"Both the companies will be working together on design, products and manufacturing of new vehicles", chairman Tata group Ratan Tata told newspersons here on Monday.

The proposed car may use the platform of Peugeot 206 or any other two-box vehicle from Peugeot's stable. "The car, which will be launched within the next two years, will be a completely new vehicle developed by both the companies specially for the Indian and overseas markets," Mr Tata said.

Regarding financial's institutions' reported reservations at the entry of Peugeot into the country, Mr Tata said that the French major was not picking up equity and the agreement was purely a technical and licence manufacturing agreement. Regarding Maruti Udyog's disinvestment, Mr Tata said "we are interested in all possible ventures, but the government has to come out with its disinvestment strategy." Tata Engineering's mid-size car `Magna' is expected to be launched in mid-2002 and will have no connection with the company's agreement with Peugeot for its proposed vehicles.

The three-box Indica is likely to be launched next year. The company has set a sales target of 55,000 Indica in 2001.

Meanwhile, Mr Tata was here to inaugurate the stall of Tata Automation at `IMTEX 2001'. Tata Automation Ltd (TAL) was formed by merging the machine tool and growth division of Tata Engineering. TAL, set up in April 2000, is targeting a turnover of up to Rs 60 crore in the first year of commercial operations, TAL chief executive Y Nath said on Monday.

TAL has already finalised the export of machine aggregates to an Italian machine builder and also furnace equipment to a German company, he said, adding that it was also exploring possibilities of exporting to the US and European markets.

However, he refused to give names of the Italian and German companies saying it would be against the terms and conditions of the agreement. Tata Automation is gearing up for its new e-business paradigm and have already its web site TataAutomation.com.