The Hindu Business Line : `Tata Motors will make up for shortfall'

TATA Motors hopes to make up for its unsteady sales performance in the first quarter of 2005-2006, during the remaining months of the year. "We expect to be able to make up for the shortfall in the coming months," Mr Ratan Tata, Chairman, said at the company's AGM here on Monday. Overall volumes for the quarter had grown by a sluggish 3 per cent with passenger cars ahead by a slender margin of 1 per cent and commercial vehicles down by 3 per cent.

Among the reasons for the mixed showing was disruption in components supply caused by "government indecision" on the deadline for new emission norms.

Given the lower margins of FY05, brought about by steep input costs, the company plans to aggressively attack costs. It is also focusing heavily on expanding overseas business as that dilutes dependence on the economic cycles of any one market.

Like its industry peers, Tata Motors too has work going on in new vehicle propulsion systems. "We are actively involved in looking at hybrids. We are working with others in this area. We are keeping abreast of what's happening in fuel cells and hybrids," Mr Tata said. While the company is working independently on hybrid engine technology it is exploring options for a technical collaboration in fuel cells.

The collaboration would be with a suitable technical partner and not another automobile manufacturer, Dr V. Sumantran, Executive Director, explained. It would be a long while before such alternative propulsion technologies become commercially viable in India. Even in select developed markets where some of these technologies have gained a market presence, courtesy stringent pollution control norms, subsidisation by the automobile manufacturer concerned helps to push sales.

Still, research in this field is relevant for the future given the need to clamp down on vehicular pollution and the price trend in convention fuels — petrol and diesel. Mr Tata said that rising cost of fuel would not dampen demand for the company's proposed small car expected to sell for around Rs 1 lakh. The market would adjust to new price points.

When a shareholder cited the Maruti 800's declining sales as cause to suspect the sales potential for the proposed small car, Mr Tata said that the product quoted as example was an old one. The small car would be a new product, meeting emission and safety norms in its category. "It will be on the road,'' he said.

On the company raising sizable debt in the recent past, Mr Tata pointed to favourable market conditions for the same and said, " you should go for money when you don't need it rather than when you want to have it.''

The company expects a tax rate of 25 per cent for FY06.

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