Tata motors to expand car production capacity

Tata Motors plans to increase its car production capacity from 150,000 to 225,000 in FY05 as it is operating near full capacity.

In the domestic car market, Tata Indica sales volume increased by 10.3 per cent to 80,182 cars, whereas Indigo volumes quadrupled to 27,987 vehicles. City Rover exports in first year reached 6,500 cars.

As part of its capcity expansion plan the company last year raised dollars500mn in 3 trenches in the form of Foreign Currency Convertible Notes (FCCN). The money will be used to fund Rs 12 billion per annum capital expenditure for next 5 years for new product initiatives like car platform X1 to augment Indica, new UV platform, truck of future.

Last year, the company also acquired Daewoo Commercial Vehicle Co Ltd. (DWCV) in Korea. The Daewoo unit with capacity of 20,000 units operating at 25 per cent capacity is a profitable entity with dollars 5.4 million profit after tax on net sales of $222 million in 2003. The unit has strong product pipeline in heavy commercial vehicle (HCV) category, which augments Tata Motors strong medium commercial vehicle (MCV) portfolio. DWCV has been brought in as subsidiary effective from March 30, 2004.

Also, Tata Motors plans to improve capacity utilisation by introducing 207 Tata pickup trucks and LCVs. The acquisition will boost Tata Motors foray into international markets with complete range of CV's for the medium-term.