Nano factory's role might expand

Company looks to manufacture other models at plant, upgrade asset utilisation

Tata Motors, India’s largest car maker by revenue, is exploring the possibility of adding more models to the production line at its Sanand plant in Gujarat. Currently, the facility manufactures only the Nano. The company also aims to upgrade asset utilisation, which would allow it to rationalise investments on expansion.

Currently, only a quarter of the Rs 2,000-crore Sanand facility’s initial installed capacity of 2,50,000 units a year is being used.

Tata Motors also manufactures the Indica, Vista, Indigo, Manza, Sumo, Safari Storme and Venture models.

Managing Director Karl Slym said, “To be economically viable, you obviously have to ensure using your assets. Therefore, for us, it is important we end up using our assets suitably. There is no reason we should not have other vehicles there.”

Despite several retail and marketing initiatives, demand for the Nano remains subdued. In January, the company sold 1,504 units of the Nano to its dealers. This was a 16-month low and an 81 per cent fall compared to the corresponding period last year, when it had sold 7,723 units to dealers.

Owing to the low demand for the model, the company was recently forced to cut production and change working hours at  Sanand. This had taken a toll on component suppliers, which had to lay off workers and shut units.

“The company can look at making its future-generation models at the Sanand plant, which is newer than the Ranjangaon and Pune plants. This will also allow the company to operate more efficiently and improve operations,” said a Mumbai-based analyst.

Tata Motors plans to address the gaps in its passenger vehicle product line-up through new launches.

A diesel version of the Nano is slated to hit showrooms by the end of this year.

“We have obvious gaps in the portfolio. We are a volume player. It is important for us to have good offerings in volume segments. For example, our SUV (sports utility vehicle) range is a very off-road SUV range. The piece of the SUV segment which is growing very strongly in India is the soft-road or look-alike SUV. We don’t have one there. So, I think that is a mistake for us, a mistake in our ability to look forward,” Slym said.