| Tata Motors chairman Ratan Tata (right) with managing director Ravi Kant in Mumbai on Monday. (Fotocorp)
Mumbai, July 9: Tata Motors will launch its small car by the middle of next year.
It also intends to come out with new variants of the Indica and the mid-sized sedan Indigo, a new version of the Sumo and a whole new generation of trucks.
Tata Motors chairman Ratan Tata told shareholders today that the country’s leading automobile maker had drawn up a capital spending programme of Rs 12,000 crore over the next three years.
“The small car will be unveiled before the company’s next annual general meeting,” Tata said. Reports have circulated in the recent past that the car will be showcased at the Delhi Auto Show in January but he gave no indication of this.
The new product offerings are designed to meet increased competition in the market. The company also plans to come out with a crossover vehicle — combining the features of a car and a utility vehicle — which it showcased at the Geneva Auto Show earlier this year. It will also launch a pick-up truck that will be assembled in Thailand.
Tata said the capital expenditure and growth plans were the most ambitious in several years. To part-finance them, it has already raised $490 million through foreign currency convertible bonds (FCCBs). The new offerings come at a time when some analysts are projecting a slowdown in the domestic markets.
“We’re seeing a stagnation in the auto sector globally,” he said, while adding that there might be a temporary dip in sales in the commercial vehicles sector due to high interest costs and increased competition. “Our greatest concern is about Chinese manufacturers’ entry into India. Most European and US manufacturers are here already.”
The Tata Motors chief felt that increased competition from low-cost manufacturers and others would not be the only challenge that the company would have to face in the coming years. Automobile companies in India will not only have to offer world-class vehicles and concentrate on other geographies, but also look at newer technologies.
Amid high competition in domestic markets, Tata Motors is looking to expand in other geographies. This is because the company is “volume sensitive” and, in the event of a downturn in the domestic markets, it could be badly seared.
Tata indicated that in such circumstances, higher exports could offset any slowdown in the domestic markets. Some of the key geographies which Tata Motors is focusing on include South Africa, Latin America and Southeast Asia among others. In February this year, Tata Motors had formed a new joint venture with Italy's Fiat to make pick-up trucks in Argentina with an investment of about $80 million.
Tata Motors also signed a memorandum of understanding with Fiat's commercial vehicle arm, Iveco, to examine the feasibility of cooperating across markets in areas such as engineering, manufacturing, sourcing, distribution and component manufacture for commercial vehicles.
Responding to various queries, Tata said TAL Manufacturing Solutions Ltd, a fully owned subsidiary of Tata Motors, was looking to make large supplies of aerospace equipment to Boeing. He also did not rule out the possibility of unlocking the value of some of the Tata Motors’ subsidiaries in the coming years. Tata Motors has around 30 subsidiaries — most of them created through demergers of the various divisions that the company once had.
Tata said the plan was to first take them out as subsidiaries, turn them into profit-making units and then unlock value through initial public offerings.