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In 1990s, high duties crashed Kinetic’s Rs1 lakh car plans

In 1990s, high duties crashed Kinetic’s Rs1 lakh car plans
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First Published: Mon, Mar 23 2009. 12 22 AM IST
Updated: Mon, Mar 23 2009. 12 22 AM IST
Pune: At a time when the Nano was not even a gleam in Ratan Tata’s eye, the head of another automobile company dreamt of a car that would be small, cheap and made in India.
Arun Firodia, chairman of Pune-based Kinetic Engineering Ltd, who also has the reputation of a maverick tinkerer, thought up a Rs1 lakh car back in the mid-1990s. His idea had few takers and successive governments refused to give him the critical excise duty breaks that would have helped him keep the price that low.
“The existing duty structure of 40% could not help in keeping it at that level at the retail level,” recalls Firodia. “So we had sought a lower duty of 15% but the project eventually went into cold storage because the duty concessions never emerged because of quick changes in the government, (all of) who failed to do anything about it.”
Ironically, Firodia’s company now supplies gear boxes for Tata Motors Ltd’s Nano.
The city commuter conceived in 1995-1996 by Firodia, an electronics engineer with a passion for automobiles, would have been much more basic than the Nano.
It was to run on a 500cc, single-cylinder engine sourced from the US, packed in a plastic body with a steel frame, and with none of the sophisticated technologies that the Nano will boast. According to Firodia, it was an attempt to fulfil the ordinary person’s dream of owning a car.
The failure of that project did not stop Firodia. In the late 1990s, Kinetic announced it would turn the city commuter into an electric car that would cost Rs1.5 lakh, with a running cost of less than 20 paise per kilometre, and go 60km on a full battery charge.
The product, aiming for 5,000-8,000 units was also shelved as rising prices of iron and zinc sent the price of batteries through the roof.
“The electric car is the product of the future for the world. It is zero polluting and cost-effective but at the moment it is not something that can get volume sales because just the battery itself costs over Rs1 lakh,” Firodia said in an interview.
And as the contours of the automobile industry have changed, Firodia has given up on his dreams of entering the passenger car business. Instead, the group has repositioned itself as a components supplier.
“People want every possible feature in a small car today and companies have to spend thousands of crores to develop that and mass produce that car. We are not in a position to do that,” Firodia said. “Also, the car is no longer a novelty for people. You can buy a used car for Rs1-1.5 lakh. So there is no point competing in this segment. We can’t afford to do that.”
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First Published: Mon, Mar 23 2009. 12 22 AM IST
More Topics: Nano | Ratan Tata | Kinetic | Arun Firodia | Duty |