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Indica, the first truly Indian Car has finally arrived. Indica, the dream child of Mr. Ratan Tata, CEO, TATA Group, marks the entry of TATAs into the Indian Passenger Car market. With the advent of Indica, Tata Engineering & Locomotive Company ( TELCO ) graduates to the role of an Automobile Integrator from that of an Integrated Truck manufacturer.

The metamorphosis of Indica from a pupa to a resplendent butterfly is chronicled below.


The Drawing Board :

For developing a new car, on an average it takes 48 months and $3 billion ( Rs.12,750 Crores ). But, Indica was developed in 31 months and the bill totaled to Rs.1700 Crores only !

TELCO went to an Italian company, IDEA, for the product design, which gave it a 5-door hatchback resembling the Fiat Paleo. TELCO bought the engine from the Institut Francais du Petrol of France. The transmission was developed at in-house at Pune, India. Putting all this together and engineering skills they had, TELCO gave birth to Indica model.

Finally, the company purchased its machinery with the objective of lowering project-costs. The assembly line of Nissan, Australia was bought for a mere Rs.90 Crores ( a new assembly line would have cost TELCO at least Rs.400 Crores ).

Others in the domestic market are global players and hence TELCO should be ready to face competition with this in mind. To evolve into a global player, one important element is an efficient Supply Chain network to cater the car market. All this has driven TELCO to put SCM in the prime slot and it plans to achieve the objective by organizing itself around capabilities & alliances - not products alone.

The Logistics :

Integrating components business with manufacturing is a dangerous game for automobile manufacturers. One main objective to bifurcate these activities is that it provides the leisure of finding other customers for the components business and does not block its growth. The idea is that automaker should eventually focus only on car designing and styling and should not be bugged up with the day-today manufacturing problems. TELCO has set up a company - Tata Autocomp Systems (TACO) a separate company to manage the auto components business. This is in tune to its plan that its supply chain network works with the state-of the art technology of the world. TACO in turn has entered into several JVs to supply components for Indica.

With respect to vendors, the company has created a two-tiered structure - with the Tier II supplying components to the Tier I, which assembles them into complete systems, which is the only level TELCO interacts directly. This lowers both costs and complications.

As a truck maker, TELCO is so integrated that it even makes its own castings and forging. As an automaker, it will focus sharply on just one point on the value chain - assembling parts into the complete automobile. 80% components of Indica are out-sourced. Except for some sheet metal parts, cylindrical gaskets, and belts - which account for 2 percent of component value- the Indica is totally indigenous.

The Price Tag :

At Rs.2.5 Lakhs, Indica's basic petrol model is the world's second most inexpensive car (after Maruti Udyog Limited's Maruti 800). With this pricing, TELCO is beckoning a customer base inclusive of first time buyers and those looking for a small car with features which could match that of their premium cars. At $6000 K, Indica can hit the world market as people's car in addition to the Indian market. Learning from the experiences gained from Indica's predecessors like Sierra ( 1991 ), Estate ( 1991 ), Sumo ( 1994 ) and Safari ( 1998 ), Indica has been placed on an envious slot.

Indeed, its advertising punch line says it all - More car per car !

The Shopkeepers :

Sales is under the purview of Concorde Motors, the 50:50 joint venture between the Tata Group and the Hong Kong based Jardine Matheson. The customer financing is done through Tata Finance and Ezanda Finance. The idea seems to moving over to gain from activities in the value chain and not just manufacturing, where TELCO already has a strong base

A Younger Brother ?

The lessons that TELCO learn from the birth pangs of Indica would help it a lot in coming out with more models. The Rs.4 Lakhs and upwards slot is always there to explore and of course, a smaller car than Indica which could rake in more first timers.

Is ZING, the real mini car from TATAs, the prototype of which was unveiled a year ago, the answer ?

Send your thoughts to Ramaprasad

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