Rs 1 lakh car to hit the road by 2008: Tata

Tata Group Chairman Ratan N Tata has put to rest speculation on the launch of his dream car, saying that the Rs 1-lakh car was expected to be out in early 2008.

In a letter to the shareholders of Tata Motors, Tata said it would be a rear-engine, 4-5 seat, 4-door car with about a 30 horse-power engine.

The styling and design of the car had been completed and prototypes were being tested. The car would create a new paradigm in low-cost personal transport and reach the broader base of the pyramid, he said.

Stating that rising fuel costs were straining the automobile industry in both commercial vehicle and passenger car segments, the Tata group chairman called for more fuel-efficient engines.

"Tata Motors, like other automobile companies, is exploring various new technologies to meet the new challenges arising from spiralling energy costs," he said.

During the year, the company took the decision to augment its engineering research centre at Pune by establishing a European technical centre in the UK, which would have access to cutting-edge technologies and could support many product development activities which the company needed to safeguard its position, he said.

On Tata Motors' alliance with Fiat, he said the discussions included possible sharing of manufacturing facilities of the two companies.

Tata Motors had earlier agreed to support Fiat India's sales, distribution, and servicing of vehicles through its selected outlets. This was part of a strategic alliance agreed to by them, which could include possible outsourcing of technologies and even joint development of models.

In a parallel move, Tata Motors has decided to place a special resolution before shareholders at its forthcoming annual general meeting, to raise up to Rs 3,000 crore through equity-related instruments.

The amount is required to fund the company's expansion plan. It aims to spend around Rs 10,000 crore in three-four years on product development and as capital expenditure on capacity enhancement.

Though the automobile industry witnessed a slowdown in the first quarter of the last fiscal, it did see an upturn towards the end of the year as the government announced a reduction in excise duty on small cars, the company said.