In an exclusive interview with CNBC-TV18, Ravi Kant, Executive Director, Tata Motors said that they have invested Rs 1700 crore to manufacture the Nano. According to Kant, for the next two or three years, the company’s focus will be on India and that they will consider export later. Kant said Tata Motors has an extremely good lineup of new products for launch including a new Sumo, Indica and Ace.

Excerpts from the exclusive interview with Ravi Kant:

Q: You had mentioned more than a year back that you would look at a cumulative capacity of probably 1 million units, given the scope that this kind of a car will have. How long will it be before you actually ramp up to those kinds of levels?

A: We are setting up a factory for 250,000 units that can be expanded to 350,000 units. Let’s see how quickly we can fill up the capacity and it is only later that we will look at expanding the capacity either on our own or through franchise manufacturers that we have talked about.

Q: The franchise manufacturers that you have mentioned, in how many locations do you think you would have to get the kind of volume that you are targeting?

A: We have not decided yet, we will see how the response is. Good entrepreneurs and good market would want to do this. So based on that we will take a view, but we haven’t decided anything as yet.

Q: Apart from that, you had also mentioned about the satellite plants, by when do you think all of them would be ready for operation?

A: First, we have to fill up the capacity and see what we can do with that. We will have to fine-tune everything. Once we are totally confident, then we will think of those and it will depend upon the demand from that particular region and the kind of entrepreneurs we can get to make it happen.

Q: The kind of pricing that we have indicated for this model, right from the base models up to the deluxe model, how would the EBITDA margin of this car be approximately?

A: As Mr. Tata has already mentioned to you and to other people, we are a commercial organisation and we will not do anything that doesn’t give us bottomline. Yes, initially in any new product, there are a couple of years that you will have to make good, and since Indica is a profitable product, we are confident that this also is going to be a profitable product.

We have to understand one thing that the base model is Rs 100,000, but we are going to have deluxe versions on which other fitments and other things can be done. So, it’s a mix of the product that we will be catering to.

Q: Once this vehicle completes one full year of launch, what kind of additional volumes do you expect to begin with for your passenger vehicle business?

A: We don’t indulge in speculation. We are investing Rs 1700 crore for product development or setting up the factory. And we do hope that we can ramp up fast enough dictated by good demand.

Q: At what kind of levels, would you breakeven in this project?

A: It depends on what kind of mix; we finally get in the marketplace.

Q: You have also been studying the Korean and the Chinese markets for your passenger vehicle business. Would you look at this car to be offered in these markets and would you look at say making an assembly base at your Daewoo plant there?

A: Right now, we have made this car for India. We are going to be focusing on India at least for the next 2-3 years. And if we find that there is good enough demand, we would be looking at other markets and geographies where it makes sense to have this car.

Now depending upon economic evaluations whether it going to be an export from here or manufactured out there, it will depend upon many factors.

Q: Along with the much talked about Rs 100,000 car, you are also working on a very innovative technology in association with MDI of France, which is the air technology. How far is Tata Motors from unveiling that product in the market?

A: We are working with them as we have already announced on the air engines, it is a compressed air vehicle. I think it is going to be quite a while before you can fine-tune everything because just assembling everything doesn’t mean it is fine-tuned, because it needs to work out in a very easy way as far as the customer is concerned.

Q: MDI of France have also indicated that probably towards the end they will unveil it in Europe. So, can we expect it in the same timeline here or would it be in 2009 probably?

A: No, we haven’t said anything about that. So, I think as and when we are ready, we will talk about that.

Q: Going back to the technology and the kind of expenses that it incurs, in terms of costs would it be significantly higher than the conventional fuel car of the same category?

A: I think it is very premature to talk about these things. When we are closing to introducing that vehicle, we will then talk about it.

Q: At the Auto Expo, you have also unveiled the Xenon, the maxi cab version of which will be assembled in Thailand. With this what kind of a market are you looking at and what kind of impact will it have on overall CV volumes for Tata Motors?

A: I think we have an extremely good line-up of products. Besides Nano, we have got so many products out there. We have introduced the new Sumo, Sumo Grande, we have got the new Indica, we have got compact Sedan, and we have got the Ace, and the green Ace, and luxury buses. We have got many new trucks and buses. So, the line-up now is really getting into full swing from this year onwards.

Q: With this line-up, both in the passenger vehicle and the commercial vehicle business, do you expect to end the year with positive growth over the previous year; do you expect that to happen?

A: Well new products are an important lever to expand the market. And we do hope that we are creating exciting enough products for customers to come forward in larger numbers and buy them.