The Hindu Business Line : Tata Motors foresees good growth in sales

Mr Ravi Kant (right), Managing Director, Tata Motors, and Mr Praveen Kadle, Executive Director-Finance, at a press conference in Mumbai on Tuesday. — Shashi Ashiwal

Mumbai , Oct. 25

THE Reserve Bank's upward revision of GDP growth rate from the earlier 7 per cent to 7-7.5 per cent, industrial production and infrastructure development augur well for the auto industry.

"We should see good growth in vehicle sales," Mr Praveen Kadle, Executive Director, Tata Motors, noted on business outlook, citing alongside the trend in fuel prices and the likely rise in interest rates as potential speed breakers. The company estimates FY06 industry sales to grow 8-10 per cent.

Capital expenditure over the next four years is pegged at Rs 6,000 crore, covering plans for doubling production capacity of the mini-truck `Ace' to 60,000 units and production facilities for the proposed small car. Mr Kadle said the company has Rs 2,000 crore of surplus cash, annual cash generation of Rs 2,000 crore and receivables to cushion its capital expenditure.

Mr Ravi Kant, Managing Director, said small car volumes at full production should touch a million units. Both Ace ( which the company speculates of manufacturing away from Pune at 60,000-120,000 units) and the small car have fetched strong interest from local and foreign distributors. "We are in the market to look for the best location to make these high volume products," he said.

Following the MoU with Fiat Auto, the two companies are in the process of identifying areas of shared interest. With South African sales touching 15,000-17,000 vehicles, the company may look at an assembly line there. While Tata Motors' key subsidiaries did well in Q2, restructuring was expected at HV Axles and HV Transmissions. "There has been good progress in talks with prospective strategic partners," Mr Kadle said. Also on were discussions with Hitachi to expand the scope of the construction equipment joint venture Telcon.

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