MUMBAI (Reuters) - Ratan Tata must be hoping Monday’s launch of the Nano, the world’s cheapest car, marks a change in fortunes for Tata Motors and the broader Tata group after a difficult second half of 2008.
For Tata, a Parsi, the formal launch follows the Parsi new year on Saturday, and offers a chance to reclaim some of the optimism of 2007 and early 2008.
Then, Tata was lauded as an Indian hero, scion of one of India’s best known and most respected business families and the flagbearer of corporate India’s growing foreign ambitions.
In January 2008, a year after engineering corporate India’s biggest takeover, group company Tata Steel’s $13 billion purchase of Corus, he drove the $2,000 snub-nosed Nano onto a Delhi stage and received a rapturous reception.
“It was not an ego trip at all, and I had no idea that it would attract this much attention,” the soft-spoken 71 year-old said on Monday of his push to develop the Nano.
Less than three months after unveiling a vehicle that would revolutionize the industry by making cars affordable to most, Tata Motors agreed to buy the luxury Jaguar and Land Rover marques for $2.3 billion in last March.
But then the credit crunch hit, making funding harder to finalize, and as recession spread and car demand plummeted, the Jaguar purchase began to look like an expensive indulgence.
As the company found it hard to refinance bridging loans, investors shied away from a rights issue and its credit ratings were cut. Other Tata companies were told to put acquisition plans on hold.
And then tragedy. In November the Tata Group’s landmark Taj Mahal hotel was one of the sites of militant attacks in Mumbai, in which more than 160 people died.
Tata is a Parsi, descendants of Iranian Zoroastrians who migrated to India more than 1,000 years ago.
Unlike many of his business peers Tata prefers to remain away from the public eye and party circuit.
His judgment has been questioned before, but he has delivered results. He led Tata Motors, India’s biggest maker trucks and buses, into cars in 1998 with its hatchback Indica.
The initial reception to the car was disappointing as customers complained of poor finishing and defective parts, but since over 1 million Indicas have been sold.
“I am probably the most difficult critic as a car is being produced, and I’ve been very pleasantly surprised and enthused by what we have finally gotten this car to be,” he said of the Nano.
Despite the setbacks since mid-2008, the Cornell University graduate with a degree in architecture and structural engineering still has his eyes on the world.
Tata said the company was also looking to develop an export model for Europe, and more recently had decided it could also make one for the U.S. market.
If Tata can pull it off, the Nano could become the symbol of Indian pride he wants it to be.
“I just hope the dream that we’ve all had and we’ve worked so hard for proves itself to be the kind of product that we would like it to be,” he said.
Editing by Ranjit Gangadharan and Dan Lalor