Hindustan Motors Limited (HM) is the pioneer automobile manufacturing company in India. Starting off in early 1940s, HM has grown to an over Rs 1000 crore company manufacturing passenger cars, utility vehicle, power products and earthmoving equipment. But with competitors steadily eating into its market share, the company is keen to get back into the game, said its executive director A. Sankara Narayanan to Kavita dalal.

What are the new projects of HM which will help it survive in the market?

At present, we are working on two projects. Firstly, Lancer car project, for which we have entered into an technical collaboration with the Mitsubishi Motors of Japan. Lancer will be the most contemporary car to be launched in the mid-size segment in India. Lancer has been introduced worldwide by Mitsubishi in 1996. Secondly, the rural transport vehicle which will be manufactured with a technical collaboration with Oka Motors of Australia.

What kind of investment has HM made in this?

The total investment made for the Lancer project is Rs 320 crore. The plant is coming up at Chennai and is expected to be ready by March 1998 and the production will start by mid-1998. We plan to make 25,000 cars in the first year of operation. Lancer would be launched with a 1500cc ECI-multi-gasoline engine, which will be followed by a 2000cc diesel engine.

Do you have any plans for exporting Lancer?

We may export Lancer but at a later stage. We are talking to Mitsubishi, our joint partner for this project. It is through them we will exporting to the neighbouring countries like Bang-ladesh, Nepal etc. We may also outsource Lancer's components like suspension, electrical, wheels etc.

Who will be the main competitor of Lancer?

Opel Astra being a sister concern, does HM plan to compete with it?General Motors is competing with the models within its product range then why can't we do so. Moreover, Opel Astra is our sister company so we could always work together to take the maximum market share of the mid-size car segment.

We have entered into a technical arrangement with Oka Motors of Australia for the development of the first rural transport vehicle in India. It is a multi-terrain vehicle which is 100 per cent indigenised. It has a 2 lt diesel engine. Designed to carry men, material and both, this vehicle shall prove to be an ideal match for most day-to-day transportation requirements of rural and semi-rural India. It will be manufactured at HM plant at Indore in Madhya Pradesh. The prototype of this vehicle is already being put through rigorous field trials and tests. The vehicle is expected to hit the roads by April 1998.

Have you asked for some concession from the government for Oka?

At present there is 15 per cent excise duty on the passenger vehicle, we have asked the government to lower excise duty since this vehicle is fulfilling the rural requirements. Secondly, we have asked the Madhya Pradesh government to give us concession in the sales tax which normally is 4 per cent. We are expecting to get 2 per cent off on the sales tax.

HM does not have any aggressive financing schemes. Do you plan to come out with any credit schemse to counter competition?

We are purely an automobile company. We do not wish to enter the credit banking business of any kind. However, I feel that we really do not need any kind of financing schemes and can manage to do well without them. Still, Kotak Mahindra has extended some finance schemes for our vehicles also.

What are the company's plans as far as the upgradation of Ambassador and Contessa are concerned?

We have upgraded the engine of the Ambassador, and already 600 cars are ready. We are planning to put the 2 lt diesel engine in Ambassador, which we will be using for the rural transport vehicle. It will be more expensive but more powerful. Overall we are investing Rs 80 crore for upgrading Ambassador.

How are the petrol versions of these two cars doing as compared to the diesel version? Do you have any plans to phase out Contessa's petrol version?

In both Ambassador and Contessa, the average sales ratio for the diesel and petrol is 70:30. As far as the phasing out of Contessa is concerned we will like to wait for some more time before deciding.Chances are that it will be accepted again (by the consumers)

What are the total investment plans of HM for the next few years?

In all, we have allocated Rs 500 crore for the company. The implementation has started. Out of this, Rs 320 crore is for the Lancer project, which has already started. For upgrading Ambassador Rs 80 crore have been allocated. While the rest are for the rural transport vehicle and the engine and gear box plant at Indore after sometime especially after the craze for the new cars settles down. But it is very comfortable and now very safe with the power steering.

What are the total investment plans of HM in the near future?

In all, we have allocated Rs 500 crore for the company. The implementation has started. Out of this, Rs 320 crore is for the Lancer project, which has already started.

For upgrading Ambassador Rs 80 crore have been allocated. While the rest are for the rural transport vehicle and the engine and gear box plant at Indore.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.