Financial Daily from THE HINDU group of publications
Friday, Feb 20, 2004
Increasing car production capacity Tata Motors steps on the gas
Pune , Feb. 19
TATA Motors is embarking on a major capacity expansion project at its passenger car division here.
Top company sources told Business Line that the work on significantly stepping up production capacity is in overdrive just now with the Chairman, Mr Ratan Tata, issuing a clear directive to the top brass at the passenger car division to have the increased capacities in place by April 2004.
Sources said that work on increasing production capacity at its passenger car business is on in full swing with volumes expected to go up from the current level of about 450-500/day to over 750 a day by the beginning of the next fiscal.
Sources said that Mr Tata's directive to those in charge at the car division is to achieve the target with minimal investment by going into three production shifts instead of the current two.
"There is a capacity expansion plan in the offing but we are not ready to divulge details just yet," an official spokesperson said when contacted.
The move to increase capacities, meanwhile, is being driven by the fact that the company is unable to service the strong demand in the market for its Indigo and Indica models since it is focusing on meeting its commitment of exporting City Rover models to UK-based car manufacturer MG Rover.
Sources said that the waiting on the new-look Indica model is between 15 and 30 days.
The Indigo models are commanding a one-month waiting period.
Sources said that the situation is likely to become tighter for the company over the next few months if capacities are not increased fast since exports to Rover are expected to be stepped up in the next fiscal.
While it is not clear if the expansion plan involves significant investments, the sources said the company is expanding its machining capacity with new machines now coming in.
The existing weld shop is also being strengthened with a new shop being built adjoining it.
While officials remain tight-lipped about the capacity expansion plan, the sources point out that the company is also examining the feasibility of setting up a new assembly line dedicated exclusively for its exports business.
"This will ensure that there will be no glitches in supply either to the domestic market or commitments abroad," they said.
In addition to its agreement with Rover to supply 1,00,000 cars over the next five years, Tata Motors also sells the Indica in the European market independently.
The capacity expansion will also allow the company to launch the Marina, the estate version of the Indigo, which was showcased at the AutoExpo this January.
The car is still awaiting launch as the production lines are jammed right now with the existing products.
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