Tata Motors is to switch production of its low cost Nano vehicle to a new plant in western Gujarati, after pulling out of a controversial operation in West Bengal.
The plant to be built at Sanand, near Ahmedabad, will be located on about 1,100 acres, and have an initial capacity of 250,000 units, which can be expanded to up to 500,000 cars per year, said Ratan Tata.
Tata Motors, which had planned to launch the Nano this month, will in the meantime explore the option of making the car at its existing units in western Pune and northern Pantnagar.
“We lost a lot of time unfortunately, and I think we can try our best to do what we set out to do ... in a new home,” said Mr Tata at a news conference broadcast live on leading TV channels.
“It will be our endeavour to be as close to the timelines we set earlier (but) we may not have the volumes initially.”
Analysts have said the company, which had invested about £175 million in the Singur site, could roll out hundreds or a few thousand Nano cars initially from its existing facilities.
Tata did not give financial details, only saying the agreement with Gujarat was “slightly better” than the one with West Bengal, and that the company would not incur “any significant losses” from the relocation of the plant in the year to March 2009.
“We will be retrieving most of our Singur cost,” said Mr Tata.
Vineet Hetamasaria, auto analyst at B&K Securities, said the expectation now was there would not be any more disruptions or delays to the project.
“They (Tata) can have a plant up and running in seven to eight months, and do a limited rollout,” he said, estimating the impact of the delay in ramping up production would be felt in the 2009/10 fiscal year, which starts next April.
Tata pulled out of West Bengal on Friday after a campaign of violent protests by farmers unhappy with the compensation for their land had forced the firm to suspend work on its factory for more than a month.
Tata Motors, which also received offers of land from states including Karnataka and Uttarakhand, has said eventual demand for the Nano, which is expected to retail for the equivalent of £1,250, would be about one million units.
The Nano plant as well as the vendor facilities and other services in Gujarat, which has a reputation for being business-friendly, will together generate more than 10,000 direct and indirect jobs, Tata said.