Tata Nano->Behind the scenes
Behind every successful Entrepreneur is the “Will to Suceed”
|CLASSIC CARS DOWN THE YEARS Top to bottom: Ford Model T — 1908 Volkswagen Beetle — 1938 Morris Mini Classic — 1958 Swatch-Mercedes Smart — 1998 Tata Nano — 2008|
In early 2003, five engineers from Tata Motors trooped into the main conference room at Bombay House, the Victorian sandstone building that houses the headquarters of the Tata Group. They had been summoned at a day’s notice from the Tata Motors factory in Pune by company Chairman Ratan N. Tata, who had just made a promise the world said would be ‘impossible’ to keep.
Tata had told a Financial Times correspondent on the sidelines of the Geneva Auto Show that he was thinking of making a car that would cost about € 2,000. Adjusted against the then exchange rate of the rupee, that translated to Rs 1 lakh. Tata says he had never really defined the project in his head exclusively by its pricing. “It was the media that said it,” says Tata. “But we decided to accept the challenge….” With that resolution, Tata imprisoned himself and his engineers in a promise to fulfil which they would have to all but rewrite the principles of automotive engineering.
When the engineers walked into the conference room that morning, they knew that the meeting had something to do with Tata’s statement about a small car that they vaguely remembered reading about in newspapers a few days ago. Little did they realise then that the next four years of their lives would be dotted with moments of agonising failure and heady success, between which they would eat, drink and catch up with their families. The worst: the engineers would not be able to share with anyone, even their wives, what was going on inside their second home, the drab block of concrete called Engineering Research Centre (ERC) at Tata Motors’ campus on the outskirts of Pune.
Jai Bolar, senior manager for development at Tata Motors’ ERC, recalls that the team entered the conference room armed with just a 60-slide presentation on all the low-cost modes of personal transport. The vehicles included motorbikes, autorickshaws, scooters and the company’s own Indica. “We had no clue as to what we were supposed to do,’’ says Bolar. “So finally, we asked him whether he could tell us what he had in mind.”
The next few minutes will, forever, be imprinted on the team’s mind. Tata, or RNT as he is affectionately called, held forth, exhorting the team to dream of building a low-cost car that would cost only marginally more than a two-wheeler and revolutionise personal transport in India. Show the world what Indian engineering is truly capable of, RNT told the engineers. “Make me also part of the team. Only in a country like India or Pakistan can a low-cost car be made,’’ he insisted. The motivational talk worked. “We came back from the meeting all charged up,’’ says Nagabhushan R. Gubbi, head of engineering for passenger cars. Gubbi did not know, nor did the others, that they had just been impelled by arguably India’s most visionary businessman to create history.
|INSPIRED LEADERS: RNT with (right) Tata Motors Managing Director Ravi Kant
The team made little progress over the next year and a half. It tried to source parts from around the world, even toyed with the idea of an open car with plastic or canvas sheets for protection (see sketch below). The problem was it was still thinking of making the motorcyclist safer. Two-wheelers continued to overtake the image of a car in their minds.
“The biggest challenge when the project started was there was no brief, no benchmarks, and it had never been done before,’’ says Bolar. Even RNT had only the disturbing image of a family of four riding a scooter on wet roads and an unclear dream to help such families as benchmarks.
In August 2005, Girish Wagh, an easy-going, but intense 35-year-old with a reputation for building teams and trucks, entered the scene. Wagh, a mechanical engineer by training, had just helped build the runaway hit Ace. He arrived at a time when the first ‘mule’ was ready. A mule in auto parlance is a vehicle that comprises the engine and transmission, driving a mock-up addled with electronic sensors. It moves like a vehicle just for testing purposes. The first mule had a marine engine that delivered 20 brake horse power (bhp).
“We wanted to see whether such an engine would work,’’ says engine man Narendra Kumar Jain. It did not.
At Tata Motors, Jain is regarded as a pioneer. He is credited with the first gasoline engine that Tatas made. For two years, Jain scoured the world looking for an engine that could fit a small car. He even tried motorcycle engines, but finally decided that RNT’s common man would need an engine not yet invented. Jain then went to work with a clean sheet of paper.
He started off designing a small engine that would deliver 20 bhp, but realised midway that it would not be enough. So he increased the engine’s capacity to 554 cc, which delivered 27 bhp. The engine still did not have enough zing and its driveability was not satisfactory. So, Jain redesigned the engine and increased its capacity to 586 cc. That appeared to be peppy enough and satisfy all parameters. The team, swelling in number as new tasks were incorporated and specialists taken on, was working to meet three parameters — acceptable cost, acceptable performance and regulatory compliance, not only current but also future.
While Tata engineers worked on the engineering of the car, Italian design house I.D.E.A., which also designed the Indica, was chartered with styling. Guided by RNT, the styling kept changing. Though in an interview with BW, RNT underplayed his own role in the design, Wagh says he was intimately involved in the styling and made some alterations even a few days before the launch. “Mr Tata was present at every testing and he made all the decisions,” Wagh says. “He was very focused on what the customer would like’’.
In December 2005, the second mule was tested, and by mid-2006, the first prototype or alpha was ready. After testing the prototype, which ran on the 586-cc engine, the team found the vehicle wanting. “We felt it needed to be longer,” Wagh says. “RNT wanted changes in styling, which meant changes in body design, which increased safety performance.” It was decided to increase the length by 100 mm. It meant redoing everything that was done until then. The team was back at the drawing board.
Beat But Not Beaten
That the project did not have any specifications, and was never tried before, worked both in its favour as well as against. With only three parameters to guide them, the engineers kept coming up against failures. Jain says the biggest support from the management was not to hold a failure against anyone. “The hardest part was continuing to believe we could do it,’’ RNT said. “I never felt the project won’t go through. I was scared I won’t meet targets — price targets, time targets, the auto expo…’’
Bolar says that since there was no precedent to the project, everybody had a number of concepts. “The management remained open, but the most challenging task was to define the specs,” he says. The Maruti 800 was the only benchmark to go by. And it cost more than Rs 2 lakh on the road.
As the team struggled with constant change, which often put them at their wits’ end, RNT and Tata Motors Managing Director Ravi Kant played a key role in preventing creative fatigue. “We were like a football team,” says Gubbi. “The leadership was where the ball was. Everyone was playing for everyone.”
|624 cc, 34 bhp, rear-mounted|
|8 per cent smaller than Maruti 800|
|21 per cent larger than
|Survived frontal crash
at 48 kmph
|Bharat III and Euro IV
Ravi Kant put in long hours of work and was always available to take decisions, monitor progress and keep the team motivated. “We exposed our people to
products of competitors by tearing those products apart and analysing the good and bad and comparing them with our own, thereby making people see why customers buy someone else’s products rather than ours,’’ Ravi Kant told The McKinsey Quarterly in a recent interview.
Abhay M. Deshpande, general manager for vehicle integration, says though there were time and cost pressures, the collective leadership kept the engineers completely insulated from them.
Sometimes the work was repetitive and tedious. In designing the engine, Jain did 150 thermodynamic simulations, each of them stretching eight to ten hours. Body systems expert R.G. Rajhans, who had built the body of the Indica and also the new Indica, had by then built about 10 different floors for the car.
Finally, in October 2006, Jain hit upon an optimal engine design. His creation had a capacity of 624 cc and squeezed out 34 bhp of power. “It was the first time that a high-pressure die-cast engine was made in India,’’ says Jain. In comparison, the first Maruti 800, which was powered by a 796-cc engine, delivered only 37 bhp.
Jain’s computer prototype was cast into a real engine in January 2007, when it was first fired. With a multi-point fuel injection system developed by Bosch calibrating the gasoline flow, the heart of the car was ready. Jain filed 10 patents for the engine. By the time the car was finished, the company had filed 34 patents in all; and some more are in the pipeline.
Miles To Go…
E. Balasubramoniam, head of sourcing for the project, was not a popular man with vendors. “We had several heated arguments,’’ says Balasubramoniam, a former Maruti hand with a wry smile and a negotiator’s demeanour that doesn’t give away anything. His job involved constantly hand-holding vendors as well as haggling with them on cost reduction and engineering changes. “We really gave them a hard time. But to their credit, they stuck on and delivered.’’
To achieve its ambitious cost reductions, Tata Motors had to get vendors to pare margins and persuade them to produce components at lower costs. The vendors had to invest in new processes and methods to reengineer their products to specifications that were rigidly guided by cost, performance and regulatory compliance. Many of them would not make profits for years. For example, P.K. Kataky, director of battery maker Exide, was reported as saying that the company’s margins would be thin and it would start making money only after two or three years.
Balasubramoniam says getting suppliers, who were mostly clustered in auto centres such as Pune, Chennai and Delhi, to invest in Singur, West Bengal, which Tata Motors had chosen for its small car plant, was difficult. “But now about 15-20 vendors would finish their plants along with ours (Tata Motors’),’’ he says.
Singur itself was a dark chapter in the project’s progress. People from several quarters decried how West Bengal gave Tata Motors subsidised land. In the wake of the violence in Nandigram, West Bengal’s main opposition party, the Trinamool Congress, also criticised the ruling Communist Party for acquiring land from peasants on behalf of a private company. RNT himself was uncharacteristically aggressive in saying that vested interests looking to scuttle or at least delay the project were behind the problems at Singur and vowed to show them up “at the right time’’.
For a while, the tension over Singur made life so difficult for the project that at the Nano’s launch RNT joked that the car could have been called “Despite Mamata”, after the Trinamool Congress’s leader, Mamata Banerjee.
While political gamesmanship fuelled the fires in Singur, the engineers at Pune were battling to bring costs to nano levels. Young blood can bring innovative ideas, but there are some things that only experience can teach. That came from experts such as the ebullient Nagabhushan, who had decades of experience building commercial vehicles, and K.K. Mirasdar, the deputy general manager of prototypes and manufacturing, a veteran with a raspy voice. The group held workshops where experts from the commercial vehicles arm found ways to lay alternative fuel lines, make better use of plastics and build better lamps.
Since the project was inspired by two-wheelers, people who had worked in the two-wheeler industry were roped in, especially in sourcing. Rakesh Mital, who came from Yamaha, came up with the idea of using instrument panels similar to those in motorcycles. The panel in Nano’s dashboard was inspired by the minimalism of the clusters on the heads of motorcycles. Ideas for suspension, cables and lamps were inspired by scooters and motorcycles. The tall-design car has McPherson struts stabilising the front and uses a suspension similar to that of motorcycles at the back to balance for a higher centre of gravity and a rear-mounted engine.
An Idea Is An Idea
Often ideas came from unexpected sources. The team was struggling to reduce the cost of seats while complying with safety norms when RNT, a passionate pilot, who often shuttles between Mumbai and Pune by a chopper, had a brainwave. He thought the reclining and sliding mechanism of helicopter seats could hold a solution for the Nano. The engineers at Tata Johnson studied the mechanism and designed one for the car. The window winding mechanism of the car was also inspired by helicopter windows and done by IFB and Shivani.
The manufacturing team also introduced pokayoke, a Japanese term for mistake-proofing. Mirasdar, who made the prototypes, almost always had a suggestion that would end up reducing costs and simplifying processes.
Sometimes the cost reduction was so drastic that it surprised the engineers themselves. “We found that the door handle of the car had 70 per cent less parts than one of the cheapest European cars,’’ says Mital.
After the engine design was frozen, things began to fall in place. The dimensions had been fixed and the layout of the transmission finalised. Sona Koyo and Rane Group came up with hollow steering shafts, saving cost and cutting weight. Sharda Motors and Emcon designed the exhaust system and MRF tweaked the tyres to bear extra weight on rear wheels.
“At every stage, we tried to cut costs by reducing the number of parts that went into each component,’’ says Wagh. As the team succeeded at this, they began to see the “impossible” dream morph into reality. But outside the factory, scepticism and discontent were growing.
If the Nano was one of the most anticipated events in automotive history, its launch has set the industry aflutter. “It’s a problem for Detroit,’’ wrote The Washington Post, “which is racing to enter India’s booming small-car market but will now have to completely revolutionise its production and distribution to compete.’’ Perhaps the most important comment came from Ford’s Executive Vice-President John Parker. “It is a groundbreaking product,’’ he said. “The Nano will cause people to think differently about the car. I have a lot of respect for Tata.’’ It seemed like poetic justice that the praise came from the company that had revolutionised personal transportation with the launch of the original ‘people’s car’, the Model ‘T’, exactly a hundred years ago. Curiously, every ‘people’s car’ has been launched in the eighth year of the decade (as noted on page 36).
However, Tata Motors still needs to align the commercial imperatives behind the car, analysts say. The company has invested Rs 1,700 crore in creating the Nano, which will yield wafer-thin margins. Analysts are concerned the company will have a hard time achieving the volumes before the Nano returns a profit. In fact, Tata Motors’ stock has been downgraded by rating agencies on this count as well as concerns over RNT’s bid to acquire the Jaguar and Land Rover for $2 billion. Analysts also seem unsure if a company can straddle a spectrum of products that ranges from a $1-lakh car to a Rs 1-lakh car. “That car doesn’t have airconditioning, power steering, air bags and other features. Do you dare to buy that kind of car?’’ Wang Chuanfu, chairman of Chinese carmaker BYD, was quoted as saying at the Detroit Auto Show.
But RNT emphasises that the Nano is not just a Rs 1-lakh car, but a platform that will be used to create further high-end models that will sell for more and yield comfortable margins. Tata Motors will also foray into electric and hybrid cars, using the Nano and its future variants as a base, RNT says. He adds that he has also received invitations from at least two countries to set up Nano manufacturing plants there, which will also help recover the car’s R&D costs. More impressive are the intangible benefits RNT’s dream car has achieved for Tata Motors. For one, he has put the fear of Indian engineering into carmakers across the world. In a single stroke he has also made the Tata brand known in every corner of the world, something no other auto company has ever done. In fact, the publicity the Nano has garnered globally would be worth more than Rs 500 crore.
The Last Mile
The launch was perfect, but the Nano has to go some more distance before it reaches the customers. The last stage of cost reduction is expected to happen in distribution. Tata Motors is developing an assembly kit for distributors who would stock completely knocked-down kits of the car at warehouses and assemble them on site. Carting CKDs to different parts of the country is expected to bring down costs as more parts can be transported in the same space that a fully built car can be moved.
To enable cheaper assembly at the distributor’s end, some parts of the car would be glued together instead of welded. “Usually those who make a small number of cars do such distributed manufacturing,” says Wagh. “Sometimes others do it to test the market. For the first time, it would be tried on a large scale.’’ Also, the car is still at the beta stage. Wagh says there would be more tweaking done by the time the first car rolls out of Singur later this year.
Already newly converted cynics are describing the car as revolutionary. The only person not fully satisfied is RNT himself. “It is not as revolutionary as I wanted,” he said. “I wanted the car to be made from new materials, use new techniques, in a sense completely re-envisage the way cars are made. In that sense I am still not satisfied,” he told BW.
For the moment, however, the cute-as-a-bug Nano is the cynosure of all eyes. And Ratan Tata has undoubtedly entered the hall of fame of automobile manufacturing.
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|GIRISH WAGH Head, small car project, Tata Motors
“At every stage, we tried to cut costs by reducing the number of parts that went into each component’’
As the car got closer to completion, the media, including BW (see ‘Tata’s Small Car, 1 Lakh Unanswered Questions’, BW, 6 August 2007), started speculating. Many reports were cynical; some were guarded, as if leaving room just in case they were proved wrong. Environmentalists such as R.K. Pachauri of The Energy Research Institute and Sunita Narain of Centre for Science and Environment began raising concerns about how a million small cars would impact urban congestion and air quality. But Tata was privy to information that his car had survived a frontal crash test and met Euro IV emission norms several months ago.
Japanese auto giant Suzuki, which makes the ubiquitous Maruti 800, also spoke out with derision. “What is it going to be? A three-wheeler with a stepney?’’ Suzuki’s Founder Chairman Osamu Suzuki had quipped when Tata announced the project. In February 2006, Suzuki again took a shot, saying that it was impossible to make a reliable car for Rs 1 lakh.
But within a year of Suzuki’s comment, the Tata team had reason to pop the bubbly. A beta prototype was ready by the middle of 2007 and to maintain secrecy, it was tested at foreign locations, such as test tracks in Germany and the rough terrains of Australia.
Just about 10 days before the Auto Expo at New Delhi’s Pragati Maidan where the car was to be unveiled, RNT joined the team in Pune. He camped there until the launch, overseeing the finishing touches. He personally drove it, and made several last-minute changes, including changes in the seat covers and air vents, as the team prepared for the big day.
While the media wildly speculated about the look and features of the car, even carrying all kinds of sketches about the car’s looks, three Nanos were shipped to Delhi in containers and remained under cover until the night before the launch. In the wee hours of 10 January, the car was rolled into Tata’s pavilion in hall 11 of Pragati Maidan right under the noses of several TV vans stationed nearby. But they missed the action. RNT, who later admitted he had spent a sleepless night preparing for the launch, and Ravi Kant, were present when the cars arrived.
That day will go down as a red-letter day in Indian automotive history. Using a three dimensional hologram created in Germany, a ‘virtual’ RNT spoke to the huge crowds deluging the Tata pavilion about the car he had dreamed of and which was finally about to be unveiled.
Then, the real RNT, his over 6’ 2” frame comfortably ensconced in a white-coloured Nano’s driver seat, drove onto the stage what the world now acknowledges as a path-breaking car. As the crowd roared and cheered, a visibly tired but moved RNT took the mike to assure them of one thing — the car, despite the protestations of many in the press, would cost Rs 1 lakh. “A promise is a promise,” RNT said, sealing his place in the hearts of millions, whose aspirations of owning a car were now reality. As Tata stood modestly enjoying his success on the stage, a foreign journalist was overheard saying to another: “We are lucky to be here’’. The other replied, “Yes, at least we can tell our grandchildren that we were there.’’