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Tata Motors' [Get Quote] Rs 1-lakh car Nano will dramatically change the company's market position, reach and visibility, although high fuel prices have cast a cloud on overall vehicle sales, company chairman Ratan Tata said on Tuesday.
In his statement to shareholders of Tata Motors, he said that although the company registered a growth of 5.5 per cent in the commercial vehicles (CVs) segment, it had lost market share.
Tata said the company introduced several new models and variants of CVs, but was unable to exploit the full market potential due to inadequate deliveries of powertrains and components from major suppliers.
He said Tata Motors would have an exciting future ahead as high volumes of the Nano range would change the company's fortunes.
Tata said: "The company's new plant at Singur in West Bengal is expected to go into operation in the last quarter of this calendar year."
He said that these manufacturing facilities would be expanded to meet the demand in the domestic and international markets in the future.
New variants of the Nano were also currently under development to meet the new environmental and fuel price challenges.
Referring to the acquisition of British auto brands Jaguar and Land Rover, Tata said the two brands would add global scale, profits and visibility to Tata Motors, enabling it to take its place in the global auto industry as a credible international auto company.
Expressing concern, Tata said that there would be an enormous and unprecedented rise in material costs in steel and tyres.
With the present economic scenario, the company would have to manage the completion of the Singur plant and introduction of Nano in the market.
Referring to fuel prices, he said higher fuel prices would have a negative impact on vehicle sales.
In addition to this, the company's operations would also have to absorb the cost of JLR acquisition and deal with its integration.
"These challenges appear to be daunting," Tata said. To fund the acquisition of JLR, the company was raising Rs 7200 crore (Rs 72 billion) through a rights issue and $500 million to $600 million through an international offering of equity or cost effective quasi-equity intruments.
Tata also noted that 'the year ahead will be no more daunting than the challenges they have faced in difficult years in the past.'
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