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MUMBAI UNIVERSITY

PROJECT ON STRATEGIC MANAGEMENT


NAME: MOHIT PRAVIN TANDEL SEAT NO: MB33572012022 CLASS: THIRD SEMESTER MMS SUBMITTED TO: Prof. Swarali Ranadive (Assistant professor)

S.A.V ACHARYA INSTITUTE OF MANAGEMENT STUDIES (SHELU) 2013-2014

CERTIFICATE
This is to certify that Mohit Tandel Has successfully presented the seminar project on " STRATEGIC MANAGEMENT - TATA NANO" During the academic year 2013-14 for Second Year MMS At S.A.V ACHARYA INSTITUTE OF MANAGEMENT STUDIES , SHELU-410101

Prof. Dr. Ashok A.R. Gowda (Director & Principal of SAVAIMS)

Prof. Swarali Ranadive (Assistant Professor)

MUMBAI UNIVERSITY

ACKNOWLEDGEMENT

I am grateful to S.A.V. ACHARYA INSTITUTE OF MANAGEMENT STUDIES for giving me the opportunity to work on this project, as a part of our curriculum. It gives me immense pleasure to express my deep gratitude & heartfelt thanks to the Director Dr.Ashok A.R.Gowda. I would also like to immensely thank our Prof. Swarali Ranadive for her constant guidance & encouragement . I would also like to sincerely thank to our IT Lab assistant Mr. Ganesh Masane, who helped me in using I.T Lab whenever required. I would like to thank our , Prof. D.A.V Kulkarni (Dean), for giving us valuable advice & support throughout the project. Last but not the least I would like to thank my family members & friends who helped me in providing the necessary guidance & information.

Thank you.....

INDEX
Sr. No. 1 2 3 4 5 6 7 Description Introduction Overview History Conclusion Abstracts Appendix Bibliography Pg. No.

The Tata Nano is a proposed city car debuted by India'sTata Motors at the 9th annual Auto Expo on January 10,2008 at Pragati Maidan in New Delhi, India. Called the peoples car In Tata's promotional material, it was projected to be the least expensive production car in the world. The standard version of the Nano is projected to sell for Rs. 100,000 (approximately US $2500, GBP 1277, or 1700), not including fees or delivery. Newsweek identifies the Nano as a part of a "new breed of 21st-century cars" that embody "a contrarian philosophy of smaller, lighter, cheaper" and portend a new era in inexpensive personal transportation and potentially, "global gridlock". The Wall Street Journal confirms a global trend towards mall cars, led by the Nano. The prefix "Nano" derives from the Greek root 'Nanos', meaning dwarf as with nanometre."Nano" also means "small" in Gujarati, the native language of the Tata family, founders of the Tata Group.

History and conception


The project to create a 1lakh (1 lakh = 100000 rupees) car began in 2003, under the Chairman of Tata Motors, Ratan Tata. The strategy behind the project was the awareness of the number of Indian families who had two wheeled transport, but couldn't afford a four wheel car, and was based on the company's success in producing the low cost 4 wheeled Ace truck in May 2005. The Nano was unveiled at the 2008 New Delhi Auto Expo Industry convention was that a reliable car couldn't be made at such a low price, so initial media speculation was that the car would be a simple four-wheeled auto rickshaw. However, The Times of India reported that the vehicle is "a properly designed and built car". The Chairman is reported to have said, "It is not a car with plastic curtains or no roof it's a real car." During development the company reinvented and minimized the manufacturing process, brought in innovative product

design, and asked component manufacturers to look at current work and design approaches in a different perspective to produce logical and simple solutions. The car was designed at Italy's Institute of Development in Automotive Engineering, with Ratan Tata ordering certain changes during the process, such as reducing the number of windscreen wipers from two to one. The Nano has 21% more interior space and an 8% smaller exterior, when compared with its closest rival, the Maruti 800. The car will come in different versions, including one standard and two deluxe variants. The deluxe version will have air conditioning, but no power steering. The car is expected to be produced in the Singur plant in West Bengal, which is under construction. The initial production target set by Tata Motors is 250,000 units per year. Rear mounted engine The use of a rear mounted engine to help maximize interior space makes the Nano similar to the original Fiat 500, another technically innovative "people's car". A concept vehicle similar in styling to the Nano, also with rear engine layout was proposed by the UK Rover Group in the 1990s to succeed the original Mini but was not put into production. The now-defunct Rover Group later based their City Rover on the Tata Indica while the eventual 'new Mini' was the much larger, technically conservative Mini (BMW). Technical specifications According to Tata Group's Chairman Ratan Tata, the Nano is a 33 PS (33 hp/24 kW) car with a 623 cc rear engine and rear wheel drive, and has a fuel economy of 4.55L/100 km(21.97km/L, 51.7 mpg (US), 62 mpg (UK)) under city road conditions, and 3.85 L/100 km on highways (25.97 km/L, 61.1 mpg (US), 73.3 mpg (UK)). It is the first time a twocylinder non-opposed petrol engine will be used in a car with a single balancer shaft. Tata Motors has reportedly filed multiple patents

related to the innovations in the design of Nano, with power train design alone having 34 patents. The head of Tata Motors' Engineering Research Centre, Girish Wagh has been credited with being one of the brains behind Nano's design. According to Tata, the Nano complies with Bharat Stage-III and Euro-IV emission standards.

Powertrain Engine: 2 cylinder petrol with Bosch multi-point fuel injection (single injector ) allaluminium33 horsepower (25 kW)624cc(38cu in) Value Motronic engine management platform from Bosch 2valves per cylinder overhead camshaft Compression ratio- 9.5:1 borestroke73.5 73.5 mm Power : 33 PS (33 hp/24 kW) @ 5500rpm Torque: 48 Nm (35 ftlbf) @ 2500rpm Rear wheel drive, 4-speed manual transmission Steering mechanical rack and pinion

Performance Acceleration: 0-70 km/h (43 mph): 14 seconds Maximum speed: 105 km/h (65 mph) Fuel economy (combined City + Highway): 20 kilometres per liter (5 L/100 km, 47 US miles per gallon, 56 UK miles per gallon)

Suspension, tires and brakes Front brake:disc Rear brake:drum Front track: 1,325 mm (52.2 in) Rear track: 1,315 mm (51.8 in) Ground clearance: 180 mm (7.1 in) Front suspension : McPherson strut with lower A arm Rear suspension: Independent coil spring 12-inch wheels

Controversies
Mass motorization and climate change As the Nano was conceived and designed around introducing the automobile to a sector of the population who are currently using ecofriendly bicycles and motorcycles , environmentalists are concerned that its extraordinarily low price might lead to mass motorization in countries like India and therefore possibly aggravate pollution and global warming as well as increase the demand for oil. Rajendra Pachauri, an Indian and chairman of the Inter governmental Panel on Climate Change, said he was "having nightmares" because of this car and added that the car represents bankruptcy of India's environmental policy. The ecology focused German newspaper die tageszeitung feels that such concerns are "inappropriate" as the Tata Nano has lower emissions compared to the average Volkswagen, and that developing countries shouldn't be denied the right to motorized mobility when industrialized countries should be looking to reduce their emissions and usage of cars. DieWelt reports that the car conforms with environmental protection, and will have the lowest emissions in India. In crowded metropolitan cities like Mumbai, Ratan Tata has conceived a scheme to only offer the Nano to those individuals who do not have an automobile already. The Nano will also replace many overloaded and worn-out two-stroke polluting vehicles, both two and three-wheeled. Singur car factory land dispute Controversies also arose about Tata's planned manufacturing unit for the car in Singur ,WestBengal, where the state government of West Bengal has allocated 997 acres (4.03 km) to Tata Motors. The construction of the car factory on that tract of land will require fertile agricultural land and the expropriation and eviction of ca. 15,000 peasants and

agricultural workers. The affected farmers fear they will receive inadequate or no compensation and therefore lose their livelihoods. Activists near Kolkata, where Tata's manufacturing unit is located, started burning the car in effigy. In New Delhi, a group of six women protested wearing T-shirts bearing slogans that said, "The Rs 1 lakh car has Singur people's blood on it." The Trinamool Congress alleged that Tata motors usurped the agrarian land for the construction site and have threatened to stall the manufacture of the car. The 11 cases were dismissed. Used Car Market Effects The Nano is alleged to have severely affected the used car market in India, as many Indians opt to wait for the Nano's release rather than buying used cars, such as the Maruti 800(are badged Suzuki Alto), which is considered as the Nano's nearest competitor. Sales of new Maruti 800s have dropped by 20%, and used ones by 30% following the unveiling of the Nano. As one automotive journalist summarises; People are asking themselves and us -why they should pay, say, 250,000 Rupees for a Maruti Alto, when they can wait and get a brand new Nano for less in a few months time, a car that is actually bigger. Tata Motors' plans would produce, in real terms, by far the cheapest car ever made. An Indian car may soon earn a parking place in history alongside Ford's Model T, Volkswagen's Beetle and the British Motor Corp.'s Mini, all of which put a set of wheels within reach of millions of customers after they rolled onto the scene. Tata Motors ( NYSE: TTM - news - people ) is developing a car it aims to sell for about $2,500 the cheapest, by far, ever made. There is a lot riding on its small wheels. If the yet-to-be-named car is a success when it goes on sale next year, it would herald the emergence of Tata Motors on the

global auto scene, mark the advent of India as a global center for smallcar production and represent a victory for those who advocate making cheap goods for potential customers at the "bottom of the pyramid" in emerging markets. Most of all, it would give millions of people now relegated to lesser means of transportation the chance to drive cars. It is a hugely ambitious project rivals have called it impossible for any company. But it is audacious for one that hadn't even built cars a decade ago. For decades Tata Motors has been India's largest commercial vehicle maker the Tata logo appears on buses, dump trucks, ambulances and cement mixers. Sturdy as elephants, they are a fixture of the Indian landscape. Owners inevitably paint the exteriors in a cheerful riot of bright red, green, orange, blue and yellow and line the un-airconditioned cabs with teakwood to keep them cooler in India's searing heat. However ubiquitous, Tata's trucks faced a problem after the Indian government began reforms that opened the Indian economy in 1991: the huge cyclical swings in demand typical for commercial vehicles. To diversify, Tata would enter, at great expense, the less volatile passenger car market. Before the reforms Indian customers had so few choices that Tata was sheltered. When demand tailed off it just worked down a waiting list, and there was never a need to concern itself with customer desires. Sure enough, after the economy slumped in the late 1990s just when expenses for developing the passenger car hit home Tata truck and bus sales plunged by 40%,and Tata Motors lost $110 million in fiscal 2000.It was the first red ink seen since 1945, when the company was founded to make locomotives. Executives were stunned. "It was corporate India's biggest loss," says Ravi Kant, managing director of Tata Motors. "The crisis changed us. We told ourselves, 'Never again.'"But Tata Motors, part of India's largest conglomerate, first had to reset its ways. Like many Indian companies protected for decades from foreign competition, Tata had gotten to 2000 still fat and slow. Change started with a spring 2000 meeting at the Lake house, a bungalow across the street from the company's main factory in Pune, a three-hour drive east of Mumbai. Kant, then in charge of the commercial vehicle division, needed fresh ideas instead of rigid resistance, so in an experiment, he called a meeting of 20 of his most promising young managers all under 35 years old."I

have a problem," he said in his matter-of-fact tone. "The company is bleeding." He asked for ideas on how to stop the gush of red ink. Okay, they told him, trim costs. Girish Wagh was there, just 29 then. He remembers the shock of what came next. "Ravi Kant said that 1% in cost cuts would be a rounding error. He asked for 10%!" says Wagh. "Never had we thought of such a target." Every single year until then costs had gone up, not down. Kant told them to present a basic plan that very afternoon, in front of him and alarmingly all their bosses They worked frantically. By the 3 p.m. meeting, their wildest ideas were on the table. Taken together, they added upto 6.5%. "A break through!" Kant remembers thinking. But that's not what he said. "Please go back and think again," he told them. He needed 10%, not 6.5%. "You've got three weeks." The young team took some measures even as its crounged for more. In came benchmarking, purchasing from Internet auctions, outsourcing parts to more efficient suppliers and boosting revenue by selling Tata-made dies to other companies. Meanwhile, the Pune factory's veteran boss bought into the project. The transformation of Tata Motors had begun with the searing loss in 2000, but it continued with a return to profit in the fiscal year ending March 2003. By then it was producing two car models and selling a bit abroad. Today, after buying or partnering, the company has vehicle projects around the globe and exports 11% of output, mostly to South Africa. Efficiency is way up: It now takes between 12 and 15 minutes to change a die on the passenger car assembly line, down from two hours in 2000. The company's break-even point for capacity utilization is one of the best in the industry worldwide. Between 2000 and 2006 nearly 6,000 workers left the company with early-retirement deals. Meanwhile, the once radical e-sourcing idea has become routine for Tata, which ran 750 reverse auctions on Ariba in the past year to bring down purchasing prices by an average of 7% for everything from ball bearings to the milk served in the company cafeteria. Tata Motors listed on the New York Stock Exchange in 2004. After thousands of changes, in the quarter ending December 2006 Tata earned $116 million on revenue of $1.55 billion. Annual revenue grew to $5.2 billion for the fiscal year ending in March 2006. Analysts worry that high product development

costs and rising commodities prices could lower profit margins for the next few quarters. The changes at Tata Motors are coming as India itself is transforming. With economic growth charging along at 9%last year, more and more Indians can afford cars. But on the highway from Mumbai to Pune, the new cars zoom past wooden carts filled with construction materials and pulled by ponies, camels, elephants or even people. Road side markets offer chickens and geese those chosen are slaughtered on the spot and usually carried home on motor scooters. Outside the Tata Motors gates in Pune, a woman in a flowing red sari balances a 3-foot-wide basket on her head. It holds snacks and drinks and serves as a roving roadside shop. Inside the company gates is a modern factory complex. In one building, just past a small statue of the beloved Hindu elephant god Ganesha, robots pick up pieces of sheet metal and feed them into a series of 30-foot-tall stamping presses every ten seconds until the left-side door of a Tata Safari suv is formed. In a building nearby, workers in navy-blue uniforms use computer-aided designs from Tata engineers to create tools and dies used to make those sheet-metal stampings. Tata Motors boosts its revenue by making dies for Jaguar, Ford, General Motors (NYSE: GM- news - people ) and Toyota (NYSE: TM - news - people ), too, just as it does by allowing the madein-India Mercedes to be run through its paint shop. Workers at the Tata Motors factory have been trained in Japanese manufacturing techniques that call for continuous improvement. A worker building Safaris noticed that each day on average, one front grille was ruined when a worker leaned over to work on the engine and accidentally scratched the grille with his belt buckle. Cost: about 2,500 rupees$57 a day, or $17,000 a year. Tata designed a simple protective cover for the grilles, plus a slip-on fabric cover for belts and watches that is now used to cut down on expensive waste at each of Tata Motors' factories. Cost: about 25cents per vehicle. That's the sort of thing that Girish Wagh, one of the breakfast-meeting whiz kids, was working to foster when Kant called him in unexpectedly in December 2000. Kant needed someone to take

on a risky project to extend the truck line beyond the sturdy Tata mainstays. Kant wanted one cheap enough to compete with threewheeled, motorized rickshaws and even considered building a small, three-wheeled truck. Before starting the project, Wagh did something no one at Tata Motors ever had: He talked to customers. The three-wheeler men inevitably insisted on a cheap, dependable truck that could go from village to market carrying, say, 200chickens, a ton of onions or potatoes, or 2,000 eggs. One night, as sunset approached, Wagh stuck with one rickshaw driver. "I kept asking the question. Why? Why? Why do you want a four-wheeler?" Wagh remembered. Finally, he got the real answer. It turned out it wasn't really a problem of chickens or eggs. "If I had a four-wheeler, I would have better marriage prospects in my village," the young man said. Drivers of three-wheelers are looked down upon in India. Wagh realized that four wheels had emotional, not just practical, appeal When Tata Motors brought out the bare-bones Ace truck in May 2005 for just $5,100, it had a monster hit: The company sold 100,000 in 20 months. To try to keep up with demand, it offers the truck only in white to save the time it takes to change colors in the factory paint shop. Tata is building a new factory that will be able to turn out 250,000a year starting this month. So when Tata Motors needed someone to take charge of the company's most ambitious plan yet to build the world's cheapest car ever Ravi Kant, who by then had become the company's managing director, again turned to Wagh. Wagh remembers what he learned marketing the little truck. "People want to move from two-wheelers to four-wheelers," he says. "Today they can't afford it."More and more can, but Indian car buyers today represent a tiny slice of a potentially giant market India has just seven cars per 1,000 people. India's auto industry has grown an average of 12% for the past decade, but just 1.3million passenger vehicles were sold in India in the fiscal year ending March 2006. That means a billion Indians buy about the same number of cars in a year as 300 million Americans buy in a month. If four wheels cost as little as two wheels, that could change fast. About 7 million scooters and motorcycles were sold in India last year, typically for prices between 30,000 rupees and 70,000 rupees, about $675 to $1,600. Tata is targeting a price of 100,000 rupees one lakh, in

Indian terms of measurement or about $2,500 at current exchange rates, for its small car. That sounds impossibly cheap in the West but remains three times higher than India's annual per capita income. The average pay for factory workers at Tata Motors is just $5,500 a year. Within a few years 2 million of those motorcycle owners may trade up to buy the Tata car, figures McKinsey and Co. partner Ramesh Mangaleswaran in Mumbai. Trying to build a car cheap enough for motorcycle buyers seems to make sense now but seemed crazy several years ago when Ratan Tata, longtime chairman of Tata Motors and scion of the nation's giant Tata Group conglomerate, first mentioned his dream of building a one-lakh car in 2003. "They are still saying it can't be done," he says, insisting that it can and will. "Everybody is talking of small cars as $5,000 or $7,000. After we get done with it, there will hopefully be a new definition of low-cost."Many low-cost car producers have set up shop in India, and McKinsey believes it could become a global hub for small-car production the way the U.S. is for pickups. Hyundai and Suzuki (other- otc: SZKMF.PK - news - people ) build their small cars in India, and Toyota is considering an India hub. Passenger vehicle exports grew by 13% last year to 192,000, according to J.D. Power and Associates, with Hyundai exporting more than 110,000.A one-lakh car is unlikely to be sold in the U.S. . But it wouldn't be aimed only at India, either, Ratan Tata says. Bottom-of-the-pyramid markets would be the best fit: places like Africa, Southeast Asia and maybe eastern Europe and Latin America, wherever income levels mirror India's. The cost target is tough, but there are plenty of other hurdles at home. India's inadequate roads, for one. Roads and highways are being built nationwide, but if India goes car crazy, maddeningly slow traffic is inevitable for several years. By far the biggest struggle in India is political. The People's Car factory is already caught in the crossfire, as politicians and pressure groups squabble over forcing destitute farmers off their land for a project expected to bring10,000 jobs to industry-hungry West Bengal. The company signed the final deal with the state last month and has begun the property's boundary walls, land leveling, and road and building plans. "We've lost four months," says Ratan Tata. So far. He is still

personally driving the People's Car project. It is a rear-engined, fourdoor, four-seat car that will get around on 33hp more pep than the Model T or the VW Beetle had when they drove onto the scene. The cheapest versions won't have air-conditioning or power steering, but Tata hopes its cute looks will make up for missing creature comforts just as happened with the VW Beetle and the Mini long before it. Tata Motors has not released a photo of its prototypes, but Ratan Tata, a trained architect with a penchant for designing consumer goods, sketched its outlines for a reporter's eyes only. He drew an egg-shaped car with a ceiling high enough to handle his tall frame. He pointed proudly to the air intake scoop in front of the rear tires and the vertical taillights similar to those found on the Tata Indica. Under the front hood it will have a small storage space, "like an overhead bin" on an airplane, Tata says. "It is not as small as a Smart," he says. "It is not a car with plastic curtains or no roof it's a real car."The design was outsourced to Italy's Institute of Development in Automotive Engineering, but Tata himself ordered changes along the way. Most recently he vetoed the design of the windshield wipers. His solution: a single wiper instead of two, giving the car a cleaner look. And cutting the cost of windshield wipers for the People's Car in half.

Tata Nano: the "Big" wonder It's a car that has made history. On January 10, while a select few thousand watched the unveiling of the Nano - the People's Car, a million more around the world saw it on the internet or read about it in newspapers the next day; and it continues to make headlines. A few weeks after the unveiling, however, its business as usual at the Engineering Research Centre (ERC) at the Tata Motors plant in Pune. Here is where it all began and here is where the Nano team, after the euphoric unveiling, is now quietly gearing up for the next phase: putting the Nano on the road."The execution of the project is the real challenge", says the self-effacing Girish Wagh, who heads the 500-strong Nano team. "While we are happy and proud at the reception received by the Nano, we also know that we have a long road ahead." This statement sums up the Nano team philosophy. It was an incredibly tough journey filled with challenges, questions, detours and self-doubts. But the Nano team developed and delivered a car that exceeded the world's expectations beyond their dreams. The team, as one, acknowledges the tremendous support and guidance from Mr Ratan Tata, Mr Ravi Kant, Mr Prakash Telang and the senior management. Mr Tata, they say, not only brought a sense of cohesiveness, but also provided a number of vital inputs - information, guidance, encouragement and the motivation to keep looking at innovation. As we spoke to some of the members of the Nano team, about their 4-year long journey, we sensed the excitement and the pleasure of a job well done; and the never-say-die spirit of the enthusiastic young team as they gear up to face the challenge of launching the car. But let's start at the beginning In 2003, a four-member team from Tata Motors was asked to work on a new project. The brief was very fluid. "It began as an advance engineering project. The idea was to try and create a very low cost transportation with four wheels - it was not even defined as a car," says Nikhil A Jadhav, industrial designer, INCAT, who has been working on the project since inception."What was defined was the cost: Rs1 lakh, about $2500 (at the time the smallest car cost around Rs2.5

lakh), without compromising on aesthetics, value to the customer, or safety and environment requirements, says Jai Bolar, senior manager (development),ERC, and a member of the initial team. The project was a Herculean challenge indeed... The road less travelled The design team first looked at alternative ways of constructing a vehicle. Many concepts were explored and inspiration was sought from existing small cars. The team also debated whether doors were necessary, whether plastics could be used instead of metal, whether interiors could be cut to a minimum, whether a low powered engine would suffice. The focus was always the cost factor and so different technologies were tried. But one question was a consistent driving factor: 'What is the bare minimum a customer will accept'."While it was sure that the design could never go down the auto rickshaw route, the team looked at other concepts: a door-less car with a bar as a safety measure, having soft doors in vinyl with plastic windows, a cloth roof, two big doors (instead of four). But all these kept getting turned down by Mr. Tata; he was very clear that it had to be a complete car. "In hindsight, after seeing the kind of joy people got by looking at the Nano, we see how important it was to have a complete car," says Mr Jadhav. Body building Various themes were explored which set the styling direction, with inputs from the Institute of Development in Automotive Engineering, Italy. Differently shaped headlights, larger and more vertical, were designed giving the front of the car the appearance of a little kid, with big eyes in a small face. But Mr Tata asked them to try something different. Horizontal rear lamps were tried out before the vertical lamps (much like the Indica) were finalised. While the constant design changes were frustrating, it also added to the interest factor, feels Mr Jadhav. "If you look at the early renderings of the car, it has metamorphosed into something completely different. But we were always kicked with the fact that in spite of the changes, the car never looked ordinary and boxy. The basic shape and size of the car was always very nice, especially after the lamps changed. In fact that was the point when my interest

came back from70 per cent to 100 per cent."A feature of the new Indica - a spine on the bonnet - was added to the Nano and that changed the front volume and the car started looking more interesting. As the team put it, "It was just a smile in the beginning and the spine accentuated that. That was an important point where the car really started looking nicer; not just a plain car or just another car." The overall shape was developed keeping in mind that this car had to feel large; the wheels at the corner accentuate the car and give an interesting graphic on the road. There was an interesting debate on the bottom end of the glass: there was an inclined wedge till the doors and then a step-up at the quarter window which was tied-in with the bonnet line. But the design team kept debating with Mr Tata where the line should be. They thought that the kick up added a lot of character, but he felt that it reduced the length of the car and asked them to extend it along the lines. This made the car look longer. In the last week of July 2007, just when the team thought it had it all together and could begin work on the virtual phase, there was one more hiccup. Mr Tata felt that the nose of the car looked snub; while the team felt that the nose gave the car a sportier look. But they went back and did some renderings to increase the nose; it actually helped increase the length of the car as well as internal volume. The new design was presented to Mr Tata, at the end of August as a virtual model, and immediately received his sign off. "And that's the car you saw in Delhi," concludes Mr Jadhav with a smile. More beautiful on the inside The design work on the interiors of the car was even more interesting with maximum scope for innovation. Here again the focus was on cost reduction, but without compromising on the comfort factor. The directive from Mr Tata was that the customer has to perceive value. So there was a constant tussle in balancing value to customer and cost to company. The styling was focused on comfort and functionality. "The inside volume was quite large and we were always faced with the challenge that with so much space if we reduce things, it will actually look like there are less things. So we tried to integrate functionality in components. It may cost a little more but you are getting two functionalities at the cost of one," says Siva S Aittili, manager

(Industrial Design), ERC. According to him, the exteriors define the character of the car but the interiors drive the user experience. "It's when a person sits inside the car and experiences the comfort and ambience, that he gets the final overall feeling about the car," he explains. So every detail was benchmarked with a luxury or best-insegment car and the thinking took a different route to manage within the costing. Working closely with the sourcing team led to many interesting inputs on what was possible and what was not. The driving instrument cluster is uniquely placed in the centre, giving the car an open look and enabling everyone in the car to look at it. It also makes the dashboard equally amenable to left hand and right hand driving. Initially the cluster was a simple circular shape; then Mr Tata suggested the shape be changed to an ellipse like the Tata logo. There was a lot of exploration in terms of colours. "We looked at harmony in the colours for the dashboard, the door trims and the seats, to give a good feeling to the customers," says Mr Aittili. The seating also went through a lot of concept changes with the team and Mr Tata looking at furniture catalogues for inspiration. Frames with tensile fabrics were thought of, but were rejected as too expensive. The final choice was a conventional looking seat with a structure made of metal and the headrest integrated with the seat to save on costs. The team also wanted the wheels to look different but alloy wheels were too expensive. The final design is called style in- steel wheels - a concept that looks like alloy but is made of pressed steel; and the cost is almost the same as a normal steel wheel. Other interesting and unique concepts include a central exhaust and the scoop (air way) required to cool the engine, which became part of the design, part of the door feature. Now that the car has been unveiled, Mr Jadhav and Mr Aittili are fine-tuning the details, listening to feedback and working on it. And after that: "We will begin work on taking this to the world in a whole different way" Girish Wagh, Head, Small Car Project "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.

Mr Tata set the internal benchmarks. The company has done a lot of innovations to bring the cost down. In such a project there are more failures than successes but never at any point did we think that we will fail. Mr Tata was completely involved with the project as was Mr Ravi Kant who was extremely supportive and participative. They were an integral part of the team along with other senior managers. They created an environment in which people never had a fear of failure; in which they had the chance to use their creativity to a maximum. And the team responded magnificently. They were convinced and passionately involved with the project. The focus was always on taking the project forward. Our suppliers also put in all efforts and were very involved with the project. The next phase is to have the variants of the Nano; there are lots of exciting possibilities in the development of the car." The heart of the Nano The original thought was to have a conventional front engine and a front wheel drive. But then the team started thinking differently. Abhay Deshpande, assistant general manager-Vehicle Integration, ERC explains, "Most high end cars have a front engine to reduce the complexity of the controls; but the engine drives the rear wheels. While driving from the rear is a more efficient way of transferring power; driving from the front is more cost effective as you don't have to take the power to the rear. We thought of taking advantage of both by having a rear engine with front wheel drive. It made the car more low-cost, more efficient and more compact (we could manage with a length of almost 3 metres).The idea of putting the engine in the rear also turned out to be a major turning point in the design process, a breakthrough of sorts. (The engine was designed to fit in the space behind the rear seat).The sourcing team went shopping worldwide for a suitable small 35hp engine that could be used in a city car, but could not find anything that fit the budget. In a review meeting, Mr Tata asked whether the engine could be built in-house. And that was a task in itself. A rear engine also meant that all controls had to be changed. "The cables that run in front from the engine to the accelerators etc, now have to travel from the back. This makes them more complex, "says Mr Deshpande. Fitting the

engine, the gearbox and the exhaust system into the space behind the rear seats was yet another challenge. The engine is actually inclined at an angle of 14 degrees to complement the rear seat incline. Starting with a 554cc, the team has managed to increase the engine to 624ccwith 27hp.The engineering team is very proud of the many innovations that have gone into the Nano. The weight in the rear of the car meant that vehicle dynamics were affected; this led to using different tyres for the front and the rear. "The ride and handling is quite optimised for the vehicle. We focused on simple designs and tried to incorporate innovations in that," says Narendra Kumar Jain, Dy GM, engines, ERC. A drum brake system and non-collapsible steering were added to the package, and the car in fact has the smallest turning circle. Manufacturing planning The interesting challenge here was that aiming for a very low cost car meant the entire organisation had to be leaned down - not just manufacturing, but materials, design, human resources, and so on. "Mr Tata gave us valuable inputs here - he suggested that the team look at benchmarking themselves not just against other automobile companies but also against other consumer product companies. As a result, the team has taken the benefit of best practices from other industries such as cycle manufacturing or PC manufacturing that involve mass manufacture and assembly," says Santosh Bannur, senior manager, planning, Passenger Car Business Unit (PCBU)." Mr Tata would frequently join us and give inputs on styling, manufacturing processes etc. We also took internal benchmarking inputs from our teams in Jamshedpur and Lucknow," adds Atul Vaidya, assistant general manager , planning, PCBU. The planning team was joined by members from other processes - the paint shop, weld shop, press shop, assembly shop. "Normally, different departments step in at different stages. But in this project manufacturing, planning, maintenance, etc were all involved from the beginning. The entire vehicle was designed and built in a collaborative manner," says Jaydeep M Desai, assistant general manager, Small Car Manufacturing Planning. Over the months the 120member manufacturing team was built through a systematic process, through interviews and evaluations. People were taken from within Tata Motors, as well as from outside, graduate trainee engineers from IIT

Kharagpur and Jadavpur University. "There was amix of experience and youthfulness," says Ajay Tiwari, assistant general manager, HR, Small Car Project. "Though the members were from diverse areas, the team worked well together because the overriding objective was the focus for everyone. There was also a huge amount of transparency as the role of each person was clearly defined."The diversity of the team helped in generating unique and fresh ideas. Since around 30 per cent of the capital investment in an automotive industry goes into the paint shop, the team looked at alternate options. "But we did not want to compromise on any of the five parameters: safety ,quality, delivery, cost and morale. Finally we used the pre-treatment and electro-deposition (PTED) process that is used in conventional cars," says Mr Bannur. In an effort to reduce capital costs, the Nano team discussed options with top Japanese and German paint shop manufacturers. "We have ensured that this will still be the cheapest car as far as the paint shop is concerned. Working with Krug, Germany, one of the best paint shop manufacturers in the world, we have managed to bring down capital costs and variable costs to a great extent. We have also ensured that we keep to the environmental norms in Maharashtra and West Bengal," says Bannur. Production concerns Another cost cutting exercise that was attempted was to reduce the number of tools to make the components while at the same time, increasing the life of the dies used, by three times the norm."It made the design and manufacture of the dies more complicated. We tried special materials and received a lot of help from the product design team in meeting the target," says another production engineer. Initially Vivek Suhasrabuddhey, divisional manager, Small Car Project Office, was skeptical about meeting the projected cost because ''the car looked like an Indica, with the same volume but the targeted price was a quarter of the cost of the Indica. But then I realised we could do many things." They started with benchmarking all parts and sub assemblies with vehicles ranging from a two-wheeler to a high-end fancy car. They also did an exercise called design for manufacturing and assembling whereby the design efficiency of each of the assemblies was worked out.

''Basically this means determining how many useful parts there are in the design. We involved the suppliers also in this exercise and they realised that some functions could be integrated in parts. That is how we got some cost benefit," he says. Because the Nano is a rear-engine car, serviceability and accessibility was a big concern. ''We had to make the car more serviceable and accessible from the customer's point of view. So we did some design modifications to allow this," says Nagabhushan R Gubbi, head of engineering, Passenger Cars. An innovative approach, creating a statistical tolerance sheet for critical failures in product design, gives the team critical control parameters. The car has undergone all required safety testing. "We have done the full frontal crash testing. The offside frontal is required for Europe and will be required in India too. We have completed all simulations etc and are ready. The car also conforms to all environment norms, including Bharat Stage III," says RG Rajhans, project manager, Body Systems Engineering Automation, INCAT. Ravi Kant, MD, Tata Motors "It was a huge challenge to make the world-s cheapest car. The Nano is not an urban phenomenon but for semi-urban and rural markets too; after decades of paucity of choice, the common man is finally going to have an option. It has been a great collaborative effort of our partners, suppliers and vendors. Emissions are better than two wheelers and the fuel efficiency is 50 miles per gallon. You consume less fuel, pollute less." Vendor development This team had a major contribution to make in lowering the cost of the car because majority of the parts were to be outsourced and had to be procured at low cost. The team evaluated and selected vendors who could deliver quality at the required price and then worked with them to ensure that the parts were made to the right critical parameters on the drawings given by ERC."There were two primary challenges for us," says Sachin Singh, assistant general manager, Strategic Sourcing Group." The first was to contain the prices, because every time there was

a change in design or specification, the cost changed. The second and unique challenge was to convince the vendors about the volumes." Not surprising since talking volumes of two million over five years was not heard of in the four-wheeler industry."A major task was to interact with them, to figure out their processes and optimum capacity to which they could deliver," he adds. E Balasubramoniam, head - Sourcing, small car project, PCBU says, "A lot of engineering has been contributed by our suppliers. We have about 100 vendors, of which 50 will be co-located at the vendor park at Singur. Of these 15-20 would be integrated facilities."Some of the vendors are from the Tata Group. The TACO group companies include - TACOIPD, Tata Toyo Radiators, Tata Johnson Controls, Tata Visteon, Tata Yazaki, Tata Ficosa, Tata GS Yuasa Batteries. There-s also Tata Ryerson for the steel service centre and roll form sections, Tata Bearings for bearings and Tata Steel Tubes for the engine cradle. The big task now is to get the plant operational with the 50 vendors setting up their facilities, clearing all the testing and validation, looking at timelines, the production and ramp rate. "In a normal set up, machines are running and processes are established; here the 4Ms of production- man, machine, material and method, are all new. It is like setting up 50 factories," says Mr Balasubramoniam. The difficulty also lies in the fact that the product and the location are both new. The team is doing its best not to repeat mistakes from the Indica launch. "We are taking definite measures to minimise problems. We have started the early vendor involvement initiative. It is a unique initiative (3P - production, preparation, process methodology) used by Toyota for their supplier base," he adds. Ramping up With the unveiling of the Nano, the main focus now is to get the plant sites ready - to ensure that the equipment is ordered, erected and commissioned as per the plan. With the company looking at very high volumes, the major task for the manufacturing and planning team is to ensure a very fast ramp up. There are some unique things in this project that have happened for the first time in Tata Motors," says Jaydeep M Desai, assistant general manager, Small Car Manufacturing Planning.

Quality systems have been thought about, put in place and well documented so implementation becomes easier. The maintenance practices - failure mode analysis and development - have been completed. "We have ensured all this during the planning phase itself and this will reduce the breakdowns when we start," he avers. With the car now unveiled and appreciated, the team is looking to provide the finishing touches. The four-year journey has a new beginning - Sujata Agrawal and Jai Wadia The design team Siva S Aittili and Nikhil A Jadhav Some Nano team members at the Tata Motors plant in Pune Standing from left: Santosh Bannur, Umesh Abhyankar, Abhay Dandekar, Sanjay Patil, CAwate, V Katkar, Swapnil Gosavi, Girish Wagh,Mangesh Nimbalkar. Sitting from left: Kedar Joshi, Sundar Palani,Abhay Dandekar, Umesh Nalawade , NikhilButala , Rahul Dangi, Vivek Lakhera, Rajesh AT Some Nano team members at the Tata MotorsplantStanding from left: NK Jain, Dr Dharmadhikari,Rohit Vaidya, Anand Kulkarni, Anil Kumar C,Rajhans RG, Hemant Malekar, Girish Wagh, Sudhir Patil Sitting from left: Jai Bolar, Santosh Yelawande,Sam Johny, Siva Aittili, Vivek Sahasrabuddhey, Nikhil Jadhav Some members of the Strategic Sourcing Group,small car projectStanding from left: Rakesh Mital, Sachin Singh,Rakesh Mehrotra, E Balasubramoniam, KrishnaMukund. Sitting from left: Anil V Palhade, Benjamin Eptha,Umesh Bulbule

Why Nano ? The name 'Nano' was chosen as it denotes high technology and small size. Most eagerly waited car People world over were keen to see what Tata Motors' People's Car looked like, and know more about it. The Tata Motors website saw nearly 7.9 million hits on January 10 (the day the Nano was unveiled), while the Tata Nano website saw 4 million hits in 30 hours, making these sites among the busiest in the world. The Nano website (www.tatanano.com) was developed within a short timeframe of 1.5 months and with limited resources. The entire portal has been built on open source technologies, involving minimum investment, following the essence of the Nano low cost, but high technology. Fuel-efficient engine - The Nano has a rear-wheel drive, all- aluminium, two-cylinder, 623 cc, 33 PS, multi point fuel injection petrol engine. This is the first time that a two-cylinder gasoline engine is being used in a car with single balancer shaft.- The lean design strategy has helped minimise weight, which helps maximise performance per unit of energy consumed and delivers high fuel efficiency.- Performance is controlled by a specially designed electronic engine management system. Meets all safety requirements - The Nano's safety performance exceeds current regulatory requirements. With an all sheet-metal body, it has a strong passenger compartment, with safety features such as crumple zones, intrusionresistant doors, seat belts, strong seats and anchorages, and the rear tailgate glass bonded to the body.- Tubeless tyres further enhance safety.

Environment-friendly - The Nano's tailpipe emission performance exceeds regulatory requirements. In terms of overall pollutants, it has a lower pollution level than two-wheelers being manufactured in India today.- The high fuel efficiency also ensures that the car has low carbon dioxide emissions, thereby providing the twin benefits of an affordable transportation solution with a low carbon footprint.