BOLD MINDS: Nov 5, 2008

Wednesday, November 5, 2008

Fall in eurozone retail sales

Eurozone shoppers are now far more cautious

Retail spending across the 15 nations of the eurozone fell in September, official EU figures have shown.

Hit by slowing consumer spending and the threat of a painful recession, retail sales fell 0.2% from August, and by 1.6% compared to September 2007.

The biggest annual fall came in Spain, where spending has fallen 7.1% in the last twelve months.

The European Central Bank (ECB) is expected to cut interest rates on Thursday to boost consumer spending.

Figures also announced on Wednesday showed that eurozone service sector activity in October fell to a record low.

Negative territory

The fall in retail spending is less than many economists had expected.

The surveys continue to show record pessimism

Guillaume Meneut, Merrill Lynch

"There is a slightly less-than-expected fall, but a fall nonetheless. Eurozone growth and retail sales are well into negative territory," said Matthew Sharratt at Bank of America.

He added that the figures should "virtually guarantee" a 0.5% interest rate cut from the ECB.

Spending on food, drinks and tobacco remained unchanged, while spending on non-food products fell by 0.3% from August.

The fall on the previous month across all 27 countries in the EU was 0.1%, and 0.4% from September last year.

Of the 15 eurozone economies, Germany suffered the biggest drop in retail trade from August, falling 2.3%. Compared with September last year, Spain suffered the biggest drop, with trade falling 7.1%.

Belgium experienced the biggest growth in retail sales, with a 1.4% increase over August and a 4.2% increase over September 2007.

Service sector

Meanwhile, the Markit Eurozone Purchasing Managers' Index for the services sector has revealed that activity in the sector in October fell to its lowest level since the index was introduced 10 years ago.

The index slumped to 45.8, below both economists' forecasts and September's score of 48.4. Any score below 50 represents a contraction in the services sector.

On Monday, Markit announced that the purchasing index for the manufacturing sector fell to 41.1, also a record low.

"The surveys continue to show record pessimism," said Guillaume Meneut at Merrill Lynch.

The European Commission announced on Tuesday that the eurozone economy contracted by 0.2% in the second quarter, and that the EU economy would "grind to a standstill" in 2009.

Kenyan beer stirs Obamamania

Tom Oladipo
BBC News, Nairobi

The Senator beer was named by drinkers after Barack Obama

The close battle between Barack Obama and Hillary Clinton to secure the Democratic nomination for the US presidency is captivating many across the world.

The charismatic Illinois senator is drawing big crowds at campaign rallies in a phenomenon known as Obamamania.

Kenya, where Senator Obama's father came from, is not immune from this either, but here, another Obama is riding on the crest of a wave.

This one, though, comes in the form of a brown bottle and is called Senator beer.

In many slums and low income areas, people who find beer too expensive often resort to cheap home brews.

But these potent drinks which include traditional spirits known as chang'aa have on a several occasions proved lethal.

Some consumers have died and others have been blinded. It's believed brewers spike the beer with deadly additives.

So one brewery, East African Breweries Limited (EABL), spotted a market opportunity for a cheap beer that is also safe.

The result: Senator Keg beer, known simply by drinkers as "Obama".

The beer became an instant hit when it was launched in 2004 at about the same time as Barack Obama was elected as senator of Illinois.

Fears of alcoholism

The product has proved as popular as the US senator in the intervening years, but with more beer for less money there are fears it could contribute to a rise in alcoholism in Kenya.

EABL's Corporate Affairs Director Ken Kariuki rejects this.

He says that normally poorer people are consuming drinks with an alcohol content of around 40%. By contrast Senator beer is only 6%.

Barack Obama in front of the White House Jan 2007

Barack Obama could be the first black president of the United States

"So you are almost forcing a responsible consumption of alcohol, only this time you're packaging the product in a more affordable and hygienic manner," Mr Kariuki explains.

But others are worried that cheap beer can create more alcoholics.

Dr Frank Njenga, chairman of the National Campaign against Drug Abuse, says more needs to be done to tackle alcohol abuse.

"Alcohol problems require the intervention by all the players, chief of which is the government through its agencies and also those in the industry," he says.

Dr Njenga, who is also a prominent psychiatrist in Nairobi, says everyone must work together to combat the rising trend of alcohol consumption.

Certainly bar owners are not complaining.

On a good day, John Kameta, who owns the Bro Jimmoh bar in Nairobi, can make up to $100 from sales of Senator beer.

"With the high cost of living, people from across all income brackets are turning to Obama beer each evening," he says.

So what do Kenyans make of the new liquid Obama?

"I like the way it is served - from a jug, instead of a bottle. Most people think you get a larger serving from a jug," one devotee told me.

So while the outcome of the US elections may not matter as much in Kenya as it does in America, here every visit to the local watering hole is a vote of confidence in their Obama.

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Kenya seeks big airport for Obama

Barack Obama's grandmother lives in the village where his father was born

Kenyan MPs have called for an airport in the west of the country to be upgraded for Air Force One in case Barack Obama wins the US elections.

Mr Obama's father was born in Nyanza Province and the MPs say the local Kisumu airport should be expanded in case he wants to visit.

The Illinois senator is a local hero in his father's homeland, where a local beer has been named after him.

Mr Obama has never lived in Kenya and he has visited just three times.

The MPs from Nyanza Province said it was clear that Mr Obama was going to clinch the US presidency, the private Nairobi Star newspaper reported.

Mr Obama will face Republican John McCain in the 4 November elections.

Mr Obama's father was from Alego-Kogello village which is 60km (37 miles) from Kisumu.

Kisumu Town MP Aluoch Olago told parliament that the delay in the airport's expansion was a major concern, the Nairobi Star reported.

Transport Minister Chirau Mwakwere said the airport's expansion programme was behind schedule, and is expected to be complete by July 2010.

Kenya declares holiday for Obama

Kenyans in Nairobi celebrate Barack Obama's victory in the US election

There were all-night victory parties across the country

Kenya has declared Thursday a public holiday to celebrate the election of Barack Obama to the US presidency.

Mr Obama's father was from Kenya and his victory has prompted jubilation across the country.

"We the Kenyan people are immensely proud of your Kenyan roots," President Mwai Kibaki said.

The BBC's Juliet Njeri says Mr Obama's step-grandmother was seen dancing and cheering jubilantly outside her house after the results were declared.

She says Mr Obama's family stayed up all night in the western Kenyan village of Kogelo watching the election count, and they are now preparing for a big party.

Your victory is not only an inspiration to millions of people all over the world, but it has special resonance with us here in Kenya

Kenyan President Mwai Kibaki

Jubilation at Obama home

A bull is to be slaughtered later on Wednesday.

In nearby Kisumu city, there is a carnival mood and people have poured onto the streets singing Mr Obama's praises.

Political leaders are expected in the city later on Wednesday and a massive celebration is planned in the city, which considers Mr Obama their chosen son.

In January, Kisumu was the scene of running battles between members of the public and police after riots broke out over the Kenya's contested elections.

But correspondents say the US election seems to be a unifying moment for the country, with people reported to be saying that Mr Obama's victory is a victory for all Kenyans.

In the capital, crowds were seen singing and dancing, waving branches and carrying posters of Mr Obama along Ngong Road, one of Nairobi's major highways.

"Your victory is not only an inspiration to millions of people all over the world, but it has special resonance with us here in Kenya," Mr Kibaki said.

Games 'to outsell' music, video

Hugely popular titles such as GTAIV have boosted sales figures

UK sales of games will outstrip music and video for the first time in 2008, says a report from Verdict Research.

A huge shift in consumer attitudes has turned video games into the UK's most popular form of entertainment, say the retail analysts.

It predicts spending on games will rise by 42% to £4.64bn in 2008, with sales on music and video at £4.46bn.

In the last five years the video games market has more than doubled in value, while music sales have stagnated.

The good news for game makers in the report was balanced by grim tidings for high street retailers.

"The music and video market is not just suffering from a slowing of growth but a massive transfer of spend to online," says Malcolm Pinkerton of Verdict Research.

It is online sales of CDs and DVDs that have grown rapidly, rather than digital downloads, which still only account for around 4% of music and video sales.

In contrast, video games spending has enjoyed explosive growth, with the launch of major new titles such as Grand Theft Auto IV and FIFA 08, and the Nintendo Wii continuing to broaden the appeal of games.

Bollywood producer BR Chopra dies

The Burning Train was one of Chopra's biggest hits

Veteran Bollywood filmmaker and producer BR Chopra has died in the western Indian city of Mumbai at the age of 94.

Mr Chopra was best known as the producer of films like Naya Daur (1957) and The Burning Train (1980).

He also produced a successful TV serial Mahabharata, based on the Indian epic, in the late 1980s.

Mr Chopra won the Dadasaheb Phalke award, the highest honour in Indian cinema presented by the government.

Born in Punjab in undivided India, Mr Chopra studied at the Lahore university. After partition, he migrated to Delhi.

Settling down in Mumbai (also known as Bombay) to pursue a career in filmmaking, Mr Chopra set up a production house and produced over 30 films.

He became a household name with such films as Naya Daur (1957), Humraz (1967) and Insaf Ka Tarazu (1980).

Mr Chopra's brother, Yash, is also a prominent filmmaker.

He is survived by his son, Ravi Chopra - also a filmmaker - and two daughters.

TWO WORLDS APART

TWO WORLDS APART

My family, I know very well, My Son, and Daughters (two). Their ins and outs. Their ups and downs. Their joys and sorrows too. I cared for them in many ways. They did not want for much. Then thro' the passing years they went their different ways. I myself found life anew in an unexpected way! My family know me NOT AT ALL! We haven't even met. They cannot, or they will not come to terms, and do not understand. That Dad as was, is now called Lynne And that will never change. That they cannot comprehend I well can understand. But time and our creator will heal their troubled minds and in the end all will be well. That's the way of all Mankind.

ARCHED ACROSS THE SKY

Arched Across The Sky
by Uba Nicolas

Rainbows created my imagination
As it arched across the sky
On one end there sat you
At the other end, there sat I

Imagining I could slide across
Over the rainbow to the end
There would be my pot of gold
The sweet love of my dear friend

The rainbow is a connection
Like a bridge from me to you
It appears joined by sunlight
Then the grey skies turn to blue

Arriving after the rainstorms
It became so evident to me
Thoughts of love follow rainbows
They arched right across the sea

A colourful arching rainbow
It has no gate, it has no door
It reaches from friend to friend
It arches from shore to shore

I smiled up today at the sky
How far would my loving smile go
It slid right over to the other side
The other end of the coloured rainbow

TRADITIONAL VS MODERN ANNIVERSARY GIFT

TRADITIONAL VS MODERN ANNIVERSARY GIFT Traditional VS Modern Anniversary Gifts

by: Uba Nicolas

Most people are familiar with the traditional materials list that good etiquette requires us use as a guide when selecting a gift to commemorate a wedding anniversary. If you are like most people, you might find it a bit challenging to convert the materials on the list into an acceptable gift idea. There may be more choices available to you than you realize. Do you know that an updated “modern” gift list is available which is becoming more and more popular? This article touches on the history of the traditional, highlights the differences between the modern and traditional lists, and helps you decide which is right for you.

Parts of the traditional list have existed since medieval times. Historians can trace the origins of silver and golden anniversaries to medieval Germany, where garlands made of these metals were presented as gifts for the 25th and 50th years of marriage. The rest of the list may not be as traditional as you think. I was surprised to learn that the traditional list, as we know it today, did not exist until 1937. In that year, the American National Retail Jeweler Association published a list, which associated a material for each Anniversary up to the 15th year and then each fifth year after that up to the 60th Anniversary. The following is the materials list from 1937, through the 60th year:

First – Paper
Second – Cotton
Third – Leather
Fourth - Fruit/Flowers
Fifth – Wood
Sixth - Candy/Iron
Seventh - Wool/Copper
Eighth - Bronze/Pottery
Ninth - Pottery/Willow
Tenth - Tin/Aluminum
Eleventh – Steel
Twelfth - Silk/Linen
Thirteenth – Lace
Fourteenth – Ivory
Fifteenth – Crystal
Twentieth – China
Twenty-Fifth – Silver
Thirtieth – Pearl
Thirty-Fifth – Coral
Fortieth – Ruby
Forty-Fifth – Sapphire
Fiftieth – Gold
Fifty-fifth – Emerald
Sixtieth - Diamond

The modern anniversary materials list presents us with a contemporary, easier to use alternative. The modern list has no clear beginning, but like the original, each year’s gift is more precious than the last. This arrangement is intended to honor the longevity of the commitment. The new list retains the spirit of the traditional list, but loses some of the sense of etiquette in the original. Although more convenient, the modern list sacrifices the thoughtfulness previously required to make a good gift from the more mundane materials on the old list. However, the modern list is more extravagant (expensive) than the original, which in some cases may be more appreciated than a thoughtful but humble gift from the traditional list. The following is the widely accepted modern list, through the 60th year:

First – Clocks
Second – China
Third - Crystal/ Glass
Fourth – Appliances
Fifth – Silverware
Sixth - Candy/Iron
Seventh - Desk Sets
Eighth - Bronze/Pottery
Ninth - Linen/Lace
Tenth – Leather
Eleventh – Jewelry
Twelfth – Pearls
Thirteenth - Textiles/Furs
Fourteenth - Gold Jewelry
Fifteenth – Watches
Twentieth – Platinum
Twenty-Fifth – Silver
Thirtieth – Diamond
Thirty-Fifth – Jade
Fortieth – Ruby
Forty-Fifth – Sapphire
Fiftieth – Gold
Fifty-fifth – Emerald
Sixtieth – Diamond Jubilee
For most couples, I recommend using the modern list. When selecting a gift from the modern list you have the benefit of more specificity, for example a desk set is much more clear than copper/wool. With the modern list, you won’t risk insulting your spouse by rewarding 10 years of companionship with a pitiful tin or aluminum gift. Believe me, she won’t be satisfied with the excuse of tradition. Also, good luck finding the ivory candlesticks for year 14! Unless you really enjoy the creative challenge of using the traditional list, try the modern list this year

A MAN WHO CUTS A PATH FOR HIMSELF WHERE NO ONE HAS TRAVELLED

A very successful manufacturer is one who cuts a path for himself where no one has travelled"Interview: Ratan Tata
by Rajiv Dubey
The year 1991 was when economic liberalisation in India kicked off. It was also the year Ratan Tata took up reins as the new Tata group chairman. In the following decade, Indian manufacturing went through its most tortuous period. During the same time, Ratan Tata also passed through his most trying period. Today, while most of Tata's businesses are on a growth drive, many erstwhile stars of Indian manufacturing have fallen by the wayside. Meanwhile, Ratan Tata has set his sights higher. The world, and not just India, is now the strategy canvas of the Rs 65,000-crore Tata group. Few others in India - with the exception of the AV Birla group - seem to share that vision.In the last few years, Tata group flagships like Tata Motors and Tisco have gone on to set new rules in the global manufacturing game. The group's most recent global initiative is its decision to invest $2 billion in Bangladesh to produce steel, power and fertilisers. At the same time, it has started selling the Indica and the Indigo in South Africa.It was primarily in recognition of his group's recent strides in manufacturing that Tata was inducted into the Prime Minister's National Manufacturing Competitiveness Council. We spoke with him for the first interview in the BW series on Manufacturing Competitiveness. Tata spoke at length about his vision of manufacturing competitiveness, about going global - and also about his most ambitious project till date, the Rs 1-lakh car. Excerpts.Which manufacturing company do you admire the most and why?RATAN TATA: I don't think I can pick on any single company... but I admire companies like Toyota and Intel. If I were to widen my net, some companies that I don't know very much about but that I have come to admire are some of the Korean companies like LG and Samsung. Why do you admire them?RATAN TATA: I view a company as a very successful manufacturer when it has cut a path for itself where no one has travelled. Toyota has done that. It has brought down the time taken for production. It has increased productivity ... it has done a whole host of things. It has not followed someone else. It has innovated tremendously in processes, in products, in design...Sony is another company I admire enormously, and for much the same reasons. Such companies produce reliable products that have been well engineered, well thought through, and well designed. Where do you see Indian manufacturing in the global context?RATAN TATA: India is, by and large, not yet world class in manufacturing. We have had the misfortune - although in some ways it was also lucky for us - of operating for a long time in a protected environment, which has caused us to produce goods that were not necessarily up to consumer aspirations. What do you think of the free trade agreements being signed currently? Especially when seen through the filter of Indian manufacturing?RATAN TATA: I am very keen that we break down all barriers between countries. I do think that the World Trade Organization concept is running into some problems internally. That's because a lot of bilateral agreements are being signed today. So, willy-nilly, we are going back to the days of the trading blocs. We really need to expand our trading horizons. If India were to be a part of one or more trading blocs, or free trade zones, I think it would be a great plus.But there is always a flip side to that. A free trade agreement often needs to include certain things, and Indian manufacturers need to recognise that it's going to happen and that they need to compete. They also need to realise that competition is a good thing. It may bring short-term pain, and there may be some bloodshed, but it will help a lot in the long run. If you look at what competition has done to Indian manufacturing, it's been a critical catalyst. It is only now that manufacturing seems to be getting a lot of attention, at least in the government circles. For a nation of our size, don't you think that more focus on manufacturing is necessary?RATAN TATA: We have to be clear about how we are defining manufacturing. For all nations, a certain content of manufacturing is necessary. You can't be just in the services sector - certainly not a nation of our size.But let's dwell upon the definition of manufacturing first. You can be a manufacturer in the context of what many Indian companies are. That is, you have a licence agreement, you manufacture. You don't embrace any of the technologies. You don't set up capabilities to develop a product. But you continue to manufacture the given product. When you can't do it any more, you find a collaborator who gives you a licence to manufacture, or to import whatever the collaborator says. You install a plant and produce that product. That's one interpretation.Then, there is the second level of manufacturing. Here you really adopt the technology and develop a product. You see the product through its crude stage and its gestation period. With experience, you refine the product. It is at least a me-too product, and at least good enough to sell in the market. That's truly manufacturing in a sense, because you really own that product. Companies or countries that have a heavy bias in that kind of manufacturing are very robust economies - like Japan, Korea.Finally, there is the third category and that is coming into its own today. This is when you are a systems integrator. You develop a system and you might consider that system to be your product... and you don't do very much actual manufacturing in that product. You buy the components but you design that product and you assemble that product.The example I often like to give is of IBM's laptop, among the best-selling laptops in the world. But what does IBM make? It designs the product. The display is from Toshiba, the drives are from Seagate, the keyboard is sourced from outside, and the chip is from Intel. So what does IBM actually put in? But it still creates the product and that's also manufacturing.The first category is an example of a bit of inane manufacturing - manufacturing a product with somebody else's knowhow, with somebody else's intellectual property.The question is: in which category does the country fall? We, traditionally, have been in the first. There has been very little incentive for development, for focused knowhow - for the things that make manufacturing competitive.The closest industry that has many of the real manufacturing capabilities that I am talking about today is, perhaps, pharmaceuticals. Because manufacturing per se in pharmaceuticals is possibly the process of tableting or filling the bottles for packaging. But the pharma industry has had a heavy dose of development from intermediates, from elsewhere. They have put a lot of product development in that industry.Even in the engineering industry, by and large, we have had licensed manufacturers. The more enterprising companies probably did some reverse engineering. But few are actually really growing into developing a new product by themselves. The Japanese did that in the Fifties, but by the Sixties they were ahead of whoever they were copying. In which of these kinds do you think we have our greatest opportunity? Or do you think it's a natural process of evolution?RATAN TATA: My sense is that we have lost that opportunity. The world is moving and there will be those countries that will be majors in the manufacturing areas... in the second and third categories.For India to come into that, it has to move very fast. It has to be able to grasp technology. And that takes time. Companies will have to spend a lot more money on product development. One has to look much more for long-term gains, rather than short-term gains. The question is whether the world will stand still while that happens. It will keep moving. And India will have to move faster to catch up.My own feeling is that India has lost the chance to be the factory of the world.... That opportunity appears to have gone to China, and since then, to some other Asian countries.Where India has its muse is one where inputs have a higher knowledge base, higher engineering skills, but are not necessarily innovative.Maybe India will do well in CAD (computer-aided design). I am not looking at that as an IT capability; I am looking at that as an engineering process. There may be prototyping in India. Mass manufacturing? I don't know. Batch manufacturing and assembly? Maybe so. Who knows, may be 10, 15 years from now India might be the centre of choice to assemble satellites because it might be too expensive in the US.How would you react to the statement, 'India is becoming a small car hub'? Indica has proven that. The whole of Hyundai's India efforts seem geared towards that.RATAN TATA: The Santro is another product being manufactured in India. Hyundai may have the full skills to develop a product, but the Indian manufacturer falls in the first category. Maruti and Hyundai are manufacturing proven products in the country from process knowhow that has come from elsewhere. You don't think there's a natural process of evolution? If they are doing that now, maybe tomorrow they will start designing and developing them, too.RATAN TATA: No... If that were so, they would be taking people from here to their design offices in Seoul and exposing them to doing the same. They are not doing that. It leads me to believe they have no plan to move in that direction.Some other companies like Texas Instruments are, in fact, doing that. The companies that are setting up product development and R&D centres in India are doing that. For example, Delphi and General Motors, BT and British Aerospace are making those inputs here. But that's in reverse - the manufacturing is outside. They recognise the knowledge base and skills here which are used to improve their operations elsewhere. In a way, the skills are the same but it doesn't suit them to manufacture here. In engineering, we could, in fact, be ahead.In the automotive area, if we have one of the major engines designed fully in India, and then follow it up and manufacture it, India could become a major centre for manufacturing. Unless that were to happen, you would only be doing engineering for some other location.What I'd like to say is that if over time we are able to build this knowhow base with our knowledge base, spin-offs from there may actually lead to start-ups in the manufacturing area. That will only be the low entry-cost businesses, but it could form a semi-conductor industry in India, or something which would be equally interesting. In the two-wheeler industry, some global majors like Honda admit that the products made by Indian companies are truly world class. We seem to be making some headway there.RATAN TATA: I think it's a good example. I think the two-wheeler industry has marched through the first category and gone beyond that. They have faced competition and, therefore, had to bring their costs down. They have achieved almost global scales because that business is on a global basis. And they have now started to invest in product development. They are still buying technology from outside, but it's fine to buy technology from wherever it's available. I should have included them when I talked about pharma.And companies are trying hard to outdo even foreign manufacturers. Bajaj is proud of the fact that it tests its engines for 300 hours in full throttle before approving them, while Honda does that for 100 hours.RATAN TATA: I must say it should not be interpreted in the wrong way. We run our car engines for x number of hours - I think it's 45 minutes. But Honda has developed its engine to such an extent that they put a cold engine in the car. They never run it. They have mastered it so that they don't have to run it for 300 hours or even 45 minutes. That's what I meant by breaking new grounds.A view of Tata Motors’ engineering research centre in Pune, where the blueprint of the Rs 1-lakh car is being finalisedThe other day, we were at Tata Motors looking at plant enhancements and I saw a few of the shower booths for checking the leaks. Now, the Japanese, for the last 10 years, have not had shower booths, because they have perfected their skills and are confident that the cars are not going to leak. We're still fixing leaks. Maybe less and less. But we have shower booths and we spray water to check for leaks.If Bajaj runs its engine for 300 hours, it sounds good. But there is pride in it if Bajaj can do it for an hour and still come out 100 per cent okay. We understand that design is very close to your heart and Titan is making some rapid strides in the area. Are you egging on other group companies to take up design and development in a major way?RATAN TATA: Yeah, if I can. Not all companies necessarily share that view. But it's necessary.Here, if you say you want to do something, the first reaction you will get is 'we will find a collaborator', 'we will find a joint venture partner', 'we don't know this business'. We have to overcome this mentality.Titan has, I think, overcome that in the sense that it can do almost everything it wants to do in the area of watches. It knows the technology, it can keep up with it, and the technologies are growing fast anyway. But in the manufacturing process it is self-sufficient. If you ask if its movements are cheaper than Chinese movements, I would say no. If you ask it how it will get there, I don't think it has an answer. It tackles a different challenge. ...In the watch industry, your main task is to produce a watch at a decent margin. So what if your movements are from China? That's an IBM kind of example.Sometimes at Titan, they get hung up because they feel that if they are not manufacturing it themselves, they are not doing the right thing. But you should remember that you are responsible for the end product. How are you trying to convince your group companies that design and development is a process of evolution in manufacturing?RATAN TATA: You see, some companies have nothing. Let's take the example of an Indian refrigerator manufacturer who is trying to go from A to B. It will go and buy some benchmark refrigerator, will take it apart, and reverse engineer - we're still in that phase - then make a product which may not be as good. Or, by luck, better. Some of our companies are in that position. Each time they have to develop a product, they have to find a product they want to emulate, take it apart, reverse engineer. I think we will have really arrived when we don't need to do that. Are these the kind of examples you put forward for others to follow, like the small car project?RATAN TATA: Tata Motors, for many years, has been self-sufficient in products. It has not necessarily been globally competitive in how it has engineered those products, but I think we are getting there slowly. Each of these products - Indica, Safari, Sumo, or any other product - is improving on itself, by the lessons we have learnt in manufacturing or manufacturability of these products. Maybe, those are not good examples. I don't have a ready example, but many of our companies are doing that. But many are also just producing the same product again and again, and are not improving upon it. They are just working on the same margins.You are talking of Indian companies, not necessarily Tata companies.RATAN TATA: I am talking of Indian companies and Tata companies as well.Some projects, like the Indica, have been radical in a way, in their own field. But with regard to manufacturing, has TACO (Tata AutoComp Systems) disappointed you?RATAN TATA: No, not at all. In fact, TACO did the right thing. When we looked at the car industry, we felt that the Indian component industry could not produce appropriate components for cars. And if they could not, then the car industry would falter in terms of quality and capability.In the auto industry, more and more technology is moving towards the components and component makers, and the car makers have become designers, and integrators or assemblers.So it has become impossible that, say at BMW or Mercedes, somebody could be sitting on top of transmission technology or electronic technology or telematics or suspension or fuel technology. There is a lot of development taking place in each of them. And the investment that is taking place in each of them is huge. So, what has happened is that the transmission manufacturers invest in transmission technologies, and the suspension manufacturers do that in their own field. And so you have sources of technology and the car manufacturer works mostly with those component manufacturers to make things happen.In the case of TACO, it just did the right thing. It picked companies abroad that had those technologies. And I was involved very closely with it then. We invited them to be our joint venture partners. If you don't want to be our joint venture partners then come to India and we will help you, but come to India and set up your operations. Or, work with us on technology. So, we've got a mix of all.Very importantly, TACO has absorbed the technology. If we divest ourselves with a joint venture partner, we'll keep technology with the holding company (TACO). So, I think TACO has been quite farsighted. The real challenge is to continue to upgrade those technologies. What we are trying to do is to supply to external companies, because from that will come not only the learning but also the requirement.So TACO has not at all disappointed me. History will show we've done a very astute thing in TACO.Wasn't it supposed to be a systems integrator for the Asian region?RATAN TATA: No, no, not at all. I first talked about what led to TACO at an address to ACMA (Automotive Component Manufacturers Association of India), where I said, 'Why can't we produce an Indian car?' It was scoffed at. At that time, we were producing the Sierra, and they said, 'Why doesn't he do his own thing first before talking about an Indian car?' So nobody came forward. That led to the conception of the Indica. It was nothing to do with TACO more than what I just said.I later came back, also to ACMA, that why don't we have an Asian car - that we leverage all the capabilities and component areas of every country in Asia. That would bring us scale. Maybe make some components in Malaysia, some in Indonesia. And that also did not get any response. But TACO was not supposed to do that.The Rs 1-lakh car - how far has it progressed?RATAN TATA: We are just finalising the concept of structure, material and powertrain - which are the building blocks. Each of those has an assigned price to meet that objective. We are just coming to closing choices on all of those.Now we'll go after developing the car. This is the broad framework in place. But if these building blocks are not decided upfront, then there is no car. So we have taken a long time to get at that. We have a couple of new drawings showing us the size of the car, but these building blocks have to be in place.Should we go monocoque? Do we do plastics or do we go sheet metal? Those decisions had to be taken. We're almost at the point where we have evaluated this. It will be a five-seat, rear-engine vehicle.Will it be bigger than the Maruti 800?RATAN TATA: It will be slightly bigger than the 800.Even in terms of the engine?RATAN TATA: Maybe not, because it will be a lighter car than the 800. The intention is that the car will be positioned between the 800 and the two-wheeler on price.I would imagine it would attract a two-wheeler customer to a primary car, which is all-weather-proof, is safe, has four wheels and, in fact, has the capabilities of a car that will come in two or three trim levels. There will be a rudimentary level and there will be a higher model which he can buy when he wants to upgrade. It will take some market away from lower-end cars and a bigger market away from two-wheelers.The rudimentary model - what will it not have?RATAN TATA: There are a couple of views on what it may not have. For example, it may have a door, but the door may be a frame with a vacuum-coated plastic sheet on the front, with fixed windows that are sliding. And the higher version will have regular wind-down windows and regular doors. There is also a concept where there are no doors but just a safety bar, somewhat like the old jeeps.When I said that the building blocks have to be in place, we needed to look at how each of those things can be done elegantly. And what we hope is that the customer can define the car he wants when he buys it. And the car can be built in that particular form. He can also upgrade the same car after he buys it.Will it meet the safety standards?RATAN TATA: It will meet all the safety standards that we require here. And until we really get involved in that, it will be difficult to say that it will meet the full safety requirements abroad, but our aim would be to try and meet most of those.It will meet the emission requirements that are there, which is a must. And we want it to be a safe car. We want to move people from a two-wheeler, with a wife holding a kid, to a safer form of transportation.What's the deadline?RATAN TATA: Once all these things are in place. It will take toolings and a manufacturing plant, and so on. Usually, it's a three-year period.Aren't you planning to crunch that?RATAN TATA: Yeah. But I would still say it's a three-year period from that.Are you trying to get this assembled by different vendors as a social cause?RATAN TATA: No, that statement has been much misunderstood. We will manufacture the car. Then we could have a variant of this car that is manufactured by someone else, but we will manufacture all the mass parts for our car at one place - let's say, all the press metal parts, etc.So we may farm out the car. Not for us, but to give a livelihood to some others. So, let's say that there is the car A, which is made by us, and a car B, which is made from the parts made for car A, but which looks different and has a different badge. If you and 30 other young guys from rural areas or semi-urban areas want to manufacture this car, we would send you these parts, we would train you, we would provide you with a modular manufacturing plant that will enable you to produce the car. We will not take warranty responsibilities. We will not let you use our name. But the view was that maybe we could give 30 or 100 entrepreneurs an opportunity to start a business without having to invest in a press shop and having to design a car.Will it compete with us? To some extent, it would. We would expect our brand to take care of most of that. But it could also reach out in areas which we may never have reached otherwise.And this has nothing to do with the target of 1 million units that you have for your small car?RATAN TATA: I think there is a market for a million such vehicles. But a million may not be all Tata vehicles. We may produce 5-7 lakh; 3 lakh may be in this other form. It's not a million plus something.The same philosophy that I am talking here can be grafted into South Africa or Namibia. Or, other countries that are looking for low-end cars. We can provide the pre-fab, the trimmings, the modular plant. We are looking at how to bring the cost of the plant down.How much does design fascinate you in the context of manufacturing?RATAN TATA: Very much. All products to me are fascinating.Is it an area you are looking at as an organisation?RATAN TATA: Yes. Tatas have looked at setting up a design house, which hasn't really happened because we would need to leapfrog into this with someone. There has been a hesitation. It's just something that, after I retire, I have an interest in doing on my own. Just to keep myself occupied.Where all in the world would you like to manufacture as the Tata group? You are going to Bangladesh, South Korea and South Africa. Can you simplify the manufacturing footprint of the group? And when you chose some of those locations, what was the big picture?RATAN TATA: We chose the locations because they seemed to be markets for various products of ours. What we do in those countries - whether we export to these countries, or we assemble in these countries, or whether we have full-scale manufacturing in these countries - will depend on the kind of stake we have in that country. Or the practicality of what we do.For example, in South Africa, we may like to just assemble. We may not like to take full manufacturing there. There may be another country, say China, where we may not manufacture ourselves, but we may have full manufacturing done by others for the Chinese market. So in each of those countries we are evaluating what we might do.How safe are your investments in Bangladesh, given the current Indo-Bangla relations?RATAN TATA: I feel that if we are looking at the safest investments, we will probably never start anything. The areas we are looking at are good for Bangladesh. Be it power, be it steel, or be it fertilisers. All of these are commodities or utilities that are consumable within Bangladesh. ... Steel and fertilisers are also exportable.Bangladesh - though I've been there only for a few days and only once in my life - looks to me a country that is suffering more from wrong perceptions than actual fact. When you go there you realise that their industrial policy is more open than India's. They do not have a history of going back on commitments. There are some places where pricing commitments have actually hurt the Bangladesh government. But they haven't changed the law; they have honoured those commitments.But it's a country where there is a chicken-and-egg situation. We wanted to set up a power plant where there is no gas. IFC and the World Bank have projects to put up a pipeline. But they won't put a pipeline because there is no demand. Now, if we have a power plant, there would be demand - so they want to participate. It's that kind of thing.And I have to say that I have been very pleasantly surprised by Bangladesh - and particularly by the reception we received - where the goodwill for Tatas exceeds that for India. We are not seen as political. We are just seen as ourselves. Many people have goodwill for Tatas going back to pre-Independence.Is there a bigger game plan for the car business than just going into South Africa?RATAN TATA: South Africa will be a stepping stone for southern Africa, and possibly for other countries in Africa. Also, they have a few trade agreements with Europe. So, if we could find a good manufacturing or assembly base, it would be our shipping point to Europe. And it will free up some of our capacity in India.

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