First cars by Oct-end as Tata asks vendors to deliver parts at Pantnagar
MUMBAI: The first batch of Nanos, the Rs1-lakh cars the Tatas are making, is scheduled to roll out from Uttarakhand by the end of October.
Ancillary suppliers, who set up shop in Singur, have now been told to deliver parts to Tata Motors’ Pantnagar plant from October 1. This sprawling unit of 1,000 acres already produces the Ace pickup and an additional 300 acres could be allocated for the Nano.
According to top sources associated with the project, Tata Motors has indicated that 100 Nanos will be produced every day between October and March. From April 1, which marks the beginning of fiscal 2009-10, the number will be doubled to 200 cars daily.
“We believe that nearly 15,000 cars will be manufactured this financial year, a steep drop from the earlier estimate of 50,000 units,” a section of vendors told DNA. Interestingly, the original target for 2008-09 was 96,000, Nanos which has now been slashed by over 80%.
Tata Motors will then have a challenge meeting demand because supplies are going to be limited for some months. “Customers will naturally make a beeline for the least expensive car in India and it is important to ensure that there is no encore of the Fiat Uno days in 1996 when production could not keep pace with the huge order list,” sources said.
The company had planned to roll out over 150,000 Nanos in the second year of production but this will require help from satellite plants which are part of the business plan Vendors are clearly not too happy. The first issue, of course, is one of money because their Singur investment on land and buildings may have to be written off. Estimates are that the 55 suppliers involved in the project have spent over Rs500 crore with some of them having installed machinery which will now have to be relocated.
It is also not too clear if Tata Motors or the West Bengal government will compensate them in some way but this will be a time-consuming process. Till then, the Singur investment will reflect in their account books as work-in-progress.
Suppliers have also hinted that they are not going to make any fresh investments in Uttarakhand and would rather meet delivery schedules from their existing plants. At least two of them who spoke to DNA have confirmed that their Pune facilities will take up this task even if it means additional costs on logistics.
“It is just not worth our while putting in more money at a time when business orders from other automakers are just drying up. Most of us have spare capacity in existing plants that needs to be put to good use and catering to the Nano is one way of ensuring this is done,” they said.
Some others insist that Uttarakhand is an interim measure and that Singur will eventually take over as the mother plant once the land issue is resolved. “The West Bengal government will be under pressure to retain the Tatas in the state. There is already a great deal of pressure building up with the company having been offered land by the Karnataka and Gujarat governments,” sources said.
Thanks to this delay, the Nano could have had some significant cost overruns and even the sops offered by the Uttarakhand government are not going to help. The Rs1-lakh (ex-factory) tag would then end up becoming a brief introductory offer price. In any case, this basic (non AC) version is only expected to account for barely 20% of sales with the mid and top-end Nanos taking up the lion’s share.
MUMBAI: The first batch of Nanos, the Rs1-lakh cars the Tatas are making, is scheduled to roll out from Uttarakhand by the end of October.
Ancillary suppliers, who set up shop in Singur, have now been told to deliver parts to Tata Motors’ Pantnagar plant from October 1. This sprawling unit of 1,000 acres already produces the Ace pickup and an additional 300 acres could be allocated for the Nano.
According to top sources associated with the project, Tata Motors has indicated that 100 Nanos will be produced every day between October and March. From April 1, which marks the beginning of fiscal 2009-10, the number will be doubled to 200 cars daily.
“We believe that nearly 15,000 cars will be manufactured this financial year, a steep drop from the earlier estimate of 50,000 units,” a section of vendors told DNA. Interestingly, the original target for 2008-09 was 96,000, Nanos which has now been slashed by over 80%.
Tata Motors will then have a challenge meeting demand because supplies are going to be limited for some months. “Customers will naturally make a beeline for the least expensive car in India and it is important to ensure that there is no encore of the Fiat Uno days in 1996 when production could not keep pace with the huge order list,” sources said.
The company had planned to roll out over 150,000 Nanos in the second year of production but this will require help from satellite plants which are part of the business plan Vendors are clearly not too happy. The first issue, of course, is one of money because their Singur investment on land and buildings may have to be written off. Estimates are that the 55 suppliers involved in the project have spent over Rs500 crore with some of them having installed machinery which will now have to be relocated.
It is also not too clear if Tata Motors or the West Bengal government will compensate them in some way but this will be a time-consuming process. Till then, the Singur investment will reflect in their account books as work-in-progress.
Suppliers have also hinted that they are not going to make any fresh investments in Uttarakhand and would rather meet delivery schedules from their existing plants. At least two of them who spoke to DNA have confirmed that their Pune facilities will take up this task even if it means additional costs on logistics.
“It is just not worth our while putting in more money at a time when business orders from other automakers are just drying up. Most of us have spare capacity in existing plants that needs to be put to good use and catering to the Nano is one way of ensuring this is done,” they said.
Some others insist that Uttarakhand is an interim measure and that Singur will eventually take over as the mother plant once the land issue is resolved. “The West Bengal government will be under pressure to retain the Tatas in the state. There is already a great deal of pressure building up with the company having been offered land by the Karnataka and Gujarat governments,” sources said.
Thanks to this delay, the Nano could have had some significant cost overruns and even the sops offered by the Uttarakhand government are not going to help. The Rs1-lakh (ex-factory) tag would then end up becoming a brief introductory offer price. In any case, this basic (non AC) version is only expected to account for barely 20% of sales with the mid and top-end Nanos taking up the lion’s share.
Source: http://www.dnaindia.com/report.asp?newsid=1192766
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