Tata Motors Ltd has decided to set up the factory for its joint venture (JV) with Brazil’s Marcopolo SA at its existing plant at Belur, near Dharwad in Karnataka, in an effort to overcome delays related to acquiring land for the new factory.
A person familiar with the matter, who did not wish to be identified, said the company’s application for land has been pending with the state government since September 2006 and that it (Tata Motors) does not wish to wait too long because that could mean losing out on a market opportunity.
The JV is to make premium buses and according to the person, “Tata Motors believes there is huge potential building up in the premium bus segment as more and more Indian cities adopt bus rapid transit systems to modernize their existing public transport.” The person added that work on the new plant is expected to be completed in the next six months.
The company’s decision to speed up the JV’s plans comes after Delhi Transport Corp. (DTC) recently awarded it a contract for 500 luxury buses for the city’s public transport system, delivery of which is expected to begin by October.
For the commercial vehicle manufacturer, the contract will also mean the opportunity to establish the relatively unknown Brazilian brand in the Indian market ahead of the massive infrastructure upgradation that the city is undertaking as it prepares to host the 2010 Commonwealth games.
The Delhi government is spending more than Rs1,400 crore to put in place a modern transportation system in the Capital.
According to the person familiar with the matter, the 500- bus order from DTC includes 50 air-conditioned buses that will ply around Noida, New Delhi and Gurgaon, while the rest of the 450 buses will be low-floor ones.
“The company has already started manufacturing three-four units of the bus every day at Lucknow, where Tata Motors” has a manufacturing facility, the person said.
A Tata Motors spokesperson said the company was “still in the process of locating land for the project” and declined to comment on whether production of these buses had already started at Lucknow.
Tata Motors’ 51:49 JV with Brazil’s Marcopolo is seeking to tap emerging opportunities in India as its cities transform itself, adopting more modern modes of transport.
Under the agreement, Marcopolo will provide its expertise in body building for buses and coaches, while Tata Motors will contribute its expertise in chassis and other parts.
The JV plans to initially make 7,000 buses a year and will scale the production up to 10,000.