Nano Car Case Study

Introduction

“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.” – Ratan Tata (Source – Business Standard)

In the year 2003 at the Geneva motor show, Ratan Tata was interviewed by the Financial Times, Tata talked about future product as an affordable car, the low cost car for the developing world which would meet the needs of the developing world. When quizzed about the price, Tata ended up saying $2500, at that time Rupees 1 lakh. The next day it was in the Financial Times headline. This is how the concept of Tata Nano car came into existence.

Fight for Nano

There were two contender

Incentive packages offered by West Bengal

 For 645 acres of land the company would make no upfront payment. The annual lease rent was fixed at Rs 1 crore for the first five years, an increase of 25% every five years from the 6th to the 30th year, a 30% rise every 10 years from the 31st to the 60th year, and a flat Rs 20 crore from the 61st to the 90th year.

 VAT dues would be refunded as soft loan at “a very nominal rate of interest”.

 TML will get a soft loan of Rs 200 crore at 1% rate of interest from the parastatal, West Bengal Industrial Development Corporation (WBIDC).

 The ancillary units will be set up on 290 acres, paying an unspecified lump sum and an annual rent of Rs 8,000 per acre. In the long run, the minister added, the state revenues would increase by Rs 400-500 crore per year thanks to the Tata project. (Chandra N K, 2008).

Tata chose Singur (W.B) to set up the Tata Nano project due to several facial benefits and another reason was to increase the market share of cars in the west part of the country. Tata initiated construction of plant on January 21, 2007 and the first car was rolled out on August