the
components and have not produced them in-house for this purpose. Piplai (2001)
studies the policy environment and its impact on the Indian automobile industry. While
Piplai appears to be justified in saying that there has been excess capacity in the auto
industry and the auto majors are facing difficulties in aggressively marketing their

25
products, it is probably not correct to conclude, as he has done, that the current levels
of competition resulting from liberalisation are unsustainable. As noted in the
introduction, car penetration levels are very low in India and hence the future potential
for demand is very high. This would ensure that competition is quite sustainable as
there will be enough consumers, given the rapid economic growth that is taking place.
The quantitative analysis of productivity indices is quite rigorous in Sharma
(2006), but this study suffers from some major inadequacies that include absence of
analysis of disaggregate data and lack of consistency with the reality. For example,
the conclusion that there has been no significant improvement in productivity of
materials and energy in recent years is incorrect, since the reality is that owing to cost
pressures, firms have been increasing their productivity with respect to these inputs.

TATA GROUP PROFILE:

The Tata Group comprises 98 operating companies in seven business sectors:

information systems and communications; engineering; materials; services; energy;
consumer products; and chemicals. The Group was founded by Jamsetji Tata in the
mid 19th century, a period when India had just set out on the road to gaining
independence from British rule. Consequently, Jamsetji Tata and those who followed
him aligned business opportunities with the objective of nation building. This approach
remains enshrined in the Group's ethos to this day.

The Tata Group is one of India's largest and most respected business conglomerates,
with revenues in 2006-07 of $28.8 billion (Rs129,994 crore), the equivalent of about
3.2 per cent of the country's GDP, and a market capitalization of $66.9 billion as on
February 21, 2008. Tata companies together employ some 289,500 people. The
Group's 27 publicly listed enterprises among them stand out names such as Tata
Steel, Tata Consultancy Services, Tata Motors and Tata Tea have a combined
market capitalization that is the highest among Indian business houses in the private
sector, and a shareholder base of over 2.9 million. The Tata Group has operations in
more than 80 countries across six continents, and its companies export products and
services to 85 countries.

26
The Tata family of companies shares a set of five core values: integrity,
understanding, excellence, unity and responsibility. These values, which have been
part of the Group's beliefs and convictions from its earliest days, continue to guide and
drive the business decisions of Tata companies. The Group and its enterprises have
been steadfast and distinctive in their adherence to business ethics and their
commitment to corporate social responsibility. This is a legacy that has earned the
Group the trust of many millions of stakeholders in a measure few business houses
anywhere in the world can match.

Values and purpose:

Leadership with trust
Purpose
At the Tata Group our purpose is to improve the quality of life of the
communities we serve. We do this through leadership in sectors of national economic
significance, to which the Group brings a unique set of capabilities. This requires us to
grow aggressively in focused areas of business.
Our heritage of returning to society what we earn evokes trust among
consumers, employees, shareholders and the community. This heritage is being
continuously enriched by the formalisation of the high standards of behavior expected
from employees and companies.
The Tata name is a unique asset representing leadership with trust. Leveraging
this asset to enhance Group synergy and becoming globally competitive is the route to
sustained growth and long-term success.

FIVE CORE VALUES

The Tata Group has always sought to be a value-driven organisation. These
values continue to direct the Group's growth and businesses. The five core Tata
values underpinning the way we do business are:
Integrity: We must conduct our business fairly, with honesty and transparency.
Everything we do must stand the test of public scrutiny.

27
Understanding: We must be caring, show respect, compassion and humanity for our
colleagues and customers around the world, and always work for the benefit of the
communities we serve.
Excellence: We must constantly strive to achieve the highest possible standards in
our day-to-day work and in the quality of the goods and services we provide.
Unity: We must work cohesively with our colleagues across the Group and with our
customers and partners around the world, building strong relationships based on
tolerance, understanding and mutual cooperation.
Responsibility: We must continue to be responsible, sensitive to the countries,
communities and environments in which we work, always ensuring that what comes
from the people goes back to the people many times over.

A SAGA OF VISION, COMMITMENT AND FORTITUDE:

As much an institution as it is a business conglomerate, the Tata Group is
unique in more ways than one. Established by Jamsetji Tata in the second half of the
19th century, the Group has grown into one of India's biggest and most respected
business organisations, thanks in no small part to its entrepreneurial vision, its
commitment to ideals that put people before profits, and its fortitude in the face of
adversity.

28
Family pride
The Tata family of enterprises comprises 98 companies in seven business
sectors. This section lists all these companies under the sectors in which they
operate, besides the two promoter companies of the Group. Visitors can, by clicking
on the relevant links, get a profile of individual companies, their subsidiaries (if any),
their products and services, contact details, etc.

The seven business sectors

ENGINEERING (AUTOMOTIVE):
Tata Auto Comp Systems:
Subsidiaries / associates / joint ventures: International Automotive, Knorr Bremse
Systems for Commercial Vehicles, Tata Auto Comp GY Batteries, TACO Engineering,
TACO Faurecia Design Centre, TACO Hendrickson Suspension Systems, TACO
Interiors and Plastics Division, TacoKunststofftechnik, TACO MobiApps Telematics,
TACO Supply Chain Management, TACO Tooling, TACO Visteon Engineering Center,
Tata Ficosa Automotive Systems, Tata Johnson Controls Automotive, Tata Toyo
Radiator, Tata Yazaki Auto Comp, TC Springs, Technical Stampings Automotive

Tata Motors:
Subsidiaries / associates / joint ventures: Concorde Motors, HV Axels, HV
Transmissions, Nita Company, TAL Manufacturing Solutions, Tata Cummins, Tata
Daewoo Commercial Vehicles Company, Tata Engineering Services, Tata Precision
Industries, Tata Technologies, Telco Construction Equipment

ENGINEERING SERVICES
Tata Projects, TCE Consulting Engineers, Voltas
ENGINEERING PRODUCTS
TAL Manufacturing Solutions, Telco Construction Equipment Company, TRF

29
Tata Steel :
Subsidiaries / associates / joint ventures: Hooghly Met Coke and Power
Company, Jamshedpur Injection Powder (Jamipol), Jamshedpur Utility and Service
Company Limited (JUSCO), Lanka Special Steel, mjunction services, NatSteel, Sila
Eastern Company, Tata Blue Scope Steel, Tata Metallic, Tata Pigments, Tata
Refractories Tata Ryerson, Tata Sponge Iron, Tata Steel (Thailand), Tata Steel KZN,
Tayo Rolls, The Dhamra Port Company, The Indian Steel and Wire Products, The
Tinplate Company of India, TM International Logistics, TRF

ENERGY:
POWER
Tata BP Solar India
Tata Power
Subsidiaries / associates / joint ventures: Tata Ceramics, Tata Power Trading, North
Delhi Power Limited
OIL AND GAS
Tata Petrodyne

CHEMICALS:
Rallis India
Tata Chemicals
Tata Pigments
PHARMA
Advinus Therapeutics

SERVICES:
HOTELS AND REALTY
Indian Hotels (Taj group)
Subsidiaries / associates / joint ventures: Taj Air, Roots Corporation (Ginger Hotels)
THDC

30
Tata Realty and Infrastructure
FINANCIAL SERVICES
Tata AIG General Insurance, Tata AIG Life Insurance, Tata Asset Management
Tata Capital, Tata Financial Services, Tata Investment Corporation
OTHER SERVICES
Tata Quality Management Services, Tata Services, Tata Strategic Management
Group

CONSUMER PRODUCTS:
Infiniti Retail
Tata Tea
Subsidiaries / associates / joint ventures: Tetley Group, Tata Coffee, Tata Tetley, Tata Tea Inc
Tata Ceramics
Tata McGraw Hill Publishing Company
Titan Industries
Trent

INFORMATION SYSTEMS AND COMMUNICATIONS:

INFORMATION SYSTEMS
Nelito Systems
Tata Consultancy Services
Subsidiaries / associates / joint ventures: APONLINE, Airline Financial Support
Services, Aviation Software Development Consultancy, CMC, CMC Americas Inc,
Conscripti, HOTV, Tata America International Corporation, WTI Advanced
Technology.
Tata Elxsi
SerWizSol
Tata Interactive Systems
Tata Technologies

COMMUNICATIONS
Tata Sky

31
Tata Teleservices
Subsidiaries / associates / joint ventures: Tata Teleservices (Maharashtra)
Tata Communications
Tata net
INDUSTRIAL AUTOMATION
Nelco
Subsidiaries / associates / joint ventures: Tatanet

TATA MOTORS PROFILE:

Tata Motors Limited is India's largest automobile company, with revenues of Rs.
32,426 crores (USD 7.2 billion) in 2006-07. It is the leader by far in commercial
vehicles in each segment, and the second largest in the passenger vehicles market
with winning products in the compact, midsize car and utility vehicle segments. The
company is the world's fifth largest medium and heavy commercial vehicle
manufacturer, and the world's second largest medium and heavy bus manufacturer.

The company's 22,000 employees are guided by the vision to be "best in the
manner in which we operate best in the products we deliver and best in our value
system and ethics." Tata Motors helps its employees realize their potential through
innovative HR practices. The company's goal is to empower and provide employees
with dynamic career paths in congruence with corporate objectives. All-round
potential development and performance improvement is ensured by regular in-
house and external training.

The company has won several awards recognising its training programs.
Established in 1945, Tata Motors' presence indeed cuts across the length and
breadth of India. Over 4 million Tata vehicles ply on Indian roads, since the first

32
rolled out in 1954. The company's manufacturing base is spread across India -
Jamshedpur (Jharkhand) in the east, Pune (Maharashtra) in the west, and in the
north in Lucknow (Uttar Pradesh) and Pantnagar (Uttarakhand). A new plant is
being set up in Singur (close to Kolkata in West Bengal) to manufacture the
company's small car. The nation-wide dealership, sales, services and spare parts
network comprises over 2,000 touch points. The company also has a strong auto
finance operation, TML Financial Services

Limited, supporting customers to purchase Tata Motors vehicles.Tata Motors,

the first company from India's engineering sector to be listed in the New York Stock
Exchange (September 2004), has also emerged as an international automobile
company. In 2004, it acquired the Daewoo Commercial Vehicles Company, Korea's
second largest truck maker. The rechristened Tata Daewoo Commercial Vehicles
Company has launched several new products in the Korean market, while also
exporting these products to several international markets. Today two-thirds of heavy
commercial vehicle exports out of South Korea are from Tata Daewoo. In 2005,
Tata Motors acquired a 21% stake in Hispano Carrocera, a reputed Spanish bus
and coach manufacturer, with an option to acquire the remaining stake as well.
Hispano's presence is being expanded in other markets.

In 2006, it formed a joint venture with the Brazil-based Marcopolo, a global

leader in Body-building for buses and coaches to manufacture fully-built buses and
coaches for India and select international markets. Tata Motors also entered into a
joint venture in 2006 with Thonburi Automotive Assembly Plant Company of
Thailand to manufacture and market the company's pickup vehicles in Thailand. In
2006, Tata Motors and Fiat Auto formed an industrial joint venture at Ranjangaon
(near Pune in Maharashtra, India) to produce both Fiat and Tata cars and Fiat
power trains for the Indian and overseas markets; Tata Motors already distributes
and markets Fiat branded cars in India. In 2007, Tata Motors and Fiat Auto entered
into an agreement for a Tata license to build a pick-up vehicle bearing the Fiat

33
nameplate at Fiat Group Automobiles' Plant at Cordoba, Argentina. The pick-up will
be sold in South and Central America and select European markets.

These linkages will further extend Tata Motors' international footprint,

established through exports since 1961. While currently about 18% of its revenues
are from international business, the company's objective is to expand its
international business, both through organic and inorganic growth routes. The
company's commercial and passenger vehicles are already being marketed in
several countries in Europe, Africa, the Middle East, Australia, South East Asia and
South Asia. It has assembly operations

in Malaysia, Kenya, Bangladesh, Ukraine, Russia and Senegal. The foundation of

the company’s growth is a deep understanding of economic stimuli and customer
needs, and the ability to translate them into customer-desired offerings through
leading edge R&D. The R&D establishment includes a team of 1400 scientists and
engineers. The company's Engineering Research Centre was established in 1966,
and has facilities in Pune, Jamshedpur and Lucknow. The ERC has enabled
pioneering technologies and products. It was Tata Motors, which developed the first
indigenously developed Light Commercial Vehicle, India's first Sports Utility Vehicle
and, in 1998, the Tata Indica, India's first fully indigenous passenger car. Within two
years of launch, Tata Indica became India's largest selling car in its segment. The
ERC in Pune, among whose facilities are India's only certified crash-test facility and
hemi-anechoic chamber for testing of noise and vibration, has received several
awards from the Government of India. Some of the more prominent amongst them
are the National Award for Research and Development Efforts in Industry in the
Mechanical Engineering Industries sector in 1999, the National Award for
Successful Commercialization of Indigenous Technology by an Industrial Concern in
2000, and the CSIR Diamond Jubilee Technology Award in 2004.

The company set up the Tata Motors European Technical Centre (TMETC) in
2005 in the UK. TMETC is engaged in design engineering and development of

34
products, supporting Tata Motors' skill sets. Tata Daewoo Commercial Vehicle
Company and Hispano Carrocera also have R&D establishments at Gunsan in
South Korea and Zaragoza in Spain. The pace of new product development has
quickened through an organisation-wide structured New Product Introduction (NPI)
process. The process with its formal structure for introducing new vehicles in the
market brings in greater discipline in project execution.

The NPI process helped Tata Motors create a new segment, in 2005, by
launching the Tata Ace, India’s first indigenously developed mini-truck. The years to
come will see the introduction of several other innovative vehicles, all rooted in
emerging customer needs. Besides product development, R&D is also focusing on
environment-friendly technologies in emissions and alternative fuels.

Through its subsidiaries, the company is engaged in engineering and

automotive solutions, construction equipment manufacturing, automotive vehicle
components manufacturing and supply chain activities, machine tools and factory
automation solutions, high-precision tooling and plastic and electronic components
for automotive and computer applications, and automotive retailing and service
operations.

True to the tradition of the Tata Group, Tata Motors is committed in letter and
spirit to Corporate Social Responsibility. It is a signatory to the United Nations
Global Compact, and is engaged in community and social initiatives on labor and
environment standards in compliance with the principles of the Global Compact. In
accordance with this, it plays an active role in community development, serving rural
communities adjacent to its manufacturing locations.

With the foundation of its rich heritage, Tata Motors today is etching a
refulgent future.

35
Management:
Board of Directors:

Mr. Ratan N Tata (Chairman)

Mr. N A Soonawala
Dr. J J Irani
Mr. V R Mehta
Mr. R Gopalakrishnan
Mr. Nusli N Wadia
Mr. S M Palia
Dr. R A Mashelkar
Mr. Ravi Kant
Mr. P M Telang

Senior Management:

Mr. Ravi Kant : Managing Director

Mr. P M Telang : Executive Director

Mr. Rajive Dube : President (Passenger Cars)

Mr. C Ramkrishnan : Chief Financial Officer

Mr. P Y Gurav : Vice President (Corporate Finance-Accounts and Taxation)

Dr. S J Tambe : Vice President (Human Resource)

Mr. Zackria Sait : Vice President (Technical Services)

Mr. A M Mankad : Head (Car Plant)

Mr. S B Borwankar : Head (Jamshedpur Plant)

Mr. S Krishnan : Vice President (Commercial-PCBU)

Mr. Ravi Pisharody : Vice President (Sales & Marketing)

Mr. H K Sethna : Company Secretary

36
Corporate Communications

Mr. Debasis Ray

Tel: 022 – 66657613 : Head - Corporate Communications

CHAIRMAN’S PROFILE
Mr. Ratan N Tata (Chairman)

Heading the Tata Group since 1991, Ratan N Tata is the Chairman of Tata
Sons, holding company of the Tata Group, and major Group companies including,
Tata Motors, Tata Steel, Tata Consultancy Services, Tata Power, Tata Tea, Tata
Chemicals, Indian Hotels, Tata Teleservices and Tata Auto Comp. He is also
Chairman of two of the largest private sector promoted philanthropic trusts in India.
During his tenure, the Group has further expanded its global reach, with its revenues
growing over six fold to Rs 97,000 crore ($21.9 billion).
Mr. Tata joined the Tata Group in December 1962. After serving in various
companies, he was appointed the Director-in-Charge of The National Radio &
Heading the Tata Group since 1991, Ratan N Tata is the Chairman of Tata Sons,
holding company of the Tata Group, and major Group companies including, Tata
Motors, Tata Steel, Tata Consultancy Services, Tata Power, Tata Tea, Tata
Chemicals, Indian Hotels, Tata Teleservices and Tata Auto Comp.
He is also Chairman of two of the largest private sector promoted philanthropic
trusts in India. During his tenure, the Group has further expanded its global reach, with
its revenues growing over six fold to Rs. 97,000 crore ($21.9 billion).
Mr. Tata joined the Tata Group in December 1962. After serving in various
companies, he was appointed the Director-in-Charge of the National Radio &
Electronics Company Limited (Nelco) in 1971. In 1981, he was named Chairman of
Tata Industries; the Group's other holding company, where he was responsible for
transforming it into the Group's strategy think-tank and a promoter of new ventures in
high-technology businesses.

37
 He is associated with various organizations in India and abroad in varying
capacities, some of which are:
• Chairman, government of India's Investment Commission
• Member, Prime Minister's Council on Trade and Industry
• Member, National Hydrogen Energy Board Member, National Manufacturing
Competitiveness
• Competitiveness Council
• Serving on the International Investment Council set up by the president of the
Republic of South Africa
• Serving the International Business Advisory Council of the British government
to advise the chancellor of the exchequer
• Member, International Advisory Council of Singapore's Economic Development
Board
• Member, Asia-Pacific Advisory Committee to the board of directors of the New
York Stock Exchange Member, international advisory boards of the Mitsubishi
Corporation, the American International
• Group and JP Morgan Chase
• President, court of the Indian Institute of Science, Bangalore
• Chairman, council of management, Tata Institute of Fundamental Research,
Mumbai
• Member, board of trustees of the Rand Corporation, Cornell University and
University of Southern California, and the Foundation Board of the Ohio State
University
• Chair, advisory board of RAND's Center for Asia Pacific Policy
• Member, Global Business Council on HIV / AIDS and the programme board of
the Bill & Melinda Gates Foundation's India AIDS initiative

Mr. Tata received a Bachelor of Science degree in architecture from Cornell

University in 1962. He worked briefly with Jones and Emmons in Los Angeles,
California, before returning to India in late 1962. He completed the Advanced
Management Program at Harvard Business School in 1975.

38
 The government of India honored Mr. Tata with one of its highest civilian
awards, the Padma Bhushan, on Republic Day, January 26, 2000. He has also been
conferred an honorary doctorate in business administration by the Ohio State
University, an honorary doctorate in technology by the Asian Institute of Technology,
Bangkok, and and honorary doctorate in science by the University of Warwick.

Manufacturing:
Tata Motors owes its leading position in the Indian automobile industry to its
strong focus on indigenisation. This focus has driven the Company to set up world-
class manufacturing units with state-of-the-art technology. Every stage of product
evolution-design, development, manufacturing, assembly and quality control, is
carried out meticulously. Our manufacturing plants are situated at Jamshedpur in the
East, Pune in the West and Lucknow in the North.

Jamshedpur:
Established in1945, the Jamshedpur unit was the company's first unit and is
spread over an area of 822 acres. It consists of 4 major divisions - Truck Factory,
Engine Factory, Cab & Cowl Factories, and the Novus. Engineering Division, which
has one of the most versatile tool making facilities in the Indian sub-continent.

Lucknow:
Tata Motors Lucknow is one of the youngest production facilities among all the
Tata Motors locations and was established in 1992 to meet the demand for
Commercial Vehicles in the Indian market.

Uttarakhand
The company has set up a plant for its mini-truck, Ace, at Pant Nagar in
Uttarakhand. The plant will begin commercial production during the course of the year.

39
Research:
Research & Development:

Research provides the much-needed inspiration for the birth of new ideas,
which in turn breathes new life into products. World-class automotive research and
development are key factors that contribute to the leadership of the Company.

Engineering Research Centre (ERC):

The Research Centre at Jamshedpur regularly upgrades components and

aggregates. A well-equipped torture track enables rigorous and exhaustive testing of
modifications before they are used as regular fitments.

Safety (CRASH TEST FACILITY):

For Tata Motors, safety is of paramount importance. This avenue provides no
room for the slightest margin of error.
Tata Motors ERC is the only high-tech facility in India to evaluate the degree of
passenger safety in the event of any high-speed impact. Through a special crash test
facility. Different types of accidents are simulated; the results analyzed, and put to use
in the development of a vehicle that satisfies stringent international safety norms.
Special high-speed cameras record test crashes at the rate of 1000 frames per
second. An accident, for instance, at the speed of 50 kilometers per hour, lasts one
eighth of a second. Thus, 125 frames recorded by these cameras are available for
study with the completion of each individual test.

Minimizing Noise (ANECHOIC CHAMBER):

Anechoic chamber is a highly sophisticated noise and vibration laboratory, the
nerve centre of which is a vast chamber lined with 88,000 cones projecting at various
angles from the walls and ceiling. It is one of its kinds in India and is developed
completely with in-house facilities.

40
Designing and Styling (CAD CENTRE):
The CAD centre is equipped with 53 state-of-the-art CAD stations and the
latest software. The CAD centre is a vital organ of ERC's Cab Design Section. CAD
designing involves development of vehicle specifications, styling interiors and
exteriors, reviewing the styling from the engineering and aesthetic points of view,
virtual prototyping to check for design acceptability and feasibility of manufacture.

AWARDS:
 PCBU bags Handa Golden Key Award…
 Tata Motors receives Uptime Champion Award 2007.
 Aggregates Business, CVBU, bags ‘Best Supplier Award’ from ECEL.
 'NDTV Profit' Business Leadership Award...
 Tata Motors bags National Award for Excellence in Cost Management...
 Tata Motors' TRAKIT bags silver award for 'Excellence in Design'...
 Tata Motors Pune - CVBU has bagged the "Golden Peacock National Quality
Aw...
 Tata Motors was awarded four prestigious honors, at the 'CNBC TV18- Auto
car.
 Tata Motors chosen as India's Most Trusted Brand in Cars...
 Business today selects Mr. P.P. Kadle as India's Best CFO in 2005...
 Pune Foundry Division bags prestigious Green Foundry Award...
 Tata Motors is 'Commercial Vehicle Manufacturer of the Year'...
 ACE bags 'Best Commercial Vehicle Design' at the BBC-Top Gear Awards....
 Tata Motors bags the prestigious' CII-EXIM Bank award' for business
excellence...
 'Car Maker of the Year' Award for Tata Motors.
 Tata Motors is 'Commercial Vehicle Manufacturer of the Year'
 'CFO of the Year Award 2004' awarded to Mr. Praveen P Kadle, Executive
Director

41
  Tata Motors wins 'Golden Peacock Award' for Corporate Social Responsibility.
 Tata Motors CVBU Pune wins National Energy Award.
 Tata Motors - Jamshedpur wins 'Energy Efficient Unit Award'.
 Tata Motors wins the first CSIR Diamond Jubilee Technology Award.
 Tata Motors Jamshedpur & Lucknow win awards...

THE NEXT PEOPLE'S CAR:

Tata Motors' plans would produce, in real terms, by far the cheapest car ever
made.

42
 An Indian car may soon earn a parking place in history alongside Ford's Model
T, Volkswagen's Beetle and the British Motor Corp.'s Mini, all of which put a set of
wheels within reach of millions of customers after they rolled onto the scene. Tata
Motors is developing a car it aims to sell for about $2,500 the cheapest, by far ever
made.
There is a lot riding on its small wheels. If the yet-to-be-named car is a success
when it goes on sale next year, it would herald the emergence of Tata Motors on the
global auto scene, mark the advent of India as a global center for small-car production
and represent a victory for those who advocate making cheap goods for potential
customers at the "bottom of the pyramid" in emerging markets. Most of all, it would
give millions of people now relegated to lesser means of transportation the chance to
drive cars.
It is a hugely ambitious project rivals have called it impossible for any company.
But it is audacious for one that hadn’t even built cars a decade ago.
For decades Tata Motors has been India's largest commercial vehicle maker
the Tata logo appears on buses, dump trucks, ambulances and cement mixers. Sturdy
as elephants, they are a fixture of the Indian landscape. Owners inevitably paint the
exteriors in a cheerful riot of bright red, green, orange, blue and yellow and line the
un-air-conditioned cabs with teakwood to keep them cooler in India's searing heat.
However, ubiquitous, Tata's trucks faced a problem after the Indian government
began reforms that opened the Indian economy in 1991: the huge cyclical swings in
demand typical for commercial vehicles. To diversify, Tata would enter, at great
expense, the less volatile passenger car market.
Before the reforms Indian customers had so few choices that Tata was
sheltered. When demand tailed off it just worked down a waiting list, and there was
never a need to concern itself with customer desires. Sure enough, after the economy
slumped in the late 1990s just when expenses for developing the passenger car hit
home Tata truck and bus sales plunged by 40% and Tata Motors lost $110 million in
fiscal 2000. It was the first red ink seen since 1945, when the company was founded
to make locomotives. Executives were stunned. "It was corporate India's biggest loss,"

43
says Ravi Kant, managing director of Tata Motors. "The crisis changed us. We told
ourselves, 'Never again.'"
But Tata Motors, part of India's largest conglomerate, first had to reset its ways.
Like many Indian companies protected for decades from foreign competition, Tata had
gotten to 2000 still fat and slow.
Change started with a spring 2000 meeting at the Lake house, a bungalow
across the street from the company's main factory in Pune, a three-hour drive east of
Mumbai. Kant, then in charge of the commercial vehicle division, needed fresh ideas
instead of rigid resistance, so in an experiment, he called a meeting of 20 of his most
promising young managers all under 35 years old.
"I have a problem," he said in his matter-of-fact tone. "The company is
bleeding." He asked for ideas on how to stop the gush of red ink. Okay, they told him,
trim costs.
Girish Wagh was there, just 29 then. He remembers the shock of what came
next. "Ravi Kant said that 1% in cost cuts would be a rounding error. He asked for
10%!" says Wagh. "Never had we thought of such a target." Every single year until
then costs had gone up, not down. Kant told them to present a basic plan that very
afternoon, in front of him and alarmingly all their bosses.
They worked frantically. By the 3 p.m. meeting, their wildest ideas were on the
table. Taken together, they added up to 6.5%. "A breakthrough!" Kant remembers
thinking. But that's not what he said. "Please go back and think again," he told them.
He needed 10%, not 6.5%. "You've got three weeks." The young team took some
measures even as it scrounged for more. In came benchmarking, purchasing from
Internet auctions, and outsourcing parts to more efficient suppliers and boosting
revenue by selling Tata-made dies to other companies. Meanwhile, the Pune factory's
veteran boss bought into the project.
The transformation of Tata Motors had begun with the searing loss in 2000, but
it continued with a return to profit in the fiscal year ending March 2003. By then it was
producing two cars models and selling a bit abroad. Today, after buying or partnering,
the company has vehicle projects around the globe and exports 11% of output, mostly
to South Africa.

44
 Efficiency is way up: It now takes between 12 and 15 minutes to change a die
on the passenger car assembly line, down from two hours in 2000. The company's
break-even point for capacity utilization is one of the best in the industry worldwide.
Between 2000 and 2006 nearly 6,000 workers left the company with early-retirement
deals. Meanwhile, the once radical e-sourcing idea has become routine for Tata,
which ran 750 reverse auctions on Ariba in the past year to bring down purchasing
prices by an average of 7% for everything from ball bearings to the milk served in the
company cafeteria. Tata Motors listed on the New York Stock Exchange in 2004. After
thousands of changes, in the quarter ending December 2006 Tata earned $116 million
on revenue of $1.55 billion. Annual revenue grew to $5.2 billion for the fiscal year
ending in March 2006. Analysts worry that high product development costs and rising
commodities prices could lower profit margins for the next few quarters.
The changes at Tata Motors are coming as India itself is transforming. With
economic growth charging along at 9% last year, more and more Indians can afford
cars. But on the highway from Mumbai to Pune, the new cars zoom past wooden carts
filled with construction materials and pulled by ponies, camels, elephants or even
people. Roadside markets offer chickens and geese those chosen are slaughtered on
the spot and usually carried home on motor scooters. Outside the Tata Motors gates
in Pune, a woman in a flowing red sari balances a 3-foot-wide basket on her head. It
holds snacks and drinks and serves as a roving roadside shop.
Inside the company gates is a modern factory complex. In one building, just
past a small statue of the beloved Hindu elephant god Ganesha, robots pick up pieces
of sheet metal and feed them into a series of 30-foot-tall stamping presses every ten
seconds until the left-side door of a Tata Safari suv is formed. In a building nearby,
workers in navy-blue uniforms use computer-aided designs from Tata engineers to
create tools and dies used to make those sheet-metal stampings. Tata Motors boosts
its revenue by making dies for Jaguar, Ford, General Motors and Toyota too, just as
it does by allowing the made-in-India Mercedes to be run through its paint shop.
Workers at the Tata Motors factory have been trained in Japanese
manufacturing techniques that call for continuous improvement. A worker building
Safaris noticed that each day on average, one front grille was ruined when a worker

45
leaned over to work on the engine and accidentally scratched the grille with his belt
buckle. Cost: about 2,500 rupees $57 a day, or $17,000 a year. Tata designed a
simple protective cover for the grilles, plus a slip-on fabric cover for belts and watches
that is now used to cut down on expensive waste at each of Tata Motors' factories.
Cost: about 25 cents per vehicle.
That's the sort of thing that Girish Wagh, one of the breakfast-meeting whiz
kids, was working to foster when Kant called him in unexpectedly in December 2000.
Kant needed someone to take on a risky project to extend the truck line beyond the
sturdy Tata mainstays. Kant wanted one cheap enough to compete with three-
wheeled, motorized rickshaws and even considered building a small, three-wheeled
truck.
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, 200 chickens, a
ton of onions or potatoes, or 2,000 eggs. One night, as sunset approached, Wagh
stuck with one rickshaw driver. "I kept asking the question. Why? Why? Why do you
want a four-wheeler?" Wagh remembered. Finally, he got the real answer. It turned
out it wasn't really a problem of chickens or eggs. "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.
When Tata Motors brought out the bare-bones Ace truck in May 2005 for just
$5,100, it had a monster hit: The company sold 100,000 in 20 months. To try to keep
up with demand, it offers the truck only in white to save the time it takes to change
colors in the factory paint shop. Tata is building a new factory that will be able to turn
out 250,000 a year starting this month.
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.”

46
 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.
Within a few years 2 million of those motorcycle owners may trade up to buy
the Tata car, Figures McKinsey and Co. partner Ramesh Mangaleshwaran in Mumbai.
Trying to build a car cheap enough for motorcycle buyers seems to make
sense now but seemed crazy several years ago when Ratan 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. "Everybody is talking of small cars as
$5,000 or $7,000. After we get done with it, there will hopefully be a new definition of
low-cost.”
Many low-cost car producers have set up shop in India, and McKinsey believes
it could become a global hub for small-car production the way the U.S. is for pickups.
Hyundai and Suzuki (other-otc: SZKMF.PK - news - people ) build their small cars in
India, and Toyota is considering an India hub. Passenger vehicle exports grew by
13% last year to 192,000, according to J.D. Power and Associates, with Hyundai
exporting more than 110,000. A one-lakh car is unlikely to be sold in the U.S. But it
wouldn't be aimed only at India, either, Ratan Tata says. Bottom-of-the-pyramid
markets would be the best fit: places like Africa, Southeast Asia and maybe eastern
Europe and Latin America, Wherever income levels mirror India’s.

47
 The cost target is tough, but there are plenty of other hurdles at home. India's
inadequate roads, for one. Roads and highways are being built nationwide, but if India
goes car crazy, maddeningly slow traffic is inevitable for several years. By far the
biggest struggle in India is political. The People's Car factory is already caught in the
crossfire, as politicians and pressure groups squabble over forcing destitute farmers
off their land for a project expected to bring 10,000 jobs to industry-hungry West
Bengal. The company signed the final deal with the state last month and has begun
the property's boundary walls, land leveling, and road and building plans. "We've lost
four months," says Ratan Tata. So far, he is still personally driving the People's Car
project. It is a rear-engined, four-door, four-seat car that will get around on 33hp more
pep than the Model T or the VW Beetle had when they drove onto the scene. The
cheapest versions won't have air-conditioning or power steering, but Tata hopes its
cute looks will make up for missing creature comforts just as happened with the VW
Beetle and the Mini long before it.
Tata Motors has not released a photo of its prototypes, but Ratan Tata, a
trained architect with a penchant for designing consumer goods, sketched its outlines
for a reporter's eyes only. He drew an egg-shaped car with a ceiling high enough to
handle his tall frame. He pointed proudly to the air intake scoop in front of the rear
tires and the vertical taillights similar to those found on the Tata Indica. Under the front
hood it will have a small storage space, "like an overhead bin" on an airplane, Tata
says. "It is not as small as a Smart," he says. "It is not a car with plastic curtains or no
roof it's a real car."

TATA NANO - THE LITTLE CAR THAT MIGHT

CHANGE THE WORLD
TECH SPECS:

Length : 3.1 m
Width : 1.5 m
Height : 1.6 m
To seat :4
Engine : 643cc, 2-cylinder, all-aluminum
Power : 33 BHP

48
Position : Engine, battery at rear end
Boot : In front
Fuel : Petrol
Fuel injection : MPFI
Fuel consumption : 20 kmpl.
AC : Only in deluxe version
Passenger side mirror : No
Power steering : No
Price : $2500 at dealer + VAT + transport cost. Base version
approximate on-road price: $3000
Tyres : Tubeless tyres.
Body : All-steel
Safety features : Crumple zones, intrusion-resistant doors, seat belts,
2 A-Pillars
Suspension : Independent front and rear

Seldom do we see cars that rewrite the history books even before they are
seen running around on the roads. And hardly ever do we see cars that vow to put the
nation on four wheels. The Tata Nano is one such car – a car that has been in the
news for quite a few years, for reasons good and evil. Nano is a car which has
breathed into life due to one man. Give credit to Mr. Ratan Tata for his determination
to build a low cost family car that has come true, finally! Took long it did, but the Nano
came in a beautiful form. Touted as world’s cheapest car by a far cry, Nano has been
the talk of the town around the globe. Head honchos of big organizations have been
pouring in by numbers to have a look at this engineering masterpiece. We bring you
some interesting bits.

Looks:
Numbers first
Length 3100mm
Width 1500mm
Height 1600mm
Wheelbase 2230mm.
Ground Clearance – 180mm

You will be wondering why I am talking about the dimensions of the Nano,
since all of you know that it is a rather compact and tiny machine. It is because I have

49
good reason to talk about the dimensions. You see, the Nano is going to be faced with
Maruti 800 as its main rival. But you could throw in the Alto and Zen Estilo to mark out
some design and packaging aspects. Just to get things in perspective, Nano is over
230mm shorter than 800 in overall length but the wheelbase advantage of 155mm
over the offering from Maruti makes sure that the Nano is more accommodating than
the 800. Tata has managed to squeeze out a 60mm advantage in width and Maruti
800 falls short of about 100mm in height. So in essence, you get more legroom, better
shoulder room and room more than enough for a turban, if you wear one! But before
you enter inside, you are bound to gape in admiration at the beautifully crafted curves
of this micro car. I personally feel that the front has a lot of Zen Estilo written on it, but
manages to look really funky and cool.
The mono-volume design establishes a sea of change from the two-box layout
of the 800. What it ensures the Nano with is extremely short overhangs and tight
packaging. For a car of this size and image, the Nano is an extremely sexy looking car
with futuristic design cues. The bonnet line is steep and unites together with the
bumper in a seamless way. Though there is no ‘grille’ per se, the front has a smiling
look which accentuates the ‘happy’ feeling. The fog lamps are incorporated in the
bumper which has a distinct air dam running across in between them. In profile, the
Nano resembles Mitsubishi’s latest small car ‘i’. The rear of the Nano is somewhat
recognizable. The tail lamps are inspired from elder sister, Indica. So this is a very
compact hatchback, yes? No my friend, you are massively wrong. Even I was
dumbfounded when I discovered that the Nano cannot be called a hatchback – a word
so true to the way the small cars are. The reason for this is because it does not have a
hatch! The tail gate cannot be opened owing to it being joined together with the boot
sill. This makes accessing the engine a pain in the bottom. But a hatchback it will be
called still. The back side of the Nano is made attractive by the mid mounted exhaust
pipe which peeps out of the aggressively designed bumper.

The ultra-secret people's car for India - the Tata Nano - is here. How will this car
change the way India, and the developing countries drive?

• It will help India's huge two wheeler popular upgrade to a four-wheeler

50
 • Very affordable - priced a bit higher 2 125cc motorcycles in India
• If popular, will clog roads in the cities
• Establish a huge volume market that cannot be ignored by any large car
manufacturer
• 40 patents by Tata Motors during development

Here are the pictures from the unveiling of the Tata Motors' small car to be sold
at a price of US $ 2500 approx. (Rs. 1 lakh.). The Tata Nano was unveiled at the 9th
Auto Expo in New Delhi, India.
The Nano is disruptive tech - make no mistake. The world's car manufacturers
have expressed all shades of opinion in the run-up to the Tata Nano. Suzuki has said
that it is impossible V W said it is not what they want to do. DaimlerChrysler said they
think it is an important market Tata is trying to tap.
There was no way Tata could design a car the conventional way. So went at it
on a clean slate. And seems to have pulled it off. The rear engined car will have a
small boot for luggage storage in the front. In the process of developing the Nano,
Tata Motors has added 40 patents to its kitty.
This car, if it becomes a hit, will make every auto company change the
way it works and look at the volume market. Not only in India, but in entire Asia
and every third world country. Offering mobility for the masses is big business. The
VW Beetle did that, and so did Henry Ford.

Environmental Impact
In India, a car like this can crowd the streets, forcing the government to improve
infrastructure - and as the evolution of the Western industrial society demonstrates,
affordable cars can be a major force for change. But till that happens, this is a car that
can seriously crowd the streets - and make life a bit tougher in the short-term.

The car will have a two-cylinder 624-cc petrol engine with 33 bhp of power.
It will also have a 30-litre fuel tank and four-speed manual gearshift. The car
will come with air conditioning in the deluxe version, but will have no power steering. I
know, that's pathetic power by American and Western standards. But Indian maximum

51
legal speeds are way lower than them - and Tata Motors anyway claims that the car is
as fast as the Maruti 800, India's original People's Car that changed things a couple
decades back. And there are a million or more of them on the streets of India already.
The car will have front disk and rear drum brakes. The company claims mileage of 22
kmpl in city and 26 kmpl on highway.
The $ 2500 is the dealer price - the actual price on the road might be approx
Rs. $3000. The car would be commercially launched in the second half of 2008 and
would be produced at the Singur plant in West Bengal.
The car launched is being avidly watched by the auto industry around the
world. As attractive as the Nano is on the outside, the same cannot be said for the
interior. The plastics feel cheap and it is here that you begin to feel the concern
towards the price that Tata was aiming at. The rudimentary knobs and switches point
towards the use of materials which would be better off in tractors twenty years old!
Dreary and uninspiring by any measure, that’s what one can say about the interior
quality and looks. What impressed me though was the layout. Spacious and
functional, the dashboard has a curved look which can prove beneficial when it comes
to storing items. The Chevy Spark started it for the small cars and the Nano continues
on what seems to be the current trend. The instrument binnacle is mid-mounted and
the centre console has a swooping form which houses all the important knobs and air
con vents. Speakers for the audio system have been incorporated on the rear bench
just under the seat area.
The speedo is calibrated to a top whack of 120kmph though we shall reserve
our statements on that till we test the car thoroughly. Cash saving activity has gone a
bit too far with the sun visor, there’s only one! Please Tata, please, have mercy on the
people who will sit on the passenger seat, only to find no sun visor to protect their skin
from sun or no vanity mirror for women (men too, going by the current fashion!) to put
the make-up on. The centre console, forming a crest in the middle of the dash, can be
worrisome if you happen to be as tall as Rajpal Yadav. The seats have integrated
head restraints, like in the hugely popular, Hyundai i10. Yes the Nano will be deprived
of a lot of creature comforts but to satisfy your salivating mouth, Tata will offer the top
end version with air con, power windows and power steering. This car is destined to

52
be exported too, so provision for ABS and airbags will also be there for sure. The floor
mounted four-speed gearbox wasn’t smooth as silk but would give the 800 something
to take inspiration from. Roominess is what this compact car from Tata is all about.
Four average sized Indians will find themselves enjoying their ride.

SAFETY
Passes crash tests. Side impact test yet to be done, but Tata is confident about
it. It has 2 A-pillars on one side to better meet safety norms. No airbags. Airbags are
still not a required feature in India. But you have crumple zones, intrusion-resistant
doors, seatbelts and anchorages.
A four wheeler is safe than a scooter. So to begin with, the huge two wheeler
population of India gains a safety benefit. But will it pass the safety requirements of a
large car or even a high technology compact? Unlikely. But that is not the objective - it
is to improve the safety of four-member families like this one that rides scooters and at
risk every day.
And so here it is. If Tata Motors is right, we could be witnessing a serious
disruptive force and one that might kick-start India on to a high growth path.
Successful mass market mobility does that to a country.
MECHANICALS:
Everyone, and it does not discount the motoring journos, expected the ‘One
Lakh Car’ to have a plastic body. But boy did Tata play it big there! Contrary to
everyone’s belief, the Nano is a metal-bodied car with four full-blown doors to ease
the ingress and egress. This is a uni-body construction but makes use of a sub-frame
which adds to the strength in addition to providing support for drive train and
suspension units. The suspension has a story of its own altogether! Well, Tata
engineers said that since the rear-biased weight distribution led to some scary
moments while testing the car, they had to optimize the suspension setup and add a
fair amount of other eccentric but equally helpful technical add-ons like fatter rear tyre
while the battery box and fuel tank are placed right underneath the arse of front
occupants.
The engine is what has been the buzz word around the car. It is an all-
aluminum two cylinder engine displacing 624cc with two valves per cylinder driven by

53
a single overhead camshaft. The bore and stroke are nearly similar giving it a ‘square’
form. Making the Nano move will be the power of 33 horses which will peak out at
5500rpm while 48Nm of turning force will be supplied at a meager 2500rpm which
should help the drivability of the car. The Nano will transmit its small amount of power
via a 4-speed cable operated gearbox with the fourth being an overdriven ratio. Tata is
working on developing an automatic gearbox as well but that will not be available
when the car gets launched later this year. In addition to the 624cc petrol engine, the
Indian auto giant might also bring out a common-rail diesel engine (700cc) which
might be of the same architecture as the one seen on Tata Ace.
As it was famous, Tata’s One Lakh Car will not exactly be that. Not a one lakh
rupee car it will be. The base version, when it will come to a parking halt will see you
shed close to 1.2lakh while the one which will sit in between with some necessary
creature comforts will be priced in the vicinity of 1.5lakh. The top end might retail for
close to 2.0lakh, we speculate.

Quick Specs:
Price : 1.2lakh onwards
Engine : 624cc, in-line, twin-cylinder
Power : 34PS@5500rpm
Torque : 48Nm@2500rpm
Gearbox : 4-speed manual, Cable operated
Top Speed : 95-100kmph (Speculated)
Fuel Efficiency : 20kmpl (Claimed)
Length : 3100 mm
Width : 1500mm
Height : 1600mm
Wheelbase : 2230mm
Ground Clearance : 180mm
Fuel Tank Capacity : 15lt.
Kerb Weight : 600kg.

54
LATEST NEWS
Tata Motors takes forward its initiative to support primary and secondary
education in Singur
Taking forward its initiative to support the cause of primary and secondary
school education in Singur, Tata Motors today helped a primary school in Joymollah
upgrade its infrastructure. The company provided desks, benches, chairs, tables,
cupboards and electrical fittings in addition to educational and sports material to the
school, in the presence of school authorities, officials from the panchayat and local
administration, Tata Motors' officials, school students and residents. Tata Motors had
flagged off its education initiative with a similar activity in a primary school in
Ruidaspara, Beraberi recently.
As part of its initiative, Tata Motors recently set up a computer laboratory in a
high school in Beraberi, and has provided 5 computers, 5 CVTs (stabilizers) and 5
computer tables and chairs to the school. The computer laboratory was inaugurated
by Mr. Prosenjit Chakraborty, Block Development Officer. The company has planned
similar programmes to upgrade school infrastructure in the project area.
This initiative is part of Tata Motors’ comprehensive community development
programme for Singur, in line with the company’s practices in other locations. The
three focus areas in Singur are – Health, Education and Livelihood. The programme
includes: a) training, according to an individual’s educational qualifications and skill, to
improve their employability; b) training women for employability – through facilitation of
cooperative societies – to produce a diverse range of items, which could be used in
the Tata Motors plant or the vendor plants; and c) social development in the Singur
area, through community centers, and support for primary health, provision for
drinking water, primary/secondary education and adult education.
As part of its health initiative, Tata Motors has been regularly conducting health
camps in Beraberi and Joymolla, where patients receive treatment and medicines. Till
date, over 54 health camps have been conducted, where over 10,170 villagers were
treated.

55
 Tata Motors recently inducted a batch of around 100 youth as apprentices at
the Singur plant. This batch comprises youth from Singur villages and from various
ITIs of West Bengal. 16 local youth, educated in state-run Industrial Training Institutes
(ITI) have been appointed as employees at the Singur plant from October 2007. 300
others are undergoing training. On successful completion of the training programme,
the trainees will take the trade tests to qualify for trade certificates issued by the
National Council for Vocational Training (NCVT) and will become eligible for
apprenticeship training at the Singur plant and vendor facilities.

Tata to ride Nano to Geneva Motor Show

Tata Motors' Nano, easily the world's most talked-about car these days, will
make its international debut at the 78th Geneva Motor Show in the first week of
March. The five-door hatchback that costs just Rs 100,000 ($2,500), making it the
world's cheapest, was unveiled in January this year at the Auto Expo here. Nano
would be among Tata Motors' exhibits at the show, a company spokesperson said
here.
Sales of Nano, nicknamed the people's car for its affordable pricing that will
make four-wheelers available to millions of middle-class people who hitherto rode two-
wheelers, is expected to start in the second half of this year.
Although the car has its share of critics, it has undeniably put India on the
global automotive map and has triggered a race among leading car makers to match
the Nano price-point. Already, car manufacturers Renault and Nissan are eyeing a
$3000 car.
The Nano, which Tata Motors has said meets all safety and emission norms,
will share the limelight with top marques from around the world that are expected at
the show. This year's edition of the Geneva Motor Show will mark the 11th year of
participation for Tata Motors. Tata Motors' Nano, easily the world's most talked-about
car these days, will make its international debut at the 78th Geneva Motor Show in the
first week of March.
# Source :The Economic Times — February 7th, 2008

56
What gave Nano a headstart ?
The Nano could potentially challenge the conventional wisdom within the auto
industry that wholly new concepts do not live long enough. New launches basically
add a whistle here and a bell there to the plethora of existing models. Indeed, in more
than 70 car launches worldwide, there have been not more than a handful of seminal
shifts within this industry.
But the Tata offering has come to topple all those casts by reordering the
status-quo. The whole story seems to strike two notes at once. The first one is true to
the old adage among businesses that the wise profit from giving that which profits
their customers; the second dares to contrarily create and nurture a space that others
overlooked or even rejected.

Some known facts

Not too long ago, many pundits within the industry had held that small cars
such as the Maruti 800 have outlived their use and must, therefore, pack up. Yet, just
into 2008, a glowing Mr. Ratan Tata drove on to the stage in his Nano, that sports a
far lower powered engine and which may soon storm the Indian roads.
Surprisingly, many of the same pundits who had bemoaned the twilight of Maruti 800
have now begun to celebrate the business sense that the Nano exudes. It looks like,
in any case, the Tata Nano project has defied textbook constructs of successful
venturing.
In fact, we knew for good reasons that there is much less money to be made in
small cars. We also knew that products conceived for specific markets have less
possibility of success than those visualized on a global basis.
And, admittedly, auto majors with a wider, deeper portfolio of cars are rightly
believed to be able to gain more profitably from a radical but relevant offering.
Such manufacturers, it is often acknowledged, are able to reap from the economies of
scale that can be got from sharing the costs of design, manufacture and retail, among
their entire product line-up.

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Small-car concept
The Tata project bore none of the above usual stamps of success. Yet it is
pretty hard to term Nano anything but a success going by the reception it received.
This perhaps indicates that the real game is one of strategy.
Indeed, it is not so much about cars or of experience as about getting clear the
underlying concepts and attitudes. Ironically, Tata's capture of the "small car concept"
is in itself hardly path-breaking.
One recollects that when the Maruti 800 was introduced around the mid-1980s,
it was, even after adjusting for the then stronger rupee, an immensely affordable car
(well below a lakh of rupees). It was, in fact, India's first small, sweet car.
But, over time, the sweetness of Maruti 800 - rather than the real demand for
small cars - had diminished. That was primarily because of its price, which kept on
surging.
What is certainly path-breaking is the price tag of the Nano. Even if we went all
the way back before all those price rises and income growth spread over the past two
consecutive decades, Nano's price would have still generated a landslide sales record
in the mid-1980s.

The price element

And, what is important is, where a pre-liberalised mid-1980s represented
stunted buying power, "today's India" that is to receive the Nano, represents greatly
enlarged buying power.
This, in effect, gives the Nano an exceptional welcome thrust. Besides the
element of price-point - where Tata Motors led the pack on a wide margin - almost
every other major car company in the world seems to have otherwise just as seriously
investigated small cars.
If anything, notwithstanding the environment dimension, the persistently high oil
prices of the present decade have, in fact, made all makers gravitate toward more
fuel-efficient, smaller cars.
The key question, then, is: With so many auto firms zeroing in on small cars,
how did Tata Motors achieve such astounding price levels? Indeed, when global

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industry majors were talking about a small car with trendy, tiny engines, they were all,
in effect, attempting to scale down on what they were traditionally good at: Medium
and big cars.

Two perspectives
Unlike Tata Motors, almost none of the global majors had paid due attention to
the thought of an all-new small car. There is, for sure, a big difference between scaling
down a big-sized car to a viable small size and creating one ab initio.
The gamut of idea generation, concept, design, making, retailing, and so on,
differs a great deal between the two perspectives. The first perspective tweaks to fit
what is already on hand, whereas the second creates afresh to fulfill what is widely
sought.
Consequently, the processes that colour the making of an inexpensive and
cheerful car are not at all 'cheap'. Understandably, those processes have to be richer
in innovation, bolder in imagination, nimbler in evaluating and, of course, shrewder in
putting together the pieces (ideas, hardware, and costs) appealingly.

Taking the lead

The stalwarts of the car industry never quite saw 'small cars' as 'small cars'.
Here is where Tata Motors strode ahead, giving Mr. Tata and his team a head-start.
The Nano, then, brings home the truth that lacking certain advantages can actually
prove more rewarding.
The car industry, unlike the insurance industry, which enjoys safety cover from
reinsurance, has never been able to obtain a guaranteed cover for assured success.
One could say that the future Nanos would certainly get their shots of
incremental improvement. So, too, would be the approaches of many other aspiring
small-car makers, after taking note of this primordial shift although it is a little too early
to be looking for it in the rear view mirror!

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 The man and his dream machine
Mr. Ratan Tata, a shock of grey on his head, a grim look on his face, shuns the
limelight. But on Thursday, the industry patriarch perhaps did not mind the thousands
of flashbulbs that popped in his face as the world took its first look at an astonishing
Tata product: the Nano. His usual taciturn expression gave way to a smile as he threw
a repartee at the environmentalists for their worries that the Rs 1 lakh "people's car"
would add to India's emission woes.
Ratan Tata's quiet moment of triumph was deserved. Despite being born to
luxury, he had felt for the Indian family, riding four to a bike. Their dream machine-his
dream machine-was here now, having weathered the odds and the critics' pessimism.
To top it, there came news that the Government had allocated spectrum to his
companies to operate GSM mobile services, a moment that harkened back to bitter
wrangling with established GSM players.
The initial response to the Nano has been overwhelming and the tiny, Noddy-
land car is expected to help the company cross several milestones. With revenues at
Rs 1,29,994 crore for the financial year 2006-7, and group companies enjoying a
market capitalisation of Rs 2,51,487 crore as on January 10, 2008, the Tata Group is
on a strong footing, contributing more than 3 per cent to India's GDP. Nano, being the
world's cheapest car, has made international players sit up in amazement and the
company has received proposals from some African, Latin American and Southeast
Asian countries to manufacture the car there.
The Nano will make millions of Indians mobile. But then, that has always been
a Tata specialty: over the 138 years of the company's existence, it has been helping
India propel itself forward. It is emblematic of the company's own recent push to
become a proactive corporate mover, not the stolid doer it had been for generations.
The acquisition of Tetley in 2000, the takeover of Corus to become the fifth largest
steel company in the world and upping its stakes to become the frontrunner in
acquiring the Jaguar and Land Rover brands from Ford, all make a statement for Tata
as a company on the move.
When Tata Tea bought Tetley, it made big news as Tetley was a much bigger
company. Similarly when Tata Steel took over Corus, it did so without a hint of

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corporate bashfulness. When Tata Tea bought 30 per cent stake in Glaceau, it was
looking for the international marketing acumen of the company to leverage for Tata
Tea. But then with another company acquiring the majority stake in Glaceau, Tata was
left with no option than to book the gains of its investment in Glaceau. But there was
still a footnote to the episode and it stated that the Tata Group was aggressive about
going global.
The importance that the economic community puts on the Tatas is evident from
the fact that three group companies form a part of the Sensex, the most to represent a
corporate. RDAG (Reliance Dhirubhai Ambani Group) is represented by two
companies in the benchmark stock market index. The combined weightage of the
market cap of the three companies in the Sensex is 6.4 per cent. Tata has 13 other
listed companies, excluding the three that are a part of the Sensex.
The future of the group will be defined by some of its flagship listed companies-
TCS, Tata Steel, Tata Motors, Tata Power, Tata Teleservices and by Tata's venture
into financial services with Tata Capital. In the current market scenario, not only does
Tata Motors stand tall after the Nano, but Tata Steel, on the back of growing demand
for steel and rising metal prices, is also strongly positioned.
Power is the buzzword in Tata circles these days. Tata Motors has bagged the
Mundra Ultra Mega Power Project and there are other projects to be undertaken by
the company. As for its finance company, the entity Tata Capital has three companies
within it, Tata AMC, Tata AIG Insurance and Tata Investment Corporation. As and
when Tata Capital gets listed, it will unlock a lot of value for the company.
How the company moves ahead will depend a lot on who takes over from
Ratan Tata, a bachelor. Retirement, though, is not what preoccupying Ratan Tata’s
mind is. In fact, he has another dream-for himself and his countrymen: availability of
clean drinking water. He has already put his scientists on the job of finding the
cheapest method of purifying water for drinking.
The company has had a strong inheritance line and that has been an important
aspect in the continuous evolution and growth of the company. Ever since Jamsetji
Tata established the first textile unit in 1870, the company has rigorously moved
ahead. Dorab Tata established Tata Steel and Tata Power and took the Tatas into

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new segments of operation. Then came the aviation pioneer JRD Tata, who brought
commercial aviation to India under the name Tata Airlines, later nationalized into what
became Air-India. He also has to his credit the tea business, hotels, trucks and
locomotives, among others.
The latest in the line of Tata patriarchs, Ratan Tata has not proved less than
his predecessors. He was instrumental in producing India's first indigenously designed
and manufactured car, the Tata Indica, a new version of which was released a day
before sibling Nano took centre stage. He has shown the aggressive face of the
Tatas-as the acquisitions that it has gone for and successfully completed. And now he
has delivered on his promise of launching the world's cheapest car. While Ratan Tata
is around, surely there will be little talk of a successor.\

SUMANT BANERJI
The people's car, also the cheapest in the world, is here with us and as we
write this, it is being scrutinized by millions across the world. But not many know that
the Nano is not only a work of art perfected by 50 engineers in Tata Motor's plant in
Pune-the character of this low-cost, cute-looking, four-wheeled vehicle has the stamp
of Ratan Tata all over it.
It was Tata, a trained architect himself, who wanted a car tall enough to hold
his 6 ft tall frame. People say he once joked in the factory that he wanted to drive the
car himself at the launch. That is how the car gets its tall boy looks.
When the company was looking to cut costs, it was Tata who suggested the
Nano have one windscreen wiper instead of two. The original blueprint for the design
of the car, prepared by Italy's Institute of Development in Automotive Design-which
had also designed the Indica over a decade earlier-had a more sedate-looking car.
Tata, with his eye for detail and aesthetic sense, made it look more revolutionary and,
few will deny, more likeable. Along the way, it became less expensive as well.
But the Nano is not a story of one product. It is not a story of Ratan Tata's long
pending dream. It is a story of the journey of Tata Motors itself. As the Tata patriarch
himself admitted after the unveiling, it was the Indica that was a bigger risk. For a
successful company. Nano is a means of achieving an ambition, not of survival.

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 In many ways, the Nano story starts in 2000. That was the year when the
company, despite its Indica, faced losses for the first time in its 55-year history. An
economy that was in decline resulted in the company's turnover receding by almost 9
per cent in 2001.
Till then Tata Motors was the face of the Indian highways. Its sturdy trucks and
buses were as ubiquitous on the dusty landscape as the roadside dhabas. The
company was the unchallenged leader in the auto industry with an over 65 per cent
market share.
Things changed after 1992, when globalization stepped in and Tata found itself
wanting. A spate of technological joint ventures followed, first with Cummins Engine
Co and then with UK's Tata Holset Ltd and Tata entered the passenger car space with
the Indica in 1998. The idea then was to entrench itself in a widely changing industry
but the crisis at the turn of the century proved that Tata was in trouble. In 2000, Tata
Motors was a bulging, slow-moving auto giant all set for decay.
The company went back to the drawing board and the commercial vehicle
division was the one that saw the first change. The head of the division, Ravi Kant (the
current MD), decided to revolutionize the flow and inject young blood. Instead of
depending on the grey heads, he asked the engineers to show the way. The solution
he had in mind was to cut costs.
It was in those times of distress that a saviour in the form of Girish Wagh
emerged. Wagh was given the responsibility of a project so risky that at that time only
a young man could have taken it. It was to build a small truck that would ensure last
mile connectivity. Something that would work where the traditional trucks stopped.
Today we know it as the Tata Ace - a mini truck that was such a runaway success that
even passenger cars paled in comparison.
Ace's success convinced Tata that a small car built frugally but practically,
would sell. "Nano was a concept that was in Tata's mind even as Ace was being
developed. In many ways it is a precursor to Nano and its success convinced him of
its salability an important facet for a listed entity with shareholders riding on it," said a
Bosch official, the company that supplies Nano engines.

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 Wagh was the obvious and automatic choice for Nano as well. By the time Tata
announced his wish to make a small car in 2003; the company was back to its money-
making ways. After that slump in 2001, the company's revenues went up in 2002-3
and by the next fiscal, the turnaround was complete.
"In many ways I was more nervous with the Indica. That was a time when we
were getting into a completely new area of passenger cars. Our CV business was also
not in great shape. So there was pressure," Tata himself admits. "Now both our
divisions are doing Well and making money.”
But unlike the Ace, which had to be small and not necessarily inexpensive,
Nano had to be both. Wagh knew that as the company challenged its own limitations,
its component suppliers had to do the same. "The Nano was as much a dream for us
as it was for our suppliers. They have challenged their own capabilities and have
helped us in no small way in realising our dream," says Tata Motors Managing
Director Ravi Kant.
The engine, alternators, management systems and brakes come from Bosch,
transmission comes from Birla's Avtec Ltd, steel from its own Tata Steel, castings from
Tata Metallic, headlights from Lumax and batteries from Exide. All these components
are different from the standard ones fitted in other small cars and the companies have
made concessions and spent extra hours on R&D for the dream car. Some do not
even expect to make money with the association.
"Our association with the Nano project is more notional. We do not have major
margins and will start making money only after 1-2 years," said P.K. Kataky, Director
(Automotive), Exide Industries Ltd.
The challenges did not end with the product alone. In the wake of controversy
surrounding the policy on SEZ, Singur in West Bengal, the site for the Nano factory,
became a rallying point for protestors. Tata had won the technological battle but a
political one still stared it in the face.
Tata lost over four months and there were anxious moments when company
officials sometime thought aloud if the project should be shifted. A belligerent
monsoon last year did not help matters either. The low-lying factory site was flooded
and work had to be stopped. "Thankfully we had not placed any equipment at that

64
time or the loss and the delay would have been greater," says Tata. With the passage
of time, both the opposition and rain water receded.
The dream came to the fore four years ago but no one knows how cherished or
long standing it is for Tata. The sense of relief on his face was palpable and as he
stood addressing the world with the car in the background, he looked the youngest 70-
year-old ever.
Ratan Tata's dream has stepped out of its private domain and is awaiting mass
approval. If it comes, Tata Motors will have well and truly arrived.

The making of a modern classic

When Tata engineers began making the Tata Nano, it was seen as an act
of faith; what they have accomplished is an act of courage.
In early 2003, five engineers from Tata Motors trooped into the main
conference room at Bombay House, the Victorian sandstone building that houses the
headquarters of the Tata Group. They had been summoned at a day’s notice from the
Tata Motors factory in Pune by company Chairman Ratan N. Tata, who had just made
a promise the world said would be ‘impossible’ to keep.
Classic cars down the years. Top to bottom: Ford Model T(1908), Volkswagen
Beetle (1938), Morris Mini Classic (1958), Swatch-Mercedes Smart (1998), Tata Nano
(2008) Tata had told a Financial Times correspondent on the sidelines of the Geneva
Auto Show that he was thinking of making a car that would cost about € 2,000.
Adjusted against the then exchange rate of the rupee, that translated to Rs 1 lakh.
Tata says he had never really defined the project in his head exclusively by its pricing.
"It was the media that said it," says Tata. "But we decided to accept the challenge…."
With that resolution, Tata imprisoned himself and his engineers in a promise to fulfill
which they would have to all but rewrite the principles of automotive engineering.
When the engineers walked into the conference room that morning, they knew
that the meeting had something to do with Tata’s statement about a small car that
they vaguely remembered reading about in newspapers a few days ago. Little did they
realize then that the next four years of their lives would be dotted with moments of
agonizing failure and heady success, between which they would eat, drink and catch

65
up with their families. The worst: the engineers would not be able to share with
anyone, even their wives, what was going on inside their second home, the drab block
of concrete called Engineering Research Centre (ERC) at Tata Motors’ campus on the
outskirts of Pune.
Jai Bolar, senior manager for development at Tata Motors’ ERC, recalls that
the team entered the conference room armed with just a 60-slide presentation on all
the low-cost modes of personal transport. The vehicles included motorbikes, auto
rickshaws, scooters and the company’s own Indica. "We had no clue as to what we
were supposed to do,’’ says Bolar.”So finally, we asked him whether he could tell us
what he had in mind."
The next few minutes will, forever, be imprinted on the team’s mind. Tata, or
RNT as he is affectionately called, held forth, exhorting the team to dream of building
a low-cost car that would cost only marginally more than a two-wheeler and
revolutionize personal transport in India. Show the world what Indian engineering is
truly capable of, RNT told the engineers. "Make me also part of the team. Only in a
country like India or Pakistan can a low-cost car be made," he insisted.
The motivational talk worked. "We came back from the meeting all charged
up,’’ says Nagabhushan R. Gubbi, head of engineering for passenger cars. Gubbi did
not know, nor did the others, that they had just been impelled by arguably India’s most
visionary businessman to create history.

Spluttering Start
The idea stage: An early vehicle layout for the occupants the team made little
progress over the next year and a half. It tried to source parts from around the world,
even toyed with the idea of an open car with plastic or canvas sheets for protection.
The problem was it was still thinking of making the motorcyclist safer. Two-wheelers
continued to overtake the image of a car in their minds.
"The biggest challenge when the project started was there was no brief, no
benchmarks, and it had never been done before," says Bolar. Even RNT had only the
disturbing image of a family of four riding a scooter on wet roads and an unclear
dream to help such families as benchmarks

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 .In August 2005, Girish Wagh, an easy-going, but intense 35-year-old with a
reputation for building teams and trucks, entered the scene. Wagh, a mechanical
engineer by training, had just helped build the runaway hit Ace. He arrived at a time
when the first ‘mule’ was ready. A mule in auto parlance is a vehicle that comprises
the engine and transmission, driving a mock-up addled with electronic sensors. It
moves like a vehicle just for testing purposes. The first mule had a marine engine that
delivered 20 brake horse power (bhp).

Cranking Up
At Tata Motors, Jain is regarded as a pioneer. He is credited with the first
gasoline engine that Tatas made. For two years, Jain scoured the world looking for an
engine that could fit a small car. He even tried motorcycle engines, but finally decided
that RNT’s common man would need an engine not yet invented. Jain then went to
work with a clean sheet of paper. He started off designing a small engine that would
deliver 20 bhp, but realized midway that it would not be enough. So he increased the
engine’s capacity to 554 cc, which delivered 27 bhp.
The engine still did not have enough zing and its driveability was not
satisfactory. So, Jain redesigned the engine and increased its capacity to 586 cc. That
appeared to be peppy enough and satisfy all parameters. The team, swelling in
number as new tasks were incorporated and specialists taken on, was working to
meet three parameters — acceptable cost, acceptable performance and regulatory
compliance, not only current but also future.
While Tata engineers worked on the engineering of the car, Italian design
house I.D.E.A., which also designed the Indica, was chartered with styling. Guided by
RNT, the styling kept changing. Though in an interview with BW, RNT underplayed his
own role in the design, Wagh says he was intimately involved in the styling and made
some alterations even a few days before the launch. "Mr. Tata was present at every
testing and he made all the decisions," Wagh says. "He was very focused on what the
customer would like."
In December 2005, the second mule was tested, and by mid-2006, the first
prototype or alpha was ready. After testing the prototype, which ran on the 586-cc

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engine, the team found the vehicle wanting. "We felt it needed to be longer," Wagh
says. "RNT wanted changes in styling, which meant changes in body design, which
increased safety performance." It was decided to increase the length by 100 mm. It
meant redoing everything that was done until then. The team was back at the drawing
board.

Beat But Not Beaten

That the project did not have any specifications, and was never tried before,
worked both in its favor as well as against. With only three parameters to guide them,
the engineers kept coming up against failures. Jain says the biggest support from the
management was not to hold a failure against anyone. "The hardest part was
continuing to believe we could do it," RNT said. "I never felt the project won’t go
through. I was scared I won’t meet Target- price targets, time targets the auto expo…”
Bolar says that since there was no precedent to the project, everybody had a
number of concepts. "The management remained open, but the most challenging task
was to define the specs," he says. The Maruti 800 was the only benchmark to go by.
And it cost more than Rs. 2 lakh on the road.
As the team struggled with constant change, which often put them at their wits’
end, RNT and Tata Motors Managing Director Ravi Kant played a key role in
preventing creative fatigue. "We were like a football team," says Gubbi. "The
leadership was where the ball was. Everyone was playing for everyone.”
Ravi Kant put in long hours of work and was always available to take decisions,
monitor progress and keep the team motivated. "We exposed our people to products
of competitors by tearing those products apart and analyzing the good and bad and
comparing them with our own, thereby making people see why customers buy
someone else’s products rather than ours," Ravi Kant told The McKinsey Quarterly in
a recent interview.
Abhay M. Deshpande, general manager for vehicle integration, says though
there was time and cost pressures, the collective leadership kept the engineers
completely insulated from them.

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 Sometimes the work was repetitive and tedious. In designing the engine, Jain
did 150 thermodynamic simulations, each of them stretching eight to ten hours. Body
systems expert R.G. Rajhans, who had built the body of the Indica and also the new
Indica, had by then built about 10 different floors for the car.
Finally, in October 2006, Jain hit upon an optimal engine design. His creation
had a capacity of 624 cc and squeezed out 34 bhp of power. "It was the first time that
a high-pressure die-cast engine was made in India," says Jain. In comparison, the first
Maruti 800, which was powered by a 796-cc engine, delivered only 37 bhp.
Jain’s computer prototype was cast into a real engine in January 2007, when it
was first fired. With a multi-point fuel injection system developed by Bosch calibrating
the gasoline flow, the heart of the car was ready. Jain filed 10 patents for the engine.
By the time the car was finished, the company had filed 34 patents in all; and some
more are in the pipeline.

An Idea Is An Idea:
Often ideas came from unexpected sources. The team was struggling to
reduce the cost of seats while complying with safety norms when RNT, a passionate
pilot, who often shuttles between Mumbai and Pune by a chopper, had a brainwave.
He thought the reclining and sliding mechanism of helicopter seats could hold a
solution for the Nano. The engineers at Tata Johnson studied the mechanism and
designed one for the car. The window winding mechanism of the car was also inspired
by helicopter windows and done by IFB and Shivani.
The manufacturing team also introduced pokayoke, a Japanese term for
mistake-proofing. Mirasdar, who made the prototypes, almost always had a
suggestion that would end up reducing costs and simplifying processes.
Sometimes the cost reduction was so drastic that it surprised the engineers
themselves. "We found that the door handle of the car had 70 per cent less parts than
one of the cheapest European cars," says Mital. After the engine design was frozen,
things began to fall in place. The dimensions had been fixed and the layout of the
transmission finalized. Sona Koyo and Rane Group came up with hollow steering

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shafts, saving cost and cutting weight. Sharda Motors and Emcon designed the
exhaust system and MRF tweaked the tyres to bear extra weight on rear wheels.
"At every stage, we tried to cut costs by reducing the number of parts that went
into each component,’’ says Wagh. As the team succeeded at this, they began to see
the "impossible" dream morph into reality. But outside the factory, skepticism and
discontent were growing.

Revving up:
As the car got closer to completion, the media, including BW (see ‘Tata’s Small
Car, 1 Lakh Unanswered Questions’, BW, 6 August 2007), started speculating. Many
reports were cynical; some were guarded, as if leaving room just in case they were
proved wrong. Environmentalists such as R.K. Pachauri of The Energy Research
Institute and Sunita Narain of Centre for Science and Environment began raising
concerns about how a million small cars would impact urban congestion and air
quality. But Tata was privy to information that his car had survived a frontal crash test
and met Euro IV emission norms several months ago.
Japanese auto giant Suzuki, which makes the ubiquitous Maruti 800, also
spoke out with derision. "What is it going to be? A three-wheeler with a stepney?"
Suzuki’s Founder Chairman Osamu Suzuki had quipped when Tata announced the
project. In February 2006, Suzuki again took a shot, saying that it was impossible to
make a reliable car for Rs. 1 lakh.
But within a year of Suzuki’s comment, the Tata team had reason to pop the
bubbly. A beta prototype was ready by the middle of 2007 and to maintain secrecy, it
was tested at foreign locations, such as test tracks in Germany and the rough terrains
of Australia.
Just about 10 days before the Auto Expo at New Delhi’s Pragati Maidan where
the car was to be unveiled, RNT joined the team in Pune. He camped there until the
launch, overseeing the finishing touches. He personally drove it, and made several
last-minute changes, including changes in the seat covers and air vents, as the team
prepared for the Big day. Kinds of sketches about the car’s looks, three Nanos were
shipped to Delhi in containers and remained under cover until the night before the

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launch. In the wee hours of 10 January, the car was rolled into Tata’s pavilion in hall
11 of Pragati Maidan right under the noses of several TV vans stationed nearby. But
they missed the action. RNT, who later admitted he had spent a sleepless night
preparing for the launch, and Ravi Kant, were present when the cars arrived.
That day will go down as a red-letter day in Indian automotive history. Using a
three dimensional hologram created in Germany, a ‘virtual’ RNT spoke to the huge
crowds deluging the Tata pavilion about the car he had dreamed of and which was
finally about to be unveiled.
Then, the real RNT, his over 6' 2" frame comfortably ensconced in a white-
colored Nano’s driver seat, drove onto the stage what the world now acknowledges as
a path-breaking car. As the crowd roared and cheered, a visibly tired but moved RNT
took the mike to assure them of one thing — the car, despite the protestations of
many in the press, would cost Rs 1 lakh. "A promise is a promise," RNT said, sealing
his place in the hearts of millions, whose aspirations of owning a car were now reality.
As Tata stood modestly enjoying his success on the stage, a foreign journalist was
overheard saying to another: "We are lucky to be here". The other replied, "Yes, at
least we can tell our grandchildren that we were there.”
If the Nano was one of the most anticipated events in automotive history, its
launch has set the industry aflutter. "It’s a problem for Detroit," wrote The Washington
Post, "which is racing to enter India’s booming small-car market but will now have to
completely revolutionize its production and distribution to compete." Perhaps the most
important comment came from Ford’s Executive Vice-President John Parker. "It is a
groundbreaking product," he said. "The Nano will cause people to think differently
about the car. I have a lot of respect for Tata.’’ It seemed like poetic justice that the
praise came from the company that had revolutionized personal transportation with
the launch of the original ‘people’s car', the Model ‘T’, exactly a hundred years ago.
Curiously, every ‘people’s car’ has been launched in the eighth year of the decade.
However, Tata Motors still needs to align the commercial imperatives behind
the car, analysts say. The company has invested Rs 1,700 crore in creating the Nano,
which will yield wafer-thin margins. Analysts are concerned the company will have a
hard time achieving the volumes before the Nano returns a profit. In fact, Tata Motors’

71
stock has been downgraded by rating agencies on this count as well as concerns over
RNT’s bid to acquire the Jaguar and Land Rover for $2 billion. Analysts also seem
unsure if a company can straddle a spectrum of products that ranges from a $1-lakh
car to a Rs 1-lakh car. "That car doesn’t have air-conditioning, power steering, air
bags and other features. Do you dare to buy that kind of car?" Wang Chuanfu,
chairman of Chinese carmaker BYD, Was quoted as saying at the Detroit Auto Show.
But RNT emphasizes that the Nano is not just a Rs 1-lakh car, but a platform
that will be used to create further high-end models that will sell for more and yield
comfortable margins. Tata Motors will also foray into electric and hybrid cars, using
the Nano and its future variants as a base, RNT says. He adds that he has also
received invitations from at least two countries to set up Nano manufacturing plants
there, which will also help recover the car’s R&D costs. More impressive are the
intangible benefits RNT’s dream car has achieved for Tata Motors. For one, he has
put the fear of Indian engineering into carmakers across the world. In a single stroke
he has also made the Tata brand known in every corner of the world, something no
other auto company has ever done. In fact, the publicity the Nano has garnered
globally would be worth more than Rs 500 crore.

The Last Mile :

The launch was perfect, but the Nano has to go some more distance before it
reaches the customers. The last stage of cost reduction is expected to happen in
distribution. Tata Motors is developing an assembly kit for distributors who would
stock completely knocked-down kits of the car at warehouses and assemble them on
site. Carting CKDs to different parts of the country is expected to bring down costs as
more parts can be transported in the same space that a fully built car can be moved.
To enable cheaper assembly at the distributor’s end, some parts of the car
would be glued together instead of welded. "Usually those who make a small number
of cars do such distributed manufacturing," says Wagh. "Sometimes others do it to
test the market. For the first time, it would be tried on a large scale." Also, the car is
still at the beta stage. Wagh says there would be more tweaking done by the time the
first car rolls out of Singur later this year.

72
 Already newly converted cynics are describing the car as revolutionary. The
only person not fully satisfied is RNT himself. "It is not as revolutionary as I wanted,''
he said. "I wanted the car to be made from new materials, use new techniques, in a
sense completely re-envisage the way cars are made. In that sense I am still not
satisfied,'' he told BW.
For the moment, however, the cute-as-a-bug Nano is the cynosure of all eyes.
And Ratan Tata has undoubtedly entered the hall of fame of automobile
manufacturing.

Nano makes it to Time’s most important cars of all time

One week after it’s unveiling, the world’s media is still agog with news and
views about the Tata Nano. Many termed it a cute, ultra-cheap car that will
revolutionize personal transportation in India and Asia and many others are calling it a
glorified go-kart that will be unreliable and unsafe. The debate is still raging in all sorts
of media - print, TV and the Internet.
Online polls that ask Americans if they will buy one if and when the Nano is
launched in that market, blogs that have postings, which swing from patriotic praise to
outright hatred and discussion forums that are still witness to heated arguments about
the promise and fallout of the car are keeping the Tata car in the thick of it all. The
Nano has probably got more media attention than it bargained for. But, it was only to
be expected with the Nano’s much-publicized price tag making it the cheapest car of
the world. Competitors who have in the past sworn that it is an impossibility to develop
a $2,500 car have reacted to the Nano as far away as Detroit – the home of the
American automobile industry.
Interestingly, the notoriously taciturn, Toyota Motor Corporation and its
President, Mr Katsuaki Watanabe, also reacted to the Nano saying that the world’s
number two car maker will need a little more time to develop vehicles at this kind of
price point. It is reported that he also added that an early prototype of a Toyota small
car that will be made specifically for markets such as India is close to getting a “go
sign”.

73
 In the midst of all this attention that the Nano is still getting, comes one of the
first recognitions of its potential to create history. In a presentation titled ‘The dozen
most important cars of all time starting from 1908 to the present’, Time magazine lists
the Tata Nano along with legendary cars like the Ford Model T, the Volkswagen
Beetle, Chevy Belair, Toyota Corolla, the Mini and the Honda Civic.
Listing the 12 cars in chronological order, the Time magazine presentation says
only these ‘few automobiles have been able to fundamentally change the way we live
and dream’. As for the Nano, Time says “India’s ‘people’s car’, as it is already dubbed,
is intended to put motoring within reach of Asia’s masses. At $2,500 it’s hard to see it
how it won’t sell, but even if it doesn’t it will become the poster car for a new, stripped-
back style of engineering — glue instead of welds! — that could change the world.”

Indian people's car

India is one of those developing countries whose economies are expected to

be among the world leaders by the middle of this century. Its technological skill and
financial clout have already made an impact in the IT industry and the international
cricketing arena, to take just two examples. But the unveiling of Tata Motors' Nano car
in New Delhi yesterday marks a new level of Indian achievement.
The headline news is that the Nano will cost only pounds 1,300, thus opening a
potentially huge market in the developing world. But Tata has also stolen a march on
giant vehicle manufacturers such as GM, Ford, Toyota, V W, Mitsubishi and Renault-
Nissan, all of which are looking to expand sales in Asia, Africa and Latin America at a
time when the European and American markets are, respectively, flat and declining.
Tata has produced a car that not only costs pounds 500 less than the cheapest
Chinese model, but also breaks technological ground by having a rear-mounted two-
cylinder engine, which both saves fuel and creates interior space. It has taken out
more than 34 patents on technologies used in its manufacture. The Tata Group, the
country's largest conglomerate, epitomizes the global outreach of modern India;
having acquired the Corus metals company last year, it is now seeking to buy Jaguar
Cars and Land Rover.

74
 The world's second most populous nation presents a striking contrast between
that kind of industrial clout and the poverty in which most Indians still live. At one end
of the scale are billionaires such as Vijay Mallya, who is promoting India as a Formula
1 racing power. At the other are the inhabitants of Mumbai's periphery who lack
decent housing, education and healthcare. The Nano lies between those two
extremes: a car built to attract members of the urban middle class who at present
perch on motorcycles. That it will add to India's already acute traffic problems should
remind the government of how far it has fallen behind in infrastructure development,
whether roads, electricity or water. The Nano is a remarkable first from a country that
still exasperates for its failure to provide basic services.

Breathe easy People's Car, Nano, not that polluting

In spite of what Ratan Tata might say, Sunita Narain and RK Pachauri would
have spent an uneasy night. The prospect of hundreds and thousands of Nanos
trundling down the roads of various Indian cities spewing carbon dioxide and nitrous
oxide would have been nightmarish for them.
Are their worries justified? Not really, if the evidence and math’s are taken into
consideration. But that is getting ahead of the story. For some experts, Tata Nano is
actually a good thing. After all, had the Tata Nano not come along, there would have
been another car to take its place.
"India is a growing economy and so people will buy cars. It is a good thing that
they will perhaps be buying a smaller car which is complying with more stringent
norms rather than a much larger car or a two-wheeler that follows less stringent
norms," says Krish Krishnan, managing director, Green Ventures, a venture fund that
invests in green initiatives. Mr. Krishnan has been an entrepreneur in sustainable
environment development.
But let us get to the heart of the argument and look at it clinically. After all, how
much pollution will the Nano cause? Automobiles produce many pollutants: carbon
monoxide, un-burnt hydrocarbons and nitrous oxides. To make things simple, all of

75
these have to be converted into equivalent amounts of carbon dioxide (CO2) — the
Mr. Evil of environment today.
Now Euro IV compliant cars, which the Tata Nano is, produce one (1) gramme
of carbon monoxide and 0.08 gramme of nitrous oxide. To convert them into CO2
equivalent, a conversion factor recommended by IPCC (Intergovernmental Panel on
Climate Change) of which Mr. Pachauri is chairman, is applied. It is 3 for carbon
monoxide and 310 for nitrous oxide. Once the entire math’s is done, we get 30
grammes per kilometer.
So each time the Tata Nano moves a kilometer, it will release 30 grammes of
CO2 equivalent material into the atmosphere. This is 40% less than what all others
cars produce (50 grammes/kilometer or more) — and there are more than 5 million
cars in India today. But let us take the argument into a zone where the naysayers
would be comfortable: on the total amount of CO2 equivalent that Tata Nanos will
produce over the next five years. This involves a bit of some assumptions.
So assume that Tata will from the next year sell 1,00,000 cars a year for five
years and reach a total of 5,00,000 - half the size Mr. Tata thinks a car at one-lakh
price point may sell. Now let us take a range that the Tata Nano runs between 1,000
kilometers and 8,000 kilometers a year. If all those half-a-million cars run 1,000
kilometers then the total CO2 produced will be 15,000 tones annually.
If they all run 8,000 kilometers then the total CO2 equivalent will be 1,20,000
tones. In reality, the figure should be closer to 25-30,000 tones because our
assumptions of car sales and annual mileage are on the higher side.
So are these numbers large? Taking the worst case - 5, 00,000 on roads and
each running 8,000 kilometers annually - the total CO2 equivalent will be less than 8%
of India's total CO2 emission. And if we take a more realistic assumption then it will be
less than 1% of India's total CO2 emission. Environment guys would do well to go
after the other 99%.

76
1 lakh car drives 1 billion dreams

Little Nano, the next big thing 20 km per liter; 21% more space than Maruti 800;
Bharat III emission norms.

NEW DELHI, SINGUR, JANUARY 10: Ending a four-year wait and bringing the
dream of car ownership closer to millions, Tata Motors today unveiled the "People's
Car" at a show here watched by the international automobile industry. Called Nano,
the car will cost Rs 1 lakh as promised by the company which also assured meeting
all safety and emission norms.
"Since we started the project four years back, there has been a steep increase
in input cost but a promise is a promise," said Tata Group chief Ratan Tata after
displaying his dream project at the Ninth Auto Expo.
"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 said.
"Tata Motors' engineers and designers gave their all for about four years to
realize this goal. Today, we indeed have a people's car, which is affordable yet built to
meet safety requirements and emission norms, to be fuel efficient and low on
emissions. We hope it brings the joy, pride and utility of owning a car to many families
who need personal mobility." This small car — Nano is 20 per cent shorter in length
than the Maruti 800 but Tata claims it has 21 per cent more space — is powered by a
623 cc rear-mounted engine and will travel 20 km per liter. The car will cost Rs 1 lakh
at the dealer-end but Attract Value-Added Tax and transportation cost.
Apart from the standard version, Nano will also come in two deluxe models with
air conditioning. While critics had been skeptical about the car meeting safety and
emission norms, Tata said Nano will meet Bharat Stage-III emission norms and can
also meet the stringent Euro 4 norms. The car has also gone through a full frontal
crash test as per Standard norms, he said.

77
 Tata Motors expects two-wheeler riders to buy the car that costs half as much
as those currently in the market. With just 8 people in 1,000 owning a car in India,
there is huge potential to upgrade bike and scooter owners who bought about 7 million
two-wheelers in 2006-07.
Commerce Minister Kamal Nath said Nano will help the common man shift from
two-wheelers to four-wheelers. "It is a proud moment for India. It demonstrates India's
technological and entrepreneurial ability. The car will help people move from two-
wheeler to four-wheeler and it will leap-frog the two-wheeler. It fulfils the need of the
common Indian who aspires to move from a two-wheeler to a four-wheeler," he said.
Tata also allayed fears expressed by environmentalist R K Pachauri and green
activist Sunita Narain that a car at that price would add more vehicles, leading to
higher pollution. "Pachauri will not have a nightmare and Sunita Narain can also
sleep," he said.
On the reasons for choosing the name Nano, Tata said the car was about high
technology and small size. He credited the development of Nano to Tata Motors'
engineers, and said it was the capability and commitment to innovate that realized the
dream. In fact, Tata Motors has applied for 34 patents for aggregate features, such as
the two cylinder gasoline with single balancer shaft.
Asked if the company was looking to export the car as well, Tata said: "The first
two-three years our focus will be India and see the Indian market appropriately
addressed." He did not, however, rule out an overseas launch of the car.
Tata revealed what enabled it to cut down costs and score over the entire
global auto industry. "We took the standard Maruti 800 as the base model and worked
backwards on how we can reduce costs. We decided and found out that a tight
package that will mean a smaller, meaner car, lighter engine and higher fuel economy
will do the trick," Tata said. "The decision to make it a rear engine driven was
precisely to reduce the length of the car."
But why did other car makers miss the trick? "I cannot say for others but what is
important is whether you have desire strong enough to prevent the odds from
overwhelming you," Tata said.

78
 At the site of the plant in Singur, West Bengal, where the first Nano will roll out,
it is a race against time. Over 2500 people have been working in two shifts behind a
guarded perimeter to complete the factory in time. Soon another shift will be
introduced to make up for any backlog in work caused during the last heavy monsoon.
"Work will soon start in three shifts. Over 75 per cent work of the factory is
complete and we hope by September of this year the first car will roll out of the
factory,"' a top official of West Bengal Industrial Development Corp (WBIDC) told The
Indian Express. A major portion of the work involving the setting up of a 230 KV
substation on the project site to ensure uninterrupted power supply to the factory and
the vendor park has almost been completed by ABB. In order to save the site from
inundation in the future, the state government has revived the 30-year-old Ghiya Kulti
irrigation project at a cost of Rs 170 crore.
Next to the 645-acre plot that will have the main car plant, a vendor park is coming up
on 290 acres to house the proposed 55 ancillary units. Already, 14 have started
setting up theirs. These include Lord Swaraj Paul-owned Caparo Engineering Pvt Ltd,
Rasandik Engineering Industries Indian Ltd, Rucha Engineers Pvt Ltd and Sharda
Motor Industries Ltd. While Rasandik has plans of investing Rs 55 crore in the first
phase of work at the vendor site, Rucha Engineering has committed Rs 50 crore for
their facility at the vendor park. WBIDC has set up a camp office at the project site
where so far 2432 persons from displaced families have got their names registered.

79
 CHAPTER: 4
SCOPE & OBJECTIVES

80
 ROLE AS A MARKETING RESEARCHER
I was a researcher of the Tata’s NANO car in which I research Perception of
people on “NANO”. I had use questionnaire as a tool in my marketing research.

Under my project was the perception of Tata Nano in JAIPUR city. I have
visited different showrooms of Two Wheeler & Four Wheeler in these areas to collect
the data. I educated every customer before filling the questionnaire about my project
work. Like this task of filling of the questionnaire was finished. After that I analyses the
entire questionnaire and get the real perception of the people about “NANO” in
JAIPUR city, and I also came to know the acceptance level of “NANO” in JAIPUR city.

81
Marketing Research Problem :
• To find out the consumer perception on NANO car in JAIPUR city.

Scope of the Study :

• This study would be useful for companies to know what people perceive and
thinking about “Small Fight” that is NANO.
• This study would be useful to other students as a secondary data.
• This study would be useful to form strategies according to perception of people
about NANO.

Objective of the Study :

• To know the consumer perception on “NANO” car.
• To find out the Acceptance level of people.
• To find out the awareness level about “NANO” car.
• To know about factors affecting purchase decision of “NANO”.
• To know how purchase decision of “NANO”.varies from different Income
group.

Limitation of the study :

• I will have to rely upon the information given by respondents, which may not be
fully true
• This study will be limited to only some areas of JAIPUR City
• It is only for short period of time.
• Lack of professional approach since researcher is a student.

82
 CHAPTER: 5
RESEARCH METHODOLOGY

83
 INSTRUMENTATION:

SOURCES OF DATA COLLECTION

PRIMARY:
For my survey primary data have been used as a questionnaire to collect the
data.

SECONDARY:
The secondary date has been collected from the following modes:
● Magazines
● Data through internet sources

RESEARCH DESIGN
Research Design is the arrangement for conditioned for data collection &
analysis of data in a manner that aims to combined relevance to research purpose
with economy in procedure.
A research design is a master plan or model for the conduct of formal
investigation. It is blue print that is followed in completing study.
The research conducted by me is a descriptive research. This is descriptive in
nature because study is focused on fact finding investigation in a well structured form
and is based on primary data.

RESEARCH PLAN

84
 • Type of study: For completing my study I have gone for sample study
because looking at the size of population & the time limitation it was not
convenient for me to cover entire population. Hence I have gone for sample
study rather than census study.

SAMPLING PLAN
A sample design is a definite plan for obtaining a sample from a given
population. It refers to the technique or the procedure that researcher would adopt in
selecting items from sample. Sampling plan may as well lay down the member of
items to be inched in the sample i.e. the size of sample. Sampling plan is determined
before data are collected.

STEPS IN SAMPLING PLAN

Sampling frame :
The list of sampling units from which sample is taken is called sampling frame.
JAIPUR city map was studied thoroughly and samples were selected from the places
in a scattered manner to get effective result.
SAMPLING SIZE:
Total sample size is 100.
SAMPLING PROCEDURE:

The selection of respondents were accordingly to be in a right place at a right

time and so the sampling were quite easy to measure, evaluate and co-operative. It
was a randomly area sampling method that attempts to obtain the sample of
convenient elements.

85
 CHAPTER: 6
DATA COLLECTION
(Data collection by Observation & Interview method)

86
FIELD WORK:
I have collected the data through medium called questionnaire collecting the
responses from 100 people in all. I had done my field work in the following area.
TONK ROAD, SITAPURA, PRATP NAGAR, MANSAROVER, MALVIYA NAGAR,
VAISHALI NAGAR, JAGATPURA, GOPALPURA, SANGANER.
I started my project very first educating the respondents about my entire
project, and ask them to co-operate with me. Mostly all the respondent were aware of
this type of surveys. So I didn’t face any type of difficulty during my project in the
process of explaining and taking there responses on the questionnaire.

QUESTIONNAIRES:
Through the questionnaire I was able to get an insight in to the consumers
mind and to learn about there perception about “NANO”. All of the questions
mentioned in the questionnaires were helpful to me in knowing the consumer
acceptance level

87
 CHAPTER: 7
DATA ANALYSIS

88
INTERPRETATION AND ANALYSIS
This has been classified in to two sections:

Section 1

Table : 1

GENDERWISE BI-FURCATION

NO. FREQUENCY PERCENTAGE

MALE 245 81.67

FEMALE 55 18.33

TOTAL 300 100%

Graph : 1

245
250

200

150
MALE
81.67
100 FEMALE
55
18.33
50

0
FREQUENCY PERCENTAGE

The above mention graph which clearly states that out of 300 respondents , 245 are
Male and 55 respondents are Female .

89
Table : 2

AGE DISTRIBUTION

NO. FREQUENCY PERCENTAGE

18-30 100 33.00

30-50 150 50.00
Above 50 50 17.00

Graph : 2

AGE
150
160
140
100
120
100
80 50 50 18--30
60 33 30--50
40 17 Above 50
20
0
FREQUENCY PERCENTAGE

There are more customers in the age group of 30-50 and 18-30 covered under
this study. Percentage wise graph has given here.

90
Table : 3

INCOME PER MONTH:

NO. FREQUENCY PERCENTAGE

5,000 – 10,000 80 17.50

10,000 – 15,000 119 45.00
15,000 – 20,000 66 20.00
Above 20,000 35 10.00

TOTAL 300 100%

Graph : 3

119
120
100 80
66
80
5000-10000
60 39.66
35 10000-15000
40 29.66 22
15000-20000
11.66
20 Above 20000
0
FREQUENCY PERCENTAGE
INCOME PER MONTH

The above graph shows the different Income Group of respondents.

91
Table : 4
OCCUPATION :

NO. FREQUENCY PERCENTAGE

Govt. Employee 95 31.66

Pvt. Employee 80 26.66
Business man 39 13.00
Professional 51 17.00
House Wife 09 3.0
Student 16 5.0
Retired 11 3.66

TOTAL 300 100%

Graph : 4

100 95
90 80
80 Govt. Employee
70
60 51 Pvt. Employee
50 39 Business Man
40 31.66
26.66 Professional
30
20 9 16 11 13 17 House Wife
10 3 5 3.66 Student
0 Retired
FREQUENCY PERCENTAGE
OCCUPATION

I have tried to cover all the people from different sectors. Here in my study there are
more no of Govt. and Pvt. sector Employee covered than other sector.

92
 SECTION – 2

Table : 5

Showing Ratio of Respondents having Two Wheeler.

No. FREQUENCY PERCENTAGE

Yes 275 91.66

No 25 8.33

TOTAL 300 100%

Graph : 5

300 275
250
200
150 91.66 Yes
100 No
25 8.33
50
0
FREQUENCY PERCENTAGE

Do you have any vehicle ?

From the above I analyze the No. of people having vehicle. There are about
92% of people having vehicle and only 8.33% of respondents do not having any
vehicle.

93
If yes than specify….
Type of Vehicle FREQUENCY PERCENTAGE

Two Wheeler 210 76.36

Four Wheeler 54 19.63
Any other 11 4.0

TOTAL 275 100%

250
210
200

150
Two Wheeler
Four Wheeler
100 76.36 Any other
54
50 19.63
11
4
0
Frequency Percentage

The above graph shows that mostly respondents who covers under my study
having Two Wheeler with 76.36% and it is followed by respondents who’re having
Four Wheeler with 19.63% and lastly with 4% of respondents who are having vehicle
other than two wheeler or Four Wheeler.

94
Table : 6
Showing willingness of respondents to purchase of Rs. 1 Lakh car.

No FREQUENCY PERCENTAGE

Yes 225 75.0

No 75 25.0

TOTAL 300 100%

Graph : 6

225
250
200
75
150 75
100 25 YES
NO
50
0
FREQUENCY PERCENTAGE

Would you like to go for Rs. 1 lakh

car ?

The above graph shows that out of 300 respondents 225 respondents with
75% like to purchase Rs. 1 Lakh car and only 75 respondents with 25% do not want to
purchase Rs. 1 Lakh car.

95
Table : 7
Showing Awareness level of “NANO”.

FREQUENCY PERCENTAGE

Yes 300 100

No 0 -

TOTAL 300 100%

Graph : 7

300 300

250
200
YES
150 100
NO
100
50 0 0
0
FREQUENCY PERCENTAGE
Are you aware of Tata’s “NANO” car ?

The above graph shows that out of 300 respondents all the respondents are aware
about the “NANO”.

96
Table : 8

Showing the perception of respondents about “NANO”

No FREQUENCY PERCENTAGE

Yes 272 90.66

No 28 9.33

TOTAL 300 100%

Graph : 8
300 272
250
200
150 90.66 YES
100 NO
28
50 9.33
0
FREQUENCY PERCENTAGE
Do you like the TATA’s Rs 1 Lakh car
The “NANO” ?

From the above graph we can see that there are 90.66% respondents like
Tata’s “NANO” car. in that respondents who do not want to go for “NANO” but even
they like “NANO” are also covered, very few respondents with 9.33% has given
negative response to the “NANO” and it is very less compare to overall sample size.

97
HYPOTHESES

Ho: Preference for The “NANO” is independent to income.

H1: Preference for The “NANO” is dependent on income.

α = 5%
PREFERENCE 5,000-10,000 10,000-15,000 15,000-20,000 Above 20,000
YES O : 39 O : 76 O : 23 O : 13
E : (35.23) E : 59.90 E : 35.23 E : (20.64)
NO O : 31 O : 43 O : 47 O : 28
E : (34.77) E : (59.10) E : (34.77) E : (20.36)

TOTAL 70 119 70 41

X2 = (O- E)2 O= Observed frequency

E E=Expected frequency

X2 = 23.7

Rejection criteria =

Ho is rejected if calculated X2cal is > X2 tab

Here calculated X2 = 23.7 & X2 tab (3,0.05) = 7.815

So, Ho is rejected.
So here I can conclude that preference for “NANO” is dependent on income of
respondents.

98
Table : 9

Showing respondents perception to purchase “NANO” within 1 to 2 year.

No FREQUENCY PERCENTAGE

Yes 213 71.0

No 77 25.66
Can’t Say 10 3.33

TOTAL 300 100%

Graph : 9

250 213
200

150

100 77 71 YES
25.66 NO
50 10
3.33 CAN'T SAY
0
FREQUENCY PERCENTAGE
Do you plan to buy a “NANO” in the next
1 to 2 year ?

The above graph shows the respondents ratio who want and who do not want
to buy “NANO” in the next 1 to 2 year. There are 213 respondents with 71% are
planning to buy “NANO” in the next 1 to 2 year. Where as 77 respondents with
25.66% like to buy “NANO” after 2 year period. There are less no. of respondents are
still not think to buy “NANO” in the next 1 to 2 year with 3.33%.

99
Table : 10

Perception of Respondents about model of “NANO”.

FREQUENCY PERCENTAGE

Standard (Without AC) 163 54.33

Deluxe (With AC) 137 45.66

TOTAL 300 100%

Graph : 10

180 163
137
160
140
120
100
80 54.33
45.66 Standard
60
Deluxe
40
20
0
FREQUENCY PERCENTAGE

Which Model would you go for ?

The above graph shows the preference of the respondents regarding two
different model of “NANO” car while purchasing. Here from the above graph we can
see that the No. of respondents who’s given their preference for car model are equally
for each model. Respondents who are like to go with Standard Model are 163 with
54.33% and respondents who prefers Deluxe Model are 137 out of 300 with 45.66%

100
 Table : 11

Perception of respondents regarding mileage (21 kmph) of “NANO”

FREQUENCY PERCENTAGE

Very good reason to buy 187 62.33

Good Enough for Small Town 92 30.66
Not Enough 21 07.00

TOTAL 300 100%

Graph : 11

200 187

150
92 Very Good
100 Reason
62.33 Good
Enough
50 30.66
21 Not
7 Enough
0
FREQUENCY PERCENTAGE
What do you think of it’s Mileage of 21 KM/Liter ?

The above graph shows that the out of 300 respondents mostly respondents
like the mileage of “NANO” car. Here, out of 300 respondents 187 select Mileage as a “Very
Good Reason” with 62.33% , 92 respondents think that this mileage of the car is “Good
Enough” for small town with 30.66% and at last very few respondents believe that this
mileage is “Not Enough” with 7%.
Ranking of attributes about “NANO” in order to preference given by respondents ,
while buying “NANO”

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Table : 12.1 (BRAND NAME)

BRAND
RANK FREQUENCY PERCENTAGE
1 70 23.33
2 149 49.66
3 56 18.66
4 25 8.33

TOTAL 300 100

Graph : 12.1
ATTRIBUTES RANKING

BRAND BRAND
RANK, 4, RANK, 1,
8.33% 23.33%

BRAND
RANK, 2,
BRAND 49.66%
RANK, 3,
18.66%

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Table : 12.2 (AFFORDABILITY)

RANK FREQUENCY PERCENTAGE

1 159 53.00
2 95 31.66
3 46 15.33

TOTAL 300 100

Graph : 12.2

ATTRIBUTES RANKING

RANK, 1,
53%
1
RANK, 3, 2
15.33% RANK, 2, 3
31.66%

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Table : 12.3 (SHAPE/DESIGN)

RANK FREQUENCY PERCENTAGE

1 31 10.33
2 27 9.0
3 10 3.33
4 44 14.66
5 188 62.66

TOTAL 300 100

Graph 12.3

ATTRIBUTES RANKING

RANK, 1,
10.33% RANK, 2,
RANK, 5, 1
9%
62.66% 2
3
RANK, 3, 4
3.33%
RANK, 4, 5
14.66%

104
Table : 12.4 (SAFETY)

RANK FREQUENCY PERCENTAGE

1 25 8.33
2 17 5.66
3 132 44.00
4 79 26.33
5 47 15.66

TOTAL 300 100

Graph : 12.4

ATTRIBUTES RANKING

RANK, 1,
RANK, 5, 8.33% RANK, 2, 1
5.66%
15.66% 2
3
RANK, 3,
4
44%
RANK, 4, 5
26.33%

105
Table : 12.5 (COMFORT)

RANK FREQUENCY PERCENTAGE

1 15 5.0
2 12 4.0
3 56 18.66
4 152 50.66
5 65 21.66

TOTAL 300 100

Graph 12.5

ATTRIBUTES RANKING

RANK, 1,
RANK, 5, 5% RANK, 2,
1
21.66% 4%
2
3
RANK, 3, 4
18.66%
RANK, 4, 5
50.66%

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Table : 12

Perception about NANO on Second hand car

No FREQUENCY PERCENTAGE

Yes 267 89.00

No 33 11.00

TOTAL 300 100%

Graph : 12

300 267
250
200
150
89 YES
100
33 NO
50 11
0
FREQUENCY PERCENTAGE
Would you like to buy Second hand car instead
of NANO ?

The above graph shows the respondents preference when they think for NANO
over second hand car. Here, graph shows that out of 300 respondents 267
respondents would like to purchase “NANO” instead of any second hand car with
89%, and respondent who would like to go for second hand car instead of Tata’s
“NANO” are very few, there are only 33 respondents prefers these with 11%.

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Table : 13
Showing Reason to like “NANO” on second hand car

FREQUENCY PERCENTAGE

Its new/ New Entry 144 48.00

Mileage 96 32.00
Running cost 45 15.00
Good looks 15 5.0

TOTAL 300 100%

Graph : 13

160 144
140
120
96
100
80 Its New
60 45 48 Mileage
40 32 Running cost
15 15 Good Looks
20 5
0
FREQUENCY PERCENTAGE
Why do you prefer a NANO to a
second hand car ?

Out of 300 respondents 144 respondent would like to purchase NANO instead
of second hand car because its New and of course due to its new entry in to the
market with 48%, where as 96 respondent prefer mileage is the main reason while
selecting between second hand car and NANO with 32% it is followed by 45
respondents with 15% would like to with prefer NANO instead of second hand car due
to its better Running cost, finally 15 respondents would like to go for NANO due to its
Good looks with 5%.

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Table : 14
Showing how purchase decision of “NANO” affect on Status of respondents

No FREQUENCY PERCENTAGE

Yes 189 63.00

No 111 37.00

TOTAL 300 100%

Graph : 14

200 189
180
160
140 111
120
100 63
80
37
60 YES
40
20 NO
0
FREQUENCY PERCENTAGE

Do you think that purchase decision of

NANO will affects your status ?

Here the above graph shows that out of 300 respondents 189 respondents with
63% think that Purchase decision of NANO would be affect to their status. Here
respondents were thinking in both the sense positively as well as negatively. Its
followed by the respondents who were thinking that purchasing decision on NANO will
not affect to their status, there are 111 respondents with 37% falls in this category.

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Table : 15
Showing level of respondents belief about

No FREQUENCY PERCENTAGE

Yes 199 66.33

No 101 33.66

TOTAL 300 100%

Graph : 15
199
200

150
YES
101
100 66.33
NO
33.66
50

0
FERQUENCY PERCENTAGE
Do you believe that “NANO” is a
dream car of yours ?

The above graph shows that out of 300 respondents 199 respondent with
66.33% believe that Tata’s “NANO” is there Dream car, while 101 respondents with
33.66% do not think that “NANO” is their Dream car.

110
 CHAPTER: 7
DATA ANALYSIS

111
• I have found in my study that most of the respondents who like to go for TATA’s
“NANO” belongs to income group of 5000 to 15000, so it can be said that
“NANO” will be most welcome by this income group of people.

• Most of the respondents who belongs to the Private Sector or Govt. Sector
having greater acceptance level for “NANO” in JAIPUR city and they would also
like to go for “NANO”.

• I have found that all the respondents of JAIPUR City which covered under my
study are well aware about TATAs “NANO”.

• In my study I have found that above 90% of respondents like the TATA”s
“NANO” car. Those respondents who would not like to go for “NANO” , they are
also like the TATA”s “NANO” for various reason like affordability, brand name,
shape/design this shows the preference of the respondents in JAIPUR city.

• More than half of the respondents would like to buy “NANO” in next 1 to 2 year.
Respondents who like to buy “NANO” are curiously waiting for its launching,
respondents like to go for “NANO” as it’s most affordable cost and of course
due to its Brand Name that is TATA.

112
• Respondents also prefer “NANO” due to its promise of good mileage about
21KM/Litre so, if TATA will fulfill the promise and if continuously maintain the
mileage of its car the “NANO” than it’ll surely helpful to attract more customer.

• Respondents who are preferring the second hand car , after the launching of TATA’s
Rs. 1lakh car the “NANO”, they would also like to go for “NANO” due to its low cost
and of course due to its attractive shape and design , its newness as compare to second
hand car.

• More than half of the respondents believe that “NANO” is their Dream Car, so it shows
TATA’s “NANO” car will be warmly welcome by the people of JAIPUR City.

113
 CHAPTER: 8
CONCLUSIONS

114
 During my study I have done a project on perception of people on “NANO” car
in JAIPUR city. I had learn a lot and get opportunity to know what consumer actually
thinks and what they perceive about TATA’s “NANO” because I had done field work
and I was in between the people only. I gain a practical knowledge, which I haven’t got
anywhere.

I had used a Questionnaire as a tool through which I had gathered a lot of

information. I fill up 300 questionnaires from the 9 areas of JAIPUR city; under my
study I have covered different class of people to know their perception and
acceptance level for “NANO”. I analyze from my questionnaire that 100% respondents
aware from the TATA’s upcoming “NANO” car, and out of 300 respondents 90%
respondents like the “NANO”. I also found that 71% of respondents would like to buy
“NANO” in next 1 to 2 year, It shows the acceptance level of the people of JAIPUR city
and it’s good sign TATA. Respondents who like the “NANO” or want to buy prefer the
“NANO” due to its Affordability and Brand Name.

All this information will be benefited to know the Perception and Acceptance
level of people in JAIPUR City. It can be also benefited to the TATA MOTERS as I
had mentioned all the likes and dislikes of the respondents in my Study.

115
 CHAPTER:
12

ANNEXURES

 I. Questionnaire

116
 BIBLIOGRAPHY
 APPENDICES

117
 CHAPTER: 11
BIBLIOGRAPHY

118
 BOOKS :

1) Philip kotler & hiller (2008) marketing management 8th edition: pearson

2)Berman , Berry and Joel r Evans(Oct-1997)Retail

management: A strategic approach 8th edition Englewood cliffs NJ
printicehall

3) Art kleiner George Roth,” How to Make experience your company’s best
teacher” Harward business review,

4) Boris Groysberg, Aashish Nanda ,and Nitin Nuhria ( may2004) “the risky
business of hiring stars “, Harward business review .

5) Country analysis 1997 “A framework to identify and evaluate the national

business environment “ Harward business review.

6) Benson P Shapiro V Kasturi Rangan , john J. svioula , (Aug. 2004 ) “ staple

your self to an order “ Harward” business unit review , July Aug. 2004

7) Derrel k. Rigby, Fredrick f reichheld, Philip schefter,(Feb - 2002) “avoid the

four perils of CRM” Harward business review.

1. MAGAZINES
A) OUTLOOK BUSINESS (9TH FEB, 2008)
B) BUSINESS STANDART (18TH FEB, 2008)
C) 4P’S OF BUSINESS AND MARKETING (28TH MARCH, 2008)
INTERNET :

http://www.tatamotors.com

119
120
 QUESTIONNAIRE
Dear Sir/Madam,

I am the student of Apex Institute of Management and Science and I am

conducting a survey on “The Study on Perception of people about
NANO car in JAIPUR city” “The following questionnaire has been drafted to
make me understand the needs and expectations of the customers. Therefore I
request you to kindly spare some time and give me the following information. I
assure you that this data will not be misused and will only be used in the study.

Personal Details

Name……………………………………….…………………………………...
Age…………………………Income……………………………………..........
Education…………………..Profession...………………………………………
Gender…………………….

SECTION – II

(1) Do you have any Vehicle?

(1) Yes (2) No

If Yes than Specify,

(1) Two Wheeler (2) Four Wheeler

(3) Any other_____________

(2) Would you like to go for Rs. 1lakh car?

(1) Yes (2) No

(3) Are you aware of Tata’s “NANO” car?

(1) Yes (2) No

(4) Do you like the Tata’s Rs. 1 Lakh car The “NANO”?

(1) Yes (2) No

121
(5) Do you plan to buy a “NANO” in the next 1 to 2 year?

(1) Yes (2) No

(3) Can’t say

(6)Which model would you go for ?

(1) Deluxe (with AC) (2) Standard (without AC)

(7) What do you think of it’s mileage of 21KM/Litre?

(1) Very Good & reason to buy (2) Not enough

(3) Good enough for small town

(8) Rank following attributes of in order to preference given by you, while buying
“NANO”

(1) Brand Name (2) Shape/Design

(3) Safety (4) Affordability

(5) Comfort

(9) Would you like to buy a second hand car instead of NANO?

(1) Yes (2) No

(10) Why do you prefer a NANO to a second hand car?

(1) It’s new (2) Mileage

(3) Running Costs (4) Good looks

(11) Do you think that Purchase decision of NANO will affects your status?

(1) Yes (2) No

(12) Do you believe that NANO is a dream car of yours?

(1) Yes (2) No

122