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Tata Nano Case Study

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Munish KumarSummer Intern at IDBI Federal

Tata Nano

Tata Nano Case Study

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TATANANO
PRESENTED BY
MUNISH KUMAR
16M910
Tata Nano Case Study
Todevelop TATAinto a world class
Indian car brand for innovative
and superior value vehicles
VISION
• Tobe the most admired multi-national Indian
company producing vehicles that people love to buy
• Tocreate an organization that people enjoy
working for doing business with and investing in
Mission
TATA’s NANO
A Promise
is
A Promise
– Ratan Tata
Idea Generation
Of Nano
“I saw families ridding around on scooters with
kids standing up and mother carrying a baby
and sitting Pillion and decided to do something
about . It started as an quest for an
affordable transportation solutions.”
. Source – Business Standard
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Tata Nano Case Study

  • 3. Todevelop TATAinto a world class Indian car brand for innovative and superior value vehicles VISION
  • 4. • Tobe the most admired multi-national Indian company producing vehicles that people love to buy • Tocreate an organization that people enjoy working for doing business with and investing in Mission
  • 5. TATA’s NANO A Promise is A Promise – Ratan Tata
  • 6. Idea Generation Of Nano “I saw families ridding around on scooters with kids standing up and mother carrying a baby and sitting Pillion and decided to do something about . It started as an quest for an affordable transportation solutions.” . Source – Business Standard
  • 7. History Tata Motors Limited, formerly known as TELCO (TATA Engineering and Locomotive Company), is a multinational corporation headquartered in Mumbai, India. It is Asia largest passenger automobile and commercial vehicle manufacturing company. Part of the Tata Group, and one of the world's largest manufacturers of commercial vehicles.   TML ranked it as the world's 17th largest automaker, based on figures for 2017.(Automotive – Technology.com)  Tata Motors has its manufacturing base in Jamshedpur, Pantnagar, Lucknow, Pune.
  • 8.  It has more than 25000 employees, 4500 engineers and scientists and with R&D.  Tata launched “TATA INDICA” India’s largest selling car, which is India’s first fully indigenous car launched in 1998  In 2005, they created a new segment mini trucks with the launch of “TATA ACE”.  Tata summo 1994 and Tata safari in 1998.
  • 9. Business Models for TATA NANO  Dream of Sri RATAN TATA, a car cheap enough for motor cycle buyers.  For this project, TATA adopted “COLLABARATIVE APPROACH”, which usually believes in vertically integrated approach and company believes it could do everything better than others.  BUSINESS PROCESS OUTSOURCING  Outsourcing was into New product development, SCM, Design and styling of its products also.  Refined the manufacturing process by breaking down every component of the car into its smallest pieces & eliminating everything that was unnecessary.
  • 10. Introduction  The Tata Nano was introduced at the 9th auto expo by Tata Motors in New Delhi, India on Jan. 10, 2008.  Tata Nano is made for medium class family it is Small, affordable and great Stylish 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
  • 11. Location of Manufacturing Plant • TML intending to set manufacturing plant • Considered locating plants in various states • Accurate understanding of :– Political interests & Compulsion of State Government
  • 12. Contd.. • Exploited such weakness to its advantage • Incentive package in Uttarakhand/Himachal Pradesh a)100% exemption from excise duty for 10 years b)100% exemption from Corporate Income tax • WB out of desperation walked into the trap
  • 13. Singur - Tata • Govt. WB keen for rapid industrialisation • Approached Tata Motors • Tata Motors showed interest in locating the plant in WB • Chose Singur a small town of WB • Govt. WB provided TML a loan of 200 crores at 1% interest
  • 14. Tata enjoying the most of incentives!!! • A comprehensive package of incentives • Electricity Clause – Electricity at Rs.3kwh • Loan Repayment – Loan with interest repayable in annual installments • Lease rental
  • 15. Why Tata Nano pulled out of Singur?
  • 16. Land Controversy • Acquired Land (land acquisition act, 1894 ) • Compensation (Section 11 ) • Misunderstanding • Admitted Mistake
  • 17. “Great agitation and great aggression” “You cannot run a plant where the wall is being broken; you cannot run a plant where bombs are being thrown from all the sides; you cannot run a plant where the people have been intimidated or threatened. This is only during the construction, what happens when we actually start running the plant!” -Ratan Tata Chairman,Tata Motors Ltd FRONT LINE ,Volume 25 - Issue 22 :: Oct. 25-Nov. 07, 2008. INDIA'S NATIONAL MAGAZINE
  • 19. Destructive Politics... “I once mentioned that if somebody puts a gun to my head, you either pull the trigger or take the gun away because I will not move my head. I think Ms.Mamta Banerjee has pulled the trigger,” - Ratan Tata Chairman,Tata Motors Ltd. FRONT LINE ,Volume 25 - Issue 22 :: Oct. 25-Nov. 07, 2008. INDIA'S NATIONAL MAGAZINE
  • 20. Effects on West Bengal • Brand Image • Damages to the Public property • Losses beared •Unemployment
  • 21. Fight for Nano Begins – Again • West Bengal’s loss another State’s gain • Karnataka 1st to offer • Gujarat offered 3 strategic locations - Mundra in Kutch district - Charodi in Sanand - Surat • Orissa offered land at Gopalpur • Maharashtra, Andhra Pradesh, Uttarakhand also made an offer
  • 22. Why Gujrat Nano Project will bring much-needed high technology into the state and strengthen the local auto component industry in the SME sector. There are certain other reasons due to which Tata Motors Limited selected Gujarat as their home for Nano project: - Gujarat is one of the few states to have substantially higher private sector investment than public sector investment. It has relatively peaceful Industrial relations climate. Relatively untouched by projects over acquisition of farmland for industry.
  • 23. Why Gujrat It has thriving entrepreneurial culture and SME clusters. Source: Projects Today/ 'Gujarat Shining' Business Today, November 02, 2008. pg. 44 The number of industrial projects in Gujarat were 789 in September 06, which risen up to 923 & 1384 consecutively in September 07 and in September 08. Source: Projects Today/ 'Gujarat Shining' Business Today, November 02, 2008. pg. 44 The status of financial investment in Gujarat was 2,12593 crore rupees in Sep. 06 became 2,11,399 in September 07 and again raise up to 2,88,018 crore rupees in September 08.
  • 25. • Reliable Infrastructure • Locations - Government owned land • Charodi and Chharal villages in Sanand the ultimate choice “You are stupid if you are not in Gujarat” - Ratan Tata Vibrant Gujrat
  • 26. Benefits to Loan of Rs 9,570 crores THE DEAL Rs 2,900 cr for Nano plant Rs 6,670 cr for Infrastructure development Repayment of Rs 9,570 cr loan @ 0.1% over 20 years
  • 27. • 100% exemption on electricity duty • Concessional power tariff • 1,100 acre land comes cheap • No stamp duty, Registration and transfer charges • Payment for land in 8 equal annual instalments THE SWEETNERS
  • 28. • Benefits to Component manufacturers and Vendors • New Investment opportunities and positive sentiment in Gujarat • Benefit to Real estate market • Additional jobs and training opportunities Benefits to Gujarat
  • 30.  Spread Over 1100 acres at Sanand , Gujrat.  Working plant 725 acres  adjacent 375 acres for future expansion
  • 31. Press Shop Weld Shop Paint Shop Powertrain Shop TCF (Trim-Chassis – Finish) Shop TATA MOTORS NANO PLANT.SANAND, GUJARAT Source : Google Earth
  • 32. Specification Looks: The snub-nosed car keeps in the tradition of the Fiat 500, Nissan Micra and the Smart. Dimensions: 3.1 metres (10.23 feet) long, 1.5 metres wide and 1.6 metres high. Can seat four to five people Engine: A two cylinder 623 cc, 35 horsepower rear mounted, all aluminium, multi-point fuel injection petrol engine can power the car to top speeds of 105 kilometres per hour (65 miles per hour). Fuel Efficiency: 20 kilometres per litre, or 50 miles per gallon is claimed. Pollution: Exceeds Indian regulatory requirements and can meet strict Euro IV emission standards. In terms of overall pollutants, Tata says the car is better than two-wheelers manufactured in India currently • • • • •
  • 33. Specification Safety: Car exceeds current regulatory requirements with a strong passenger compartment, crumple zones, intrusion resistant doors, seat belts, strong seats and anchorage. Nearest Domestic Car Rival: Maruti 800, part of Japanese-owned • • Suzuki Maruti stable whose base model sells for about 4,800 dollars nearly double the price of the Nano Nearest International Rival: China's Chery QQ which retails for 3,600 dollars. Market: India's car market is a huge draw because car penetration is just seven per 1,000 people, compared to 550 per 1,000 in such countries as Germany or 476 in France, according to the Society of Indian Automobiles. -- • •
  • 34. • • • • • • • • • • Length:- 3.1 mtr Wide:- 1.5 mtr Height:- 1.6 mtr Weight:- 600 Kg Mileage:- 20 Kmpl Fuel tank:- 15 Ltr Engine:- 623 cc Top speed:- 95-100 Kph Ground clearance:- 180 mm Gear box:- 4-speed
  • 35. Engine Options – Petrol, Diesel. Petrol Engine 2 cylinder petrol all aluminium Engine 624 cc Bosch multi-point fuel injection (mpfi) Diesel Engine Jointly developed with Diesel Engine specialist FEV 684 cc Smallest Common Rail Turbocharged Diesel engine Variants Models Ex-showroom prices Nano Standard Rs 1,23,360 Nano Deluxe-Cx Rs 1,51,360 Nano luxury-Lx Rs 1,72,360
  • 36. COST CUTTING FEATURES  The trunk is only accessible from inside the car as the rear hatch doesn’t open  One wide wiper instead of usual pair.  No power steering, radio or music can be fitted as accessories. No air bags In any model  624cc two engine cylinder. No air conditioning.  To ease the assembly, body panels are glued instead of welded.
  • 38. Collaboration as a source of innovation….  TATA MOTORS considered COLLABORATION as the source of innovation from different company’s idea to reduce cost.  TATA divided the components into two types – proprietary design and Tata motors design.  For proprietary design components Tata went with established suppliers such as BOSCHGROUP.  BOSCH GROUP, which supplies the engine management systems.
  • 39. BOSCH GROUP  Bosch group decided to take the challenge to be a part in cheapest car though they (Bosch) developed systems only for high end vehicles.  Bosch again split the development between its design centers Bangalore and Germany  Using local design capabilities was a crucial decision and employment took place at higher wage levels.  Bosch developed a software consists of electronic control unit, fuel injectors, sensors, ignition oil, tank vent level and throttle body assembly.  Cost effective “drum brakes” were used.
  • 40. SUPPLIERS  There were more than 100 suppliers.  The brief to suppliers was: “Make things smaller and lighter, do away with superficial parts, and change the material wherever possible”  A few did their own way and few developed with the Tata motors.  Arvind Kapoor, CEO of Rico, supplier of blocks to the engine, decided to use aluminum for engine instead of traditional cast iron as it was smaller, lighter and cost was less.  Price negotiations from Tata motors side apparently started from 50 % of what suppliers offered.
  • 41. • Though the one lakh price tag is not fixed by TATA group, it was the word of mouth of people which fixed that range. This expectation of people creates a big challenge for the company. To accept this challenge the following strategies are followed:- • • • Target costing method Penetration pricing Low pricing policy with minimum profit margin.
  • 42. Promotion * Enough use of one of the most important element of promotion mix , publicity reduces the necessity of other promotional devices for nano. Nano got publicity in following ways:- the  o o o * Publicity as “One lakh car” by mouth to mouth. * Auto expo 2008,New Delhi & Geneva * Publicity through print & electronic media. * Internet will be a major media for advertising.
  • 43. * For other type of promotional activities ,cost factor that is 1 lakh price tag is to be keep in mind, TATA is going to launch its nano mobile for indicom user, nano watches , nano T-shirts available in Westside stores . *Advertising:- TV & other mass media will be less effective, thus too much money will not be invested in this regard . Mainly word of mouth advertising will get more emphasis
  • 44. Online buzz:-Nano has gone beyond the traditional methods of advertising and promotion online .     Social Media communities:- Official Orkut community Members - 6,906. Official Facebook Group Fans - 4,210 Highest View Count on You Tube- 303,006 (it was just under 3,00,000 when I began writing this post) No. of Blog Posts - 61,664 TATA have a blog on the official website where they have been discussing quite interesting topics and generally maintaining an active community  
  • 45. Distribution   TATA, it’s business has been extended to the overseas i.e. to the Europe, Africa, U.S & Australia.  Hence it has n-number of showrooms in India & outside of India.  The exclusive showrooms are the best distribution channels for TATA itself.
  • 46. Swot Analysis Price, mileage, style, brand name, all weather vehicle,STRENGTH first innovation. Fiber body, low suspension power, low engine capacity, light vehicle, not suitable for hilly areas, delay due violation. WEAKNESS to singur Bikers can be motivated, auto rickshaw & second hand market can be motivated. OPPORTUNITY Other competitors (Honda, Maruti , Tara tiny) not friendly, Govt. may come with new rule. eco-THREAT
  • 47. • • • • • Family of four riding a scooter on wet roads Two Wheeler Market Used Cars Market second hand car user middle and lower income group people.
  • 48. Post Purchase Service -As Tata is going to provide this car with rupees one lakh only, so it may not give the same service like it’s other vehicles. -But it’s post purchase services will be better than a costlier bike. -Customers may get minimum three services from Tata in any of it’s servicing center, all over the country. • • • •
  • 49. Bibliography/Webliography • "Specifications of Tata's Nano". indiatimes.com. 2008-01-10. • "Nano Mania". Autocar India. February 2008. • "Specifications of Tata's Nano". cardesignnew. • "Review of Tata Nano" TechWebToday. • Falling Rain Genomics, Inc - Singur • "Census of India 2001: Data from the 2001 Census, including cities, villages and towns (Provisional)". Census Commission of India. Archived from the original on 2004-06-16. http://web.archive.org. • The Hindu Business Line, 26 November2006 • The Hindu Business Line, 13 December2006