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May 15, 2002 | 1310 IST
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Tatas working on new platform for utility vehicles

Arijit De

Tata Engineering has embarked upon yet another ambitious project.

The automobile major, which has seen the fortunes of its passenger cars and mainline trucks business revive in the past few months, is working on developing a new platform for utility vehicles.

Rajiv Dube, vice-president of the passenger cars division, said: "We are working on developing a completely new platform for a new range of utility vehicles."

The company, however, is reluctant to reveal much about the project which, analysts say, may involve fresh investments of at least Rs 5 billion. Industry sources said it could take Tata Engineering around three years to begin commercial production of the new range.

The present crop of utility vehicles from the Tata Engineering stable includes the Sumo and the Safari. The earlier models, the Estate and the Sierra, have been withdrawn, and are only custom-made. All the four models are based on the 207 platform.

While the Sumo is currently facing competition from Mahindra's Armada and Toyota's Qualis, the Safari has ceded its leadership position to the top-end version of the Qualis.

In comparison, Tata Engineering's Indica has emerged the largest selling passenger car in India, after Maruti's 800-cc model.

The firm's commercial vehicles have also consolidated their leading positions. Hence, analysts feel a new range of utility vehicles, if successful, might plug the chink in Tata Engineering's product portfolio.

Industry sources say Tata Engineering's decision to develop the new platform might have been prompted by the launch of a string of multi-utility and sports-utility vehicles by several automobile multinationals in India.

Hyundai plans to launch the Terracan soon, General Motors is lining up the Isuzu Panther, and Toyota another utility vehicle. Mahindra is launching the Scorpio this year.

However, Tata Engineering did not make a provision for funding the new project during its recent rights issue.

As per the prospectus, the company will invest Rs 3.76 billion in the car business over the next two years, most of which will go into developing the Sedan, a three-box car on the Indica platform.

Analysts, however, do not see any problems in the firm tying up funds for the new project because of the strength of its balance sheet. "The turnaround of the truck business will result in better cash flow," said an analyst.

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