Tata Motors, India's biggest auto company by revenue, has speeded bus production at its massive Dharwad facility, primarily to avoid any delay in honouring its commitment to supply low-floor buses to the Delhi Transport Corporation (DTC).
Both Tata Motors and Chennai-based Ashok Leyland have been asked to accelerate the supply of 2,500 buses — an order placed by DTC at the start of this year. While Ashok Leyland has already overshot the original delivery deadline of September, Tata Motors said it is confident of meeting its February 2010 target.
However, Tata Motors was earlier slammed by the Ministry of Urban Development for failing to honour its responsibility of supplying buses ordered by a few states under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) within the set timeline.
Buses ordered by DTC hold greater significance for both companies, as these will be used during the Commonwealth Games due to begin on October 3, 2010, in the national capital.
Tata Motors managed to bag the major share of the DTC order, comprising 1,625 ultra-modern buses with a mix of air-conditioned (AC) and non-AC buses. Ashok Leyland got the order to supply the balance 875 ultra low-entry buses, comprising 350 AC buses and 525 non-AC buses.
The total purchase value of the 2,500 buses stood at Rs 1,380 crore, while the value of a 12-year maintenance contract for the vehicles, which both companies agreed to provide, was worth an additional Rs 2,010 crore.
Tata Motors' contract was valued at Rs 2,200 crore (Rs 900 crore for buses and Rs 1,300 crore for maintenance), while Ashok Leyland's contract was valued at Rs 1,190 crore (Rs 480 crore for buses and Rs 710 crore for maintenance).
Tata Motors Managing Director (India Operations) P M Telang said: "We are ramping up the Dharwad plant capacity to 700-800 light buses per month. Parallelly, we are also setting up a line for heavy buses, which will produce 200 buses every month. We are hopeful of clearing the DTC order by February."
Tata Motors, along with Brazil-headquartered Marcopolo, one of world's largest manufacturer of bus bodies, had set up a 30,000-unit-per-annum bus making facility at Dharwad in Karnataka with an initial investment of Rs 200 crore.
Similarly, Ashok Leyland had said that it would supply the required buses to DTC by February 2010, its revised timeline, from its plant at Alwar in Rajasthan.
Ashok Leyland Executive Director (Marketing) Rajeev Saharia said: "Of the 875 buses, we have delivered the first 40 buses to them. We were not able to meet their earlier deadline of September, but have since ramped up our capacity to 300 per month (from 200 per month)."
Ashok Leyland also has a separate order of 4,800 buses under JNNURM, of which 350 buses have already been delivered to various states. Each bus is priced at Rs 55-70 lakh, depending on individual specifications.
Meanwhile, a clutch of bus body builders and some Chinese bus manufacturers offered to supply DTC the required number buses after both Tata Motors and Ashok Leyland failed to meet the earlier deadline.
DTC Managing Director Naresh Kumar said: "They (the Chinese companies) were not ready for the 12-year maintenance clause, so they backed out. Although Tata Motors and Ashok Leyland have delayed the supply of buses, they have agreed to complete the delivery by February-March."