You are on page 1of 20

St FRANCIS XAVIERS DEEGREE COLLAGE

COST ACCOUNTING

PROJECT ON TATA NANO

SUBMITTED BY: ANIL.J.HIRANI

SUBMITTED TO: Mr.VINAY SHARMA

CONTENTS

ACKNOWLEDGEMENT……………………………………………………… INTRODUCTION……………………………………………………………… IDEA GENERATION………………………………………………………….. COMPETENCIES OF TATA NANO………………………………………… PROCUREMENT OF RAW MATERIAL……………………………………. CONCEPT TESTING AND DEVELOPMENT………………………………. PRODUCT DESIGNING ………………………………………………………. PRODUCT DEVELOPMENT……………………………………………….... COST CUTTING FEATURE………………………………………………….. VARIANTS OF NANO………………………………………………………… PRICING STRATEGY…………………………………………………………. PROMOTION STRATEGY…………………………………………………… DISTRIBUTION CHANNEL………………………………………………….. OBSTACLES TO NANO………………………………………………………. FUTURE PLANS………………………………………………………………... CORPORATE RIVALRY……………………………………………………… SWOT ANALYSIS……………………………………………………………… CONCLUSION…………………………………………………………………..

2

constant support and help in completing this report successfully. their keen interest. 3 . all the people mentioned below have performed it to their maximum possible. Help is a voluntary fulfillment of duty.ACKNOWLEDGEMENT An acknowledgement is the expression of one’s thanks giving to the people who have extended their help in every possible way. which. VINAY SHARMA. At the onset. we wish to express our gratitude to Mr. in a way giving us and our research the utmost importance. faculty at St FRANCIS XAVIER DEEGREE COLLAGE for COST ACCOUNTING.

4 . We have taken into account the whole process from idea generation to selling of tata nano.INTRODUCTION Under this project we have taken the launch of tata nano by tata. This project has helped us a lot in knowing about various issues which takes place while launch of product. In this we have tried to explain the entire value chain in launch of tata nano and various which have been taken into account or dealt with while launch of tata nano.

It all started with the dream translated into a reality on the 10th of January. It started as a quest for an affordable transportation solution “ Ratan Tata source : . there will hopefully be a new definition of low – cost “ 5 . the generation of the idea the next step is screening of idea:1) 2) 3) 4) 5) 6) 7) A scooter with two extra wheels at the back for better stability? An auto-rickshaw with four wheels? A three wheeled car like a closed auto-rickshaw? A four wheeled car made of engineering plastics? A four wheeled rural car? Rolled up plastics curtains in place of windows? A four wheeled open car with safety side bars? But the market wanted a car and if they build a people’s car and not something that people would say.IDEA GENERATION “I Saw families riding around on scooters with the kids standing up and the mother carrying a baby and sitting pillion and decided to do something about it. The purchase price of this no frills auto was brought down by dispensing with most non essential features. Seeing an opportunity in the great number of Indian families with two-wheeled vehicles. tata motors began development of an affordable car in 2003. “ they are still saying it can’t be done . After we get done with it. insisting that it can and will. long time chairman of Tata motors. After. “ ah that’s just a scooter with four wheels or an auto-rickshaw with four wheels and not really a car “ Trying to build a car cheap enough for motorcycle buyers seems to make sense now but seemed crazy several years ago when Ratan Tata. The concept behind the creation of the people’s car was to fill the status void that was felt by the middle class families.business standard .cost Indian labor. and relying on low. 2008 at the Auto Expo. first mentioned his dream of building a one – lakh car in 2003.” he says. reducing the amount of steel used in its construction .

COMPETENCIES OF TATA NANO • Expectations According to one report. such as European nations. have great expectations from the Nano and are keenly and eagerly awaiting it. Nano innovations are also there. Since it meeting Euro-4 norms at this price so this is taking as a future of small car segment . • Pricing strategy Tata initially targeted the vehicle as "the least expensive production car in the world"— aiming for a starting price of 100. The enthusiasm is even higher than that for the petrol-version 6 . India as well as other nations. for the electric-version from India as well as other-nations.000 rupees or approximately $2300 US despite rapidly rising material prices • Export expectation Being worlds cheapest car it is expected that not only India demand for Nano will go rise at global level. Tata envisions going even further. especially the electric version of the Nano. • Modular design In fact. even from Europe. • Reputation and Acceptance of Tata After launch TATAs have shown the world what Indian engineering is truly capable of • Enthusiastic support Tata Motors is receiving preliminary and some very enthusiastic support in the media and officials. providing the tools for local mechanics to assemble the car in existing auto shops or even in new garages created to cater to remote rural customers.

BOSCH 2.PROCUREMENT AND SUPPLYERS OF RAW MATERIAL 1. CAPARO 7 .

FAG Kugelfischer 6.3. Delphi 5. Ficosa 7. BEHR GmbH & Co 8 . Continental motors 4.

as sunset approached.8. 9 . Saint-Gobain CONCEPT TESTING AND DEVELOPMENT Before starting the project. It turned out it wasn’t really a problem of transportation of vegetable “if I had a four-wheeler.” the young man said. wagh stuck with one rickshaw driver. Finally. Thus the new product was now to be developed. say. not just practical appeal. he got the real answer. wagh did something no one at tata motors ever had: he talked to customers. Drivers of three-wheelers are looked down upon in India. Wagh realized that four wheels had emotional. TRW 10. dependable truck that could go from village to market carrying. a ton of onions or potatoes. Why? Why? Why do you want a four-wheeler?” wagh remembered. one night. I would have better marriage prospects in my village. Vistoen 9. He says. The three-wheeler men inevitably insisted on a cheap. “I kept asking the question.

The Alternatives are: 10 . TATA used the concept of Disruptive Technology which was cheaper than existing Technology. The design has to question the need of each and every component from the point of view of its necessity of existence and also the minimum requirements of its functionality. “ the innovation wasn’t technology. 1 Lac. The mission began back in 2003. however. affords both safety and status. wanted it to be easy for tall people to get in and out of the car.The car was to cost Ross. it was in a mindset change” PRODUCT DESIGNING Since the car had to be built within a cost of Rs. chairman of Tata motors and the $50 billion Tata conglomerate. 1 lakh on road. It was closer to a quadricycle than a car. The Nano. much higher performing. The Guiding factor was that the cost has to be minimized for each component Yet maintaining its basic functionality. it made an immediate impact. and the first prototype. set a challenge to build a “people car”. The body had to be changed because Ratan Tata. Tata gave three requirements for the new vehicle: it should be low-cost. But failure didn’t stop them they quickly realized it was necessary to bring everyone on board. even a bigger engine. which boosted the power by nearly 20%. when Ratan Tata. was still dismal. adhere to regulatory requirements. 2) It must be meeting all the safety and regulatory requirements. The design team initially came up with a vehicle which had bars instead of doors and plastic flaps to keep out the monsoon rains. That quest to build the world’s cheapest car hasn’t ended. Everyone from manufacturers to vendor development teams were asked to be a part of decision-making. over six feet tall himself. The attention to detail paid off: when the car rolled onto the dais at the auto show in New Delhi in January. and achieve performance targets such as fuel efficiency and acceleration capacity. is convenient to use and brings radical changes. 1) The car should be built on a different platform than conventional ones. and Ratan Tata stepped out of the driver’s seat with ease. no conventional design would work as the costs shall be higher and so the entire car has to be redesigned. 3) The car has to be designed so that it can be exported to other countries as the domestic demand may not materialize as per projections. 4) The car must be a beacon for the Indian automobile industry and prove to the world that we are capable to take any challenge and come out worthy winners.

Establish factory in a tax free zone. 3.c. His solution: a single wiper instead of two The target was very clearly defined that within the given cost structure of 1Lakh all the components have to be allocated a maximum price and the same had to be achieved using the available alternatives. Get the suppliers to establish base near the factory. Reduce Consumption of Material being used. Most recently he vetoed the design of the windshield wipers. PRODUCT DEVELOPMENT And finally the product was developed with the following features. Comfortable leg room.6m. Speed Manual Gear Box. on materials and manufacturing. 1. 4. but Tata himself ordered changes along the way. Use alternate materials The design was outsourced to Italy's Institute of Development in Automotive engineering. All Aluminum Engine.5m. 3. Less length but more inner cabin space due to height. 1 Lakh. 3. 9. 7. Superb control over emission and smooth acceleration. W: 1.1. Lighter and so better mileage. twin cylinder. 6. Higher thermal conductivity than cast iron. H: 1. Dimensions L: 3. must support the final cost of Rs. 2. sufficient with better Power Rear Engine to reduce the transmission length using a balancer shaft. 5. 4. Alternate Suppliers to get same material at fewer prices. Lighter.1m. 8. Low capacity. The Decisions were: 1. Engine Management System by Bosch. 2. Engine Capacity Bosch 624 c. Get the concessions from state government In short select a manufacturing location where all the advantages could be achieved. 2. The Guiding factor was that the tax structure. 11 . Get the tax advantages on infrastructure development.

15. seat belts. Single piece ribbed steel body with safety features such as crumple zones. 14. Cost effective. Safety requirements are adequately met. 17. And in line with modern vehicles. Elegant to look at and can be used both in Left Hand & Right hand version. Independent Front & Rear Suspension McPherson Strut in front & Coil spring & trailing arm in rear. Single Wiper in place of two.10. 13. 16. Tube less Tires. strong seats & anchorages. Weight reduced by 2 Kg. 12 . Cost reductions 200 Rs. 19. Better ride than Maruti 800. Instrument console in the centre. 11. intrusion resistant doors. 18. 12.

7) No air conditioners 8) No airbags 9) 623cc engine has only 2 cylinders.COST CUTTING FEATURE The nano’s design implements many cost-reducing innovations. central locking etc. VARIANTS OF NANO The Tata Nano will be available in four variants which are:• • • • Tata Nano standard Tata Nano Deluxe Tata Nano Luxury Tata Nano Europa Tata Nano Standard: The car will be priced at Rs one lakh and twenty three thousand. unnecessary due to its light weight. as the rear hatch does not open. This standard variant will have the following features • Seat Belts. 4) Three lug nuts on the wheels instead of the usual four. 5) Only one wing mirror. 13 . 2) One windscreen wiper instead of the usual pair. power windows. 6) No radio or CD player. The car will have no air conditioning. 1) The nano’s trunk is only accessible from inside the car . 3) No power steering.

Lunar Silver . Racing Red and Summer Blue. metallic paint.• • • • • • • • Speedometer. or 14 . Front and Rear fog lamps. Lunar Silver. Racing Red and the Summer Blue colour. Driver seat adjust-sliding Folding Rear Seats. The deluxe variant will come in the following colors: Champange Gold. Floor console with glass holder. or  Foregoing profit on the car. As of august 2008. Ivory White. colors: Ivory White.000 rupees or approximately $2000 US despite rapidly rising material prices. power windows. 2-Spoke Steering wheel. Tata Nano deluxe: the deluxe model will have the additional features of air conditioning. central locking and power steering. Central Locking. PRICING STRATEGY Tata initially targeted the vehicle as “ the least expensive producting in the world”aiming for a strating price of 100. Odometer. Centrally placed exhaust. colors: Sunshine Yellow. Anti lock braking system Front Power windows. Champange Gold. material costs have risen from 13% to 23% over the car’s development. Grey bumpers and interiors. Tata Nano luxury: The luxury Tata nano will have additional features of • • • • • • • Tripmeter. High mounted Rear Stop lamp. or  Using vertical-integration. Anti-Glare inside rear view mirror. tinted glasses. and Tata now faces the choice of :  Introducing the car with an artificially low price through govt-subsidies and taxbreaks.

publicity reduces the necessity of other promotional devices for nano. Online booking facility will be available. Internet will be a major media for advertising. An increase price on the nano will likely decrease demand. PROMOTION STRATEGY Enough use of one of the most important element of promotion mix . Tata has rejected the agreement between Trinamool Congress and the CPM-led state government in West Bengal saying that they could not compromise on project land. It is being said that Tata Motors is going ahead with its distribution and financing plans for the Nano car.already a low priced product financing facilities will be provided through Tata motor financing ltd and other banks.TV & other mass media will be less effective thus too much money will not be invested in this regard . West Bengal. the car maker is also given a thrust to the retail and finance models too. Nano got publicity in the following ways:• Publicity as “One lakh car” by mouth to mouth. or  Raising the price of the car. •Auto expo 2008. Tata Motors is implementing a ‘hub-and-spoke’ model for Nano’s distribution. despite the current shutdown at the main Nano plant in Singur. ADVERTISING:. 15 . DISTRIBUTION CHANNEL Distribution network planning and strategising is full swing. which would mean that it would involve increasing dealership points as well as adding sales and customer touch points. SALES PROMOTION:. Besides.New Delhi & Geneva For other type of promotional activities. Partially using inexpensive polymers or biodegradable plastics instead of a full metal-body. Mainly word of mouth advertising will get more emphasis. cost factor that is 1 lakh price tag is to be keep in mind.

Tata Motors is manufacturing Tata Nano at its Pantnagar plant.Tata Motors has said that dealerships based in bigger cities will be responsible for looking after these touch points. It may be recalled that Ratan Tata recently had conveyed optimism that Nano will be launched on time. Splitting Neighbors in West Bengal”  “ Tata's problems in West Bengal are scaring off other industries hoping to locate here. Tata Motors took decision to pull out of Singur. Due to the Singur land dispute. the "Stalled Car Factory" is "Costing Jobs. who demanded land to be returned from the factory.000 jobs. The Singur faciliy. including Infosys. Tata Motors has reportedly decided to focus on semi urban and rural markets to sell the people’s car. on the promised deadline. As per the plan. As per plan. saying that all obstacles in its path would be removed. which would play the spokes.  Tata Motors announced it was pulling out its Nano small car industrial project from West Bengal's Singur and blamed the Mamata Banerjee-led Trinamool 16 . the Tata Nano dealers in the cities would play the role of hubs. OBSTACLES TO NANO  However. which could be located even in the remotest corners of the country. Though work at Singur has come to an almost standstill. a software maker that wanted to build a business park that would provide 5. They in turn will undertake the effectiveness of other sales and customer touch points. has been seeing ryots on the war path with the government being urged to return the 400 acres of land taken away from them for the plant.  Due to ongoing opposition to Tata's Singur car-factory by Mamta Banerjee. located around 40 kilometers away from Kolakata. The Tatas are also going in for mass production of the Nano and this is expected to be done very soon. Tata Motors would launched the Nano across the country. it is expected that Tata Motors will be able to keep its promise for launching the Nano at the price that it promised.

for the 'painful' decision. the exit lead west Bengal a loss of more than 80. FUTURE PLANS After all the applause for being the cheapest car in the world.Congress. the Tata Nano is back in the news again. performance and emissions. mileage. The Nano was built to fulfill the basic transportation needs of a family but the car compromises on nothing.000 crore . be it safety. which spearheaded the protests against the factory.  While existence of Tata Nano could lead to high industrial growth . 17 .How ever Tata has to suffer in terms of delay and settlement cost . Tata’s drawing up plans to build an electric and hybrid model using its platform. The Tata Nano is compared to legendary cars in the market like the Ford Model-T which brought a revolution in the automobile industry.

’ Most probably these higher end models will be sold in the international markets. the Tata Nano also has all the fire power to redo the same thing. So there are pretty good chances of India and global markets to have a Tata Nano petrol. China and Russia. a Tata Nano Station Wagon. It has been speculated that money to sustain such a prolonged protest involving thousands of TMC party workers came from rival Two/four wheeler lobby. a Tata Nano Electric and a Tata Nano Hybrid variants in the coming years. due to its affordable price Nano’s impact on two wheelers sales has been widely debated. a Tata Nano diesel. Tata also have plans to introduce variants in Brazil. nano will also affect sales of higher priced cars or will motivate competitors to reduce the prices resulting lowered margins for rest of the industry. Indonesia. a Tata Nano Convertible. Bajaj auto is also developing a low cost car together with Renault-Nissan to rival Tata Nano.A Tata Group report says ‘It’s not only a car for Tata it’s a platform for some higher end models too which will be sold at higher prices and will give greater profits. CORPORATE RIVALRY Tata nano was envisioned as the four wheelers for those who can only afford two wheelers. 18 . The Bajaj Chetak and Maruti 800 created history in the Indian automobile industry.

WEAKNESS:- OPPORTUNITY:.bikers can be motivated. low suspension power. As customers gain more power. style. mileage. Expectations to Nano has proved this . After 100 years to Henry Ford . Companies that innovate on this dimension are likely to be richly rewarded. brand name. The challenge of reaching dispersed. they will demand more tailoring and value-added service to meet their needs. maruti) CONCLUSION • • • • Emerging markets are a fertile ground for innovation. light vehicle. low-income consumers in emerging markets often spurs significant innovation. not Suitable for Hilly areas. Tata has proved him again not only he came out of the expectations but also came out with a platform for Indian auto sector . auto rickshaw. first innovation at such low price. fiber body.SWOT ANALYSIS STRENGTH: - price. World is getting tougher day by day being unique is a competitive advantage. all weather Vehicle. 19 . THREATS: Other competitors (bajaj. Low engine capacity.

20 .• So this as per this project conclusion can be draw as a future car not only of Indian but also if exported than could be to the world.