12BSP1868_Canute_Fernandes (PAF).doc

7/27/2019 12BSP1868_Canute_Fernandes (PAF).doc

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A Project on

Tata Nano

Submitted by: Canute Fernandes (12BSP1868)


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Background:

Tata Motors dates back to mid-1900s.

In 1945, Tata Motors was incorporated as Tata Engineering and Locomotive Company Ltd.

Three years later, it launched a steam road roller in association with UK-based Marshall Sons.

Abstract:

The car was the result of a 5 year research and development project carried out by Tata Nano

development team. Analysts opined that Tata Nano had created a new segment in the passenger

car market. However, they were concerned about the company's lack of capacity to fulfill high

demand. Considering the low margins the company would get, it would take a long time for the

project to break even.

Deal of Tata Nano:

A loan of Rs. 9750 Crore at 0.1% simple rate of interest.

Repayment of this loan @ 0.1% over 20years.

They got 100% exemption on electricity duty.

The 1100 Crores Land has been given with high subsidies without any stamp duty

registration and transfer charges.

The payment for land would be made in eight equal annual installment at a compound

interest of 8% p.a.

Generation of idea: ( Brainchild of Ratan Tata)

Strategy /Idea: Segment accounts for 92% of the two-wheeler market in India in terms of

sales. With the launch of Nano (Rs 100,000 + taxes), the spillover will happen from two

wheeler market to Nano.

The engineering team achieved the cost target by implementing an innovative design and

reducing cost by paying attention to each and every component of the car.


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Market Analysis:

Idea Screening

Business Analysis

Development

Test Marketing

Commercialization

Idea Screening:

Will the customer in the target market benefit from the product?

What is the size and growth forecasts of the market segment/target market?

What is the current or expected competitive pressure for the product idea?

What are the industry sales and market trends the product idea is based on?

Is it technically feasible to manufacture the product?

Will the product be profitable when manufactured and delivered to the customer at

the target price?

Concept development & testing:

Develop the marketing and engineering details

Who is the target market and who is the decision maker in the purchasing process?

What product features must the product incorporate?

What benefits will the product provide?

How will consumers react to the product?


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How will the product be produced most cost effectively?

Prove feasibility through virtual computer aided rendering.

Business Analysis:

Estimate likely selling price based upon competition and customer feedback.

Estimate the cost of the project.

Estimate profitability and breakeven point.

Market Testing:

Produce a physical prototype or mock-up

Test the product (and its packaging) in typical usage situations

Conduct focus group customer interviews or introduce at trade show

Make adjustments where necessary

Produce an initial run of the product and sell it in a test market area to determine

customer acceptance

Technical implementation

Resource estimation

Engineering operations planning

Department scheduling

Supplier collaboration

Logistics plan

Resource plan publication

Program review and monitoring

Contingencies

Commercialization

Launch the product


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Produce and place advertisements and other promotions

Fill the distribution pipeline with product

Marketing Of Tata Nano:


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Technical Specifications


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Financial projection


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Tata Motors plans to produce 2,50,000 Tata Nano Cars (1st phase) taking the total

production capacity to 3,50,000 cars by the end the next financial year.

As of August 08 ,material costs have risen from 13% to 23% over the cars

development

Tata now faces the choice of introducing the car with an artificially lowintroductory price, raising the price of the car, or foregoing profit on the car the

latter an unlikely proposition, while an increased price on the Nano will likely

decrease demand

How the cost was cut down?

Cutting down the cost of the car by making things smaller and lighter, doing away

with superficial parts & changing material wherever possible.

Introducing the car with an artificially low price through government subsidies

and tax-breaks

The Nanos boot does not open. Instead, the rear seats can be folded down to

access the boot.

It has a single windscreen wiper instead of the usual pair.

It has no power steering.

Its door opening lever was simplified.

It has three nuts on the wheels instead of four.

It has only one side view mirror.

The front seats are identical and have integrated headrests.

Our biggest challenge was to keep the balance between cost and performance.

The brief was that the vehicle should be attractive to customers without any

compromises on quality and performance.

The company has done a lot of innovations to bring the cost down,while the

companys US-based product development teams are used to working on feature-

rich, content-rich products, the Indian product teams are more focused on cutting

costs.


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Expectations:

According to one report, India as well as other nations, such as European nations,

have great expectations from the Nano and are keenly awaiting it, especially the

electric version of the Nano, making it in all probability the "world's cheapest

electric car

The car itself is expected to boost the Indian Economy as well as expand the

Indian car market by 65%, according to rating agency CRISIL.

The Nano, already in production, has already been listed in the Guinness Book of

World Records as the world's cheapest car.

Potential effect on the economy:

Launch expanded the Indian car market by 65%, (CRISIL)

The low price makes the car affordable

The increase in the market is expected to push up car sales by 20% over the

previous year.

The unveiling of Tata Nano, caused a revolution, or triggered an important event

in car market.

CRISIL Research estimates, the consumer price of the car at around Rs 1.3 lakh.

This brings down the cost of ownership of an entry level car in India by 30%.

Singur factory pullout:

Tata Motors announced on May 19, 06 that it will be manufacturing Tata Nano

from Singur.

Protests were started by a few farmers in the area against the acquisition of their

lands by Tata.

The cause was taken up by Mamata Banerjee.

The situation escalated with Tatas threatening to pull out.

There was widespread violence in the clashes between the police and the farmers

on December 2, 2006.


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On December 4, 2006 Mamata Banerjee entered into a hunger strike. A 48-hour

strike was later called by her.

On the 24th day of her strike, Banerjee was given oxygen support and finally

called off her fast after appeals from the then President Abdul Kalam and Prime

Minister Manmohan Singh. Ratan Tata accused that the competitors had a role in the controversy.

The acquisition of land was initially criticized in Feb 2007, but later approved by

the Calcutta High Court (2008).

As political unrest and rains hampered the construction, Tata Motors delayed the

launch of Nano to Sept 2008.

Tata Motors announced that they have suspended work at Singur.

On October 7, 2008, it was announced that the Chief Minister of Gujarat,

Narendra Modi had signed a MoU with Tata Motors for allocating land for Nano

factory in Sanand (Ahmadabad) district of Gujarat.

Documents

12BSP1868_Canute_Fernandes (PAF).doc