Of what nature is the tie-up between Tatra and the Vectra Group?
As of now, there is no equity participation. What we are looking at is a technology tie-up, basically a licensing arrangement for which we have signed an MOU. After we have identified products, we will implement suitable modifications and launch the product in India before this year-end.
Why have you chosen the Kamaz range?
Primarily we were looking at the highway transportation segment in India. Since we are present in niche segments like mining, among other things, we looked around for similar technology that would be cost-effective, rugged and durable for India-specific applications. That’s how we identified Kamaz of Russia. There are many similarities between the technologies and standards in Russia and the Czech Republic. Also, we found the products to be cost-effective — they are costly but value- for-money propositions. Hitherto we have been selling our products directly; now with Kamaz in place, we will be appointing dealers and create a network for sales and service. We foresee a sales potential for up to 6,000 trucks a year for the Tatra Vectra and Kamaz range in India.
Considering that Tatra has yet to establish itself in India, how will this alliance help you?
When it comes to getting known in a market, product and brand play different roles. Through this tie-up we are addressing the availability of the product. Creation and evolution of the brand will happen over a period of time. Without a product, even if there is a brand, it doesn’t work. The story starts with the product. We have made a beginning with the Kamaz range of vehicles. While it may not be known in India, Kamaz is a reputed brand internationally. The task on hand is to bring that brand equity to India.
Why did you display the Binggo at the Auto Expo?
The Binggo has been developed by Tatra Vectra Motors on its own with the help of a design house in Europe. It will help us enter the two-tonner GVW category for intra-city goods transportation. For the LCV and MCV segment, we will get products from Kamaz. We will not offer any other product in which Kamaz is present.
In which sectors has Tatra made its presence felt in India?
Tatra has done pioneering work in its own niche, in off-highway applications. We were the first to introduce this range of products in the mining segment. Tatra is a very well known and trusted brand in a few sectors, especially defence since it has its own standards.
You are utilizing only 200 of your 5,000 per annum production capacity. Why?
That is because when you set up a manufacturing unit there is a certain size that comes along with it. You cannot create something very small to just manufacture 100 to 200 vehicles. We, at present, make all the cabins in India. The entire finishing is done here and all the components inside the cabin -dashboard, seats and trim - have been localised. In fact, we have now begun exporting these parts to Tatra and give them a cost advantage of between 20-30 percent. Our quality is at par and in many cases better than foreign components. While our exports will be marginal this fiscal, next year will see us doing about Rs 10-12 crore worth of business. Our turnover in 2004-05 was Rs 80 crore; this year we are trying to cross the Rs 100-crore mark.
Does this mean Tatra will increase component imports from India?
Yes, it is looking to source a number of components. The criteria are cost advantage, quality and logistics.
What is the local content in the vehicles manufactured by Tatra Vectra?
We are close to 55 percent local content and plan to reach 60 percent by mid-2007. We are now looking to indigenize some engine components like piston rings, crankshafts and connecting rods and have already begun work with some component manufacturers. The existing sourcing team has also been given the mandate for global sourcing.
What about vehicle exports?
Last year, when we sent 33 vehicles to Indonesia, we began exporting vehicles in a small way as part of a Tatra Vectra initiative. We plan to focus on right-hand-drive vehicles and South East Asian countries for exports. We, however, do not see a possibility in exporting back to Tatra in the Czech Republic as it is a left-hand-drive country. However, if something works out, they may use us to send vehicles back home.