Tata Motors to expand Ace plant to Dharwad

MUMBAI (Makemystocks): India’s Tata Motors Ltd (BOM 500570) is looking to Dharwad in Karnataka for the expansion of its Ace light truck plant and start production, said Telang, managing director, India operations, said Wednesday.

The Ace is currently manufactured at the company's Pantnagar plant in Uttarakhand, and the Dharwad plant will be the second facility for the light-truck, Telang said on the sidelines of the company's annual general meeting here. Tata Motors has seen strong demand for the Ace, which has already sold over 500,000 units since its launch five years ago.

The production at Pantnagar was reaching full capacity, which had made the company look at other options including setting up a new production facility for the Ace. Telang, however, refused to divulge details on the production capacity planned for the Ace at Dharwad, saying it was "too early" to talk about it.

Tata Motors currently makes buses under its joint venture with Brazil-based bus body builder Marcopolo at Dharwad. CAPEX Addressing the annual general meeting, Tata Motors Chairman Ratan Tata said the company is planning a capital expenditure of Rs 30 billion each year over the next three years.

The capex will be used towards new products, new plant investments and facelifts of its products, Tata said. Tata Motors is planning to integrate technologies with its luxury car division Jaguar Land Rover, which will help it cut costs for developing new engines and also aid in jointly sourcing automobile parts.

"What the company is trying to do is get the benefits of integrating technologies and current capabilities between the two companies through rationalisation of platforms, which you will see the benefit of in a few years," Tata said. Tata Motors had acquired Jaguar Land Rover from Ford Motor Co in 2008.

Tata Motors will look at developing new Jaguar Land Rover cars, which are lighter and smaller and have a lower engine capacity, than the existing ones, he said. JLR will also look at developing greener hybrid vehicles in the future, he said. It plans to start assembling the Freelander, a smaller version of the Land Rover in India, from next year.

Tata Motors will launch electric vehicles in UK on a commercial basis by March-end, Tata said. Meanwhile, Tata Motors seems to be unsatisfied with sales through its joint venture with Italian car maker Fiat.

"The Fiat joint venture is a venture that produces vehicles for Fiat, for us and produces engines for the two companies. The venture is going quite well but the volumes from that have not been what we had expected," Tata said. Fiat currently sells the Linea sedan and Grande Punto hatchback in India.

NANO PLANS Tata Motors is planning to develop a diesel version and a three-cylinder version of Nano, the world's cheapest car, as well as versions of the small car for the US and European markets.

"We are working on different versions of the Nano, which will be sold in the US, and UK, but that is several years away," Tata said. Commenting on Nano cars catching fire, one just last week in New Delhi, he said the company was still investigating the issue in detail, but there was no reason to worry.

"There have been incidents where we have had fires. We are going through a detailed investigation. In some cases, we found foreign material in the exhaust system...But we have had 50,000 vehicles in the market and the fires we had don't indicate there is a problem with the Nano," Tata said.

Last Friday, a Nano belonging to a Supreme Court went up in flames at a parking lot in Delhi. Two similar incidents were reported in Vadodra and Mumbai earlier this year, forcing the company to launch an investigation. The company had said in May that the accidents were due to unrelated reasons and the car was safe.

Tata Motors share Wednesday closed at Rs 1,030.05 on Bombay Stock Exchange, up 2.13% from previous close.