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Business Commentary/Dilip Thakore

Tata small car & Konkan Railway: Two silver linings in dark days

If you speak to any of the captains of Indian industry, it won't take you long to discover that for them, this is a long winter of discontent. Inventories are piling up; hitherto dormant inflation indices are beginning to rumble; the rupee is under siege; the stock market is in the doldrums; real estate prices have suffered an unprecedented fall; and the prospect of another hung Parliament is in the offing. There's a pervasive gloom in the boardrooms of Indian industry.

But as Prof Arnold Toynbee has so convincingly demonstrated in his great and enduring opus, A Study of History, the darkest periods in the lives of nations have often provoked the most creative response. And since the turn of this year, against all odds and confounding the cynics, Indian industry's winter of discontent has been made glorious by two remarkable engineering breakthroughs which augur well for the future.

The first of these great contemporary engineering accomplishments which merit attention is in the automobile manufacturing industry. At the international automobile exposition, the Auto Expo '98 which concluded in New Delhi last week, the Tata Engineering and Locomotive Company unveiled, to rapturous applause, a prototype of the small car (unnamed as yet) that is being manufactured by the company at its Pune works..

Suddenly there is a strong possibility that when the Tata small car begins to roll out of TELCO's assembly lines towards the end of the current year, it will herald the coming of age of India's automobile industry and its emergence as a serious contender in the international marketplace for subcompact cars.

The Tata top management has firmly stated its determination to price the small car between Rs 250,000 and Rs 300,000 while providing the amenities and features of mid-sized saloons that are being assembled in India by international automobile manufacturing majors. This is likely to end the domination of India's growing market for small cars by the Maruti 800, manufactured by the Indo-Japanese firm, the Maruti Udyog Ltd.

And if the small car can best the Maruti 800, manufactured as per the design and specifications of the Japan-based Suzuki Motor Co -- the world's most successful subcompact car manufacturer -- in the Indian market, it is likely to emerge as a serious player in the global market for small cars. Little wonder then that the Tata small car generated tremendous excitement at the Auto Expo '98 and emerged as the star of the motor show.

Prior to the unveiling of the small car, TELCO Chairman Ratan Tata had promised the public that his company's small car would deliver the roominess of the Ambassador, the torque of the Maruti Zen, and the engine capacity of a mid-size saloon car at the price of the Maruti 800. The opinion is almost unanimous that the small car substantially delivers the promises. Certainly, the most exciting feature of the car is that its revolutionary cost-effective 1400 cc engine has been entirely designed by TELCO engineers. Indeed apart from the body design, which was given some finishing touches by an Italian car design firm, the Tata small car is entirely indigenously designed, with an astonishing local content of 99 per cent ab initio.

The general feeling that India's automobile engineering industry is on the threshold of a big breakthrough is generated by the fact that TELCO is not an amateurish lightweight company. Apart from dominating the nation's heavy commercial vehicles segment (70 per cent market share), it has overtaken all the Japanese companies which entered the light commercial vehicles segment in the 1980s. And unlike other Indian companies which in the past have made cautious subeconomic entries into the automobile industry, the Tatas have entered the small car market with a Rs 17 billion investment in a manufacturing facility with an annual capacity of 150,000 automobiles. The company means business.

The other engineering breakthrough which pierced the winter of discontent with a luminous light is the Konkan Railway project that became fully operational on Republic Day, January 26. The completion of all sections of the line, linking Sawantwadi on the Maharashtra border with Margao in Goa and on to Mangalore in Karnataka, has established a direct rail link between India's western seaboard and the north, providing great potential for commerce and tourism.

But perhaps of even greater significance than the integration of the western seaboard into the national economy, is the remarkable accomplishment of the largely unsung engineers and managers of the Konkan Railway Corporation Ltd, who confounded a growing army of sceptics by successfully planting the rail tracks across some of the most hostile terrain in the world. Consider the facts: to operationalise the Konkan Railway, the company's engineers had to construct 179 major and 1,819 minor bridges; bore 92 tunnels, including one which is 6.5 km in length; and construct a 64-metre high viaduct, said to be the tallest in the subcontinent. All these, in addition to laying tracks in wetlands characterised by treacherous shifting sands.

True the Konkan Railway project was completed three years behind schedule and with a cost overrun of 222 per cent. But not only are these cost and time overruns modest by usual public sector standards, given the fund-raising and project engineering problems the company was confronted with, it is a marvel that the project was completed at all. The managers and engineers of the Konkan Railway Corporation deserve the nation's congratulations for accomplishing one of the great construction engineering feats of the latter half of this century.

Though it may be premature to classify these two projects as unqualified successes, since both of them are likely to experience teething pains, the moral of these two apparent success stories is that despite the hostile anti-business environment created by five decades of bureaucratic, socialist raj, Indian industry has developed the skills to succeed in the merging global economy. All that managers in India Inc need to do is dream great dreams and take on great challenges in a conducive and enabling environment.

This is why the nation's hesitant economic liberalisation and deregulation programme deserves the full throats support of all right thinking members of society. By transferring business decision-making power from moribund government ministries to corporate managements, the liberalisation programme offers a great opportunity to create a conducive and enabling environment for the nation's managers, scientists and engineers.

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Dilip Thakore