Ford will make small car

N. Mohan
1 April 1999
Ford India Ltd will produce a new car in India. The C-195, as the car has been
code-named, will roll out of the company's Maraimalainagar plant sometime in
November 1999. The company is expected to price the car competitively.

The Rs 1,700-crore Maraimalainagar plant, capable of producing 1 lakh vehicles a

year, was inaugurated recently. Philip G. Spender, the company's managing director,
said Ford India will produce about 20,000 to 25,000 of C-195 cars in the first year
of operations.

"It will be bigger on the inside and smaller on the outside than the Ford Escort,"
according to Mr Spender. The high level of indigenisation (70 per cent) will enable
the company to price the vehicle competitively.

The engine will be imported in partially-built form. Ford India expects to export
the vehicle in about 18 months from the date of its launch in India. The
destinations: other regions except Europe.

The Maraimalainagar plant includes a body shop with press and machining facilities,
a paint shop and an assembly shop. Most of the heavy equipment is imported, mainly
from Europe.

The assembly line, however, is not the latest in design. It uses a moving line
system instead of a fully automated one. The car being assembled will have to be
physically pushed on the rails from one stage to another.

Ford India says investments in automation have been made after careful
consideration. The assembly line could become redundant once the tiering of the
component industry takes place. Then Ford India will only purchase systems from the
tier-1 suppliers.

Ford India has identified about 80 vendors supplying various components for the
car, of which 50 are joint ventures between Indian companies and Ford suppliers
elsewhere in the world. One of the tier-1 suppliers is Visteon India, a Ford
subsidiary. The C-195 manufacturing will be done entirely at Maraimalainagar. Ford
India's Nashik plant in Maharashtra will make the Ford Escort.

Is Escort on the way out?

13 November 1999
The Indian auto market is apparently not very encouraged by car major Ford�s first
offer to India, the Escort. In spite of the Escort being one of the most popular
Ford car models worldwide, the US auto major's Indian subsidiary, Ford India, has
been finding it hard to sell the car. Volumes have been low. That's the reason Ford
had to think of another model for India.

Hyped as a model designed and engineered exclusively for India and Indian
conditions, the Ikon has received an encouraging response. Ford has now decided to
temporarily stop assembling the Escort. The company has already informed its
dealers about the decision and has advised them to draw their pending requirements
from inventories already built. The company has sold some 15,000 cars in about two
and a half years.

Ford India, however, does not accept that Escort has not been popular in India.
Ford officials claim it has been a successful product in India as well and the
15,000 units sold testifies to its popularity. Whether one calls it popular or not,
the Escort's relatively high price has kept Indian buyers away from the car. The
action is now at the lower end of mid-size cars, where Ikon fits in better.
The decision is not to do away with the Escort, says Ford India managing director
Philip Spender. "Everybody is focussed on the Ikon. The car has caught the fancy of
the market and has been greeted very positively," he says. Any decision on the
Escort will depend on feedback from the market and on consumers� preference,
according to him.

Ford earlier imported completely knocked down kits of the Escort from its European
facilities and assembled them at the Mahindras� plant at Nashik in Maharashtra.
Once the company set up its Rs 1,700-crore Maraimalainagar plant near Chennai, the
assembling has been shifted there.

The Ikon has received a very good market response. Bookings in the first ten days
crossed the 5,000-mark, surpassing even the company�s expectations. Ford India
intends to maintain the delivery schedule, and has set a target of 21,000 units in
2000 although the plant has a capacity to make 50,000 to 60,000 cars a year. Given
the demand for Ikon's the Escort has been edged out, perhaps temporarily until
production of the new model stabilises.

Ford India to make Q1 tag compulsory for vendors

Venkatachari Jagannathan
03 February 2004

Chennai: Ford India has decided to follow its US parent Ford Motor Company's policy
of sourcing components from Q1 certified vendors. However the company has not fixed
any time limit within which the vendors must get the Q1 certification.
Ford India sources 90 per cent of the component for its Ikon models from 97
vendors. "Out of these 20 are Q1 certified," says Arvind Mathew, vice president and
executive director-India, programs implementation and supply. Ten vendors had
complied with the company's Q1 norms in 2003.

According to David E Friedman, managing director and president: "The Q1 certified

component vendors get a head start over others while bidding for Ford Motor's
global supply contracts."

Curiously, the Deming award winner, Rane Brake Linings (See The Deming dash) a Ford
India supplier, does not figure in the Q1 list. "There is no relationship between
the Deming Award and our Q1 quality process," says Mathew , and adds, "Rane Brake
Linings is in the process of complying with some of our metrics and once that is
done, the company will figure in the Q1 list."

Achieving Q1 is a collaborative approach between the Ford and its vendors. The Q1
certification consists of a set of fundamental quality and manufacturing
disciplines that ensure a supplier's success through continuous improvement. Ford
India applies the vital metrics to determine which suppliers qualify for the
quality tag. The measurements will also continue to determine the vendor's Q1
retention ability.

According to Mathew the key metrics that decide the Q1 certification are (1)
getting the QS 9000/TS 16949, ISO 14001 and MS-9000/MMOG certifications (2)
maintaining the rejections within certain limits (3) strictly sticking to the
delivery schedules and (4) taking corrective actions in the case of deviations.

As per Ford Motor Company's norms, every Q1 certified plant starts with 1,000
points and should continue to improve on this. However the plants should maintain
at least 800 points to retain the quality ticket.
When asked how the company could measure the plant level component rejections
(generally measured as parts per million) when its own production is just around
50,000 units per year, Mathew answers: "Even though our volumes are less than a
million, through statistical models we can extrapolate the results achieved by our
vendors."

Speaking about Ford India's plans, Friedman says a new model will be launched this
year, though refused elaborate further. "We hope to sell around 170 Endeavours, the
sports utility vehicle, per month," he said nd added thatthe company expected a 20
per cent growth of over the 18,000 units sold last year, depending on factors like
low inflation, healthy stock market, good monsoon ,etc.

The Foreign Investment Promotion Board (FIPB) gave its clearance to Ford Motors to
set up a wholly-owned electrical and fuel handling manufacturing division. However,
it refused to allow the company to offset export earnings from the new parts
manufacturing division against the export commitments of its car manufacturing
unit.

If allowed, this would set a legal precedent for a benefit that several foreign car
manufacturers have sought. BMW had earlier asked for a similar concession

The M&M-promoted auto ancillary park outside Madras in Tamil Nadu state has won
enthusiastic response from the Tatas, Siemens, Gabriel India of the Anand group,
Wheels India, Brakes India and others. M&M group company Mahindra Real Estates
Infrastructural Developers Ltd (MREIDL) plans to invest about Rs 400 crores in
developing the park, which is situated close to the Mahindra Ford site. The project
is in partnership with the Tamil Nadu Industrial Development Ltd (TNIDL) and the
Mumbai-based Infrastructure Leasing Finance Services Ltd (ILFS).

MREIDL is to hold 40 per cent of the shares, TNIDL 11 per cent and ILFS 30 per
cent.

The plan is to provide state-of-the-art infrastructure facilities to automobile and

auto parts manufacturers and other engineering companies.

Mahindra Industrial Park: changing with the times

Venkatachari Jagannathan
http://www.domain-
b.com/companies/companies_m/mahindra/20001218_industrial_park.html
18 December 2000
"It will be different," is the punch line of Mr. Rohit Modi, managing director and
chief executive, of the Chennai-based Mahindra Industrial Park Ltd.

But the former IAS officer doesn't stop with that and continues to detail the
1,420-acre industrial park�s history, present status and the facilities it would
offer.

Conceived to house mainly auto ancillaries, the country's first private sector
industrial park initiative has come a long way. With major car manufacturers,
Hyundai Motors, Ford India (earlier Mahindra Ford) and Hindustan Motors' Lancer car
project, beating their way to Chennai to make it the Detroit of India the project
was to be the first of its kind in the country. However, in the process, the
company has had to spend precious time to get around 300 different approvals from
various government departments.
Meanwhile the fortunes of the automobile industry in India, and more particularly
the passenger car segment, witnessed a downturn. The new car manufacturers located
in Chennai have to pick up sufficient volumes to attract auto component
manufacturers to set up a production base here. The ones who came here are mainly
vendors of Hyundai Motors who have located their facilities near the Hyundai car
plant.

This unforeseen development naturally had its impact on Mahindra Industrial Park's
plans as it has to focus on other industries. The company has hired Andersen
Consulting (to be renamed Accenture from 1 January 2001) to study the market
situation and suggest target industries.

"We hope to attract computer hardware manufacturers, call centres, back office
operators, electrical, electronics, high tech engineering, bio technology and other
non polluting industries," says Mr. Modi.

Incidentally it is not only its business plan that has undergone a change, even its
equity holding pattern has been altered recently.

Originally the two major promoters, the Mahindra group and Infrastructure Leasing
and Financial Services Ltd (IL&FS), planned to hold 40 and 30 per cent respectively
in the Rs. 20 crore equity based Mahindra Industrial Park and Tamil Nadu Industrial
Development Corporation Ltd (Tidco) chipping in 11 per cent. The balance 19 per
cent was reserved in favour of a strategic investor or an operation and maintenance
(O&M) operator.

As the Park is yet to finalise the O&M operator, it has now been decided that the
Mahindra Group and IL&FS would contribute the remaining 19 per cent and later
dilute their holding. As a result, the revised equity holding pattern of the two
promoters will be the Mahindra group 50 per cent and IL&FS 39 per cent.

According to Mr. Modi, the company is already on the look out for a good O&M
operator and talks are on with JTC International Pte Ltd, Singapore for this
purpose.

The Rs 220 crore two-phase project has a debt component of Rs 200 crore. For the
first phase, the Park has already drawn down on Rs. 120 crore of debt, contributed
by State Bank of India and Union Bank of India (Rs 30 crore each) and Rs. 60 crore
from the promoters. The balance Rs 80 crore will be drawn down for the second
phase.

According to Mr. Modi the project is expected to break even in three years time
once phase one goes on stream.

Speaking about the project status he remarks that the major part of the earthwork
relating to phase I (820 acres-saleable area 574 acres) having been completed, work
relating to laying of roads, water and sewage lines etc have commenced. He states
that all the amenities and facilities at the park will be ready by July 2001.

"The second phase involving 600 acres - saleable area 420 acres - will be developed
later," adds Mr. George Abraham, general manager.

Simultaneously the company is planning to start its marketing efforts with road
shows to be held within and outside India. The company intends to sign around three
marketing tie-ups apart from the existing agreement with Mitshubishi Corporation,
Japan.

"Part of the marketing efforts is the decision to put up a stall at the IT Asia
Millennium, Mumbai and Infranet 2000, Delhi business fairs," says Abraham.
In what way the Park will be different?

Responds Mr. Modi, "our plots are flexible and the Park will house all the advanced
features that companies would like to use. Apart from vacant plots, we will offer
ready built factories and all that an entrepreneur would need to do is to plug and
play."

According to him the park would sell/lease well laid out plots of varying sizes
ranging from half an acre to 60 acres. According to him a container freight station
is being planned inside the park. In addition, a proposal for a customs-bonded
warehouse is also under consideration for easy movement of international goods as
well as electronic data interface with the customs department. The entire park is
to be landscaped and will have wide roads.

When queried about the high cost of the plots (Rs. 24 lakh per acre) Mr. Modi
remarks, "It is true that the Park is costlier by 60 per cent when compared to the
plots offered by the State Industries promotion Corporation of Tamil Nadu Ltd
(Sipcot). But one has to consider the advantages - locational and other
infrastructural facilities - offered by us."

"For instance our water cost might be cheaper than Sipcots' as we are surrounded by
water bodies," he adds. In addition, Mahindra Industrial Park is talking with BSNL,
VSNL and STPI to provide telecom/internet facilities. "Compared to similar
facilities offered overseas we will be cheaper by 60 per cent," he remarks.

Nevertheless competition is going to be tough for the Mahindra Industrial Park as

many states are actively promoting industrial estates to attract investments. And
nearer home the company has to contend with Sipcot building several estates/parks
targeting more or less the same market.

Says Sipcot's managing director, Mr. K. Deenabandu (46), "We offer plots on 99
years lease which is equivalent to owning it. We offer choice of location - whether
in the hinterland or near the port/city." More important issue is the availability
of investment subsidies/incentives and loans for units located within Sipcot's
estates.

Sipcot is promoting six industrial estates or parks in Tamil Nadu. They are: the
Information Technology Park, Siruseri, the Export Promotion Industrial Park at
Gummidipoondi, two Parks at Irrungattukottai and Sriperumpudur, Growth Centres at
Perundurai, Nilakottai and Gangaikondan and also a satellite industrial residential
township at Nemili, Kancheepuram District, near Chennai.

It is learnt that software major Infosys Ltd is planning to take around 70 acres in
the Siruseri Park.

But Mr.Modi is unfazed. "I can also help to arrange finance via IL&FS one of the
promoters," he says. Ruling out competition from Delhi, Nagpur, Bangalore and
Hyderabad as they lack ports or international airports, he says that the Park's
location and the facilities it would offer to investors would attract industries.

The other added attractions that his park would offer are: food courts, mini marts,
shops, guest houses, post office, courier services, restaurants, lakeside
recreational area and a gymnasium.

Nevertheless it is going to be interesting to watch how promoters of private

industrial parks fight it out while the States at the macro level tries to woo the
investors to their State.