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Tata Engg unfazed by imminent auto alliance: Sumantran

Dr V Sumantran, executive director Tata Engineering, spoke to V Phani Kumar on the company's China strategy, and its plans for the domestic market as the imminent General Motors (GM)-Fiat-Maruti alliance is set to reshape the Indian auto industry. Excerpts:

Tata Engineering chairman Ratan Tata had at the recent annual general meeting called the Chinese auto industry the "biggest threat" to India, and said Telco must have a presence in that market. What exactly is your China strategy?

China is logically a very large and attractive market. But it also has some unique aspects. Of the many global majors who have already invested hugely in China, I don't think anyone has started seeing volumes that they expected. Then there is also the local partners that you need to work with. Given that, any partnership we want to enter into would essentially be for a very long term, not for just 3-5 years. We have been doing our homework. Currently, we are at a very early stage of our analysis on China.

As far as exports are concerned, the existing duty structure prevailing there makes it somewhat unattractive. But things are changing. Even their tariff structure would change. We would be keeping a close watch. We are already projecting these different scenarios.

There has been talk that you are negotiating with Brilliance China for a possible alliance.

I think that was perhaps a signal that was misread. As you know, MG Rover and Brilliance have a deal for a joint venture. We have not had any substantive discussions with Brilliance. There is nothing concrete as yet.

Is the Indica a good choice for China?

I think so, it is a tough little car, with a lot of space. It has proven itself in India which has a combination of extreme road and climatic conditions. It is a good car for China.

What shape will Telco's product development programme take in future?

We already have Indica. After we launch Indigo, an estate on the Indica platform is to follow. We are continuing with the upgradation of our utility vehicles as an ongoing process. Between utility vehicles and passenger car market, we'll be able to cover almost 90 per cent of market segments. So we are not missing many segments.

Against the backdrop of the imminent GM-Fiat-Maruti alliance in India, can Telco sustain itself on its own?

Yes, definitely. I myself have been very much a part of the GM alliance. I have seen the workings, both the advantages and disadvantages. There is another model that is developing. In fact, you can still craft your own strategy by having some partnerships which don't necessarily become alliances. One example is Peugeot, which doesn't have any global alliances, but works with various global majors for different projects in Europe.

Some people say that model is more flexible to market conditions. Alliances can be very difficult to manoeuvre. The more number of stakeholders you have, the more difficult it is to bring everyone into the assembly line.

Is product sharing a part of the ongoing discussions with MG Rover?

Much of the focus so far has been on whether it is possible to use Indica in some of their plants. But yes, down the road, there might be some other possibilities. But these kind of things take so many months to consummate.

The stakes are high, you have to be sure that this is what you want to do for your company, as much as they do. It takes a while to get these things worked out. It may still not happen, you never know. That's why I say it is too early, but it is progressing.

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