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Telco plans several variants of Indica

Tata Engineering and Locomotive Company Ltd plans to develop several variants of its Indica hatchback -- the country's first indigenous car -- to serve different market segments, a senior company official said.

The company will unveil the first variants, a sedan and a stationwagon, at an Indian automobile fair in January and expects to launch the models in the last quarter of 2002.

"The Indica is a very good platform to start with," Dr V Sumantran, executive director for passenger cars and head of research, recently told reporters at the company's plant in Pune.

Like Germany's Volkswagen, which has used its Golf platform to develop a four-door sedan, a multi-purpose vehicle, a van and a two-door coupe, Tata Engineering could address a variety of segments through the Indica platform, said Sumantran, who joined the company in October after more than 15 years at General Motors, the world's largest automaker.

"The potential is there, and it will come through a natural evolution."

He said that while Tata Engineering was looking at alliances with global automobile companies, it was confident of executing its product plans on its own.

Tata Engineering, which belongs to one of India's largest business groups, the Tatas, is the country's biggest truck and bus maker and the third-largest maker of utility vehicles and cars.

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The Indica, the company's sole car, on which it has invested more than Rs 17 billion, received a cool response when it was first launched in February 1999 because of initial steering and suspension problems.

But after several improvements it has clawed its way to the top rank in premium hatchbacks, a segment accounting for nearly half of India's about 600,000-a-year car market.

In each of the last four months, the Indica's sales have crossed 5,000 units, the minimum it needs to sell to achieve cash break-even and has given it a market share of 21.6 per cent in this segment in April-November.

It was largest selling car in this segment in September and October.

The 1.4 litre Indica now rivals the Santro, made by South Korea's Hyundai, and the Zen, made by Maruti, Japanese Suzuki's Indian joint venture in this segment.

But Indica's failure to meet targeted sales in the first two years of its launch in addition to falling truck sales, the company's main business, in a slowing economy led to Telco posting losses the past six quarters.

Telco officials said the company had saved Rs 750 million in costs in the six months to September and was hoping to reach a full-year target of Rs 2.25 billion.

The company planned to sell Rs 4 billion worth of non-core financial investments in the year to March 2002, of which it had already completed Rs 2.5 billion, they said.

It also plans to restructure Rs 5 billion of expensive debt this financial year and reduce the size of its balance sheet by Rs 10 billion over the next three years.

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