May 06, 2006 | Business Standard

Tata Motors, Marcopolo in truck for bus venture

JV will set up a facility in India and invest R150-200 crore.

Commercial and passenger vehicle major Tata Motors has floated a 51:49 joint venture company with Brazil's Marcopolo to manufacture and assemble fully-built buses and coaches in India. The JV will set up a facility in India within a year by investing Rs 150-200 crore.

Last financial year, overseas sales accounted for nearly a quarter of the total buses sold by Tata Motors. As the company expands its global footprint and its operations outside the country go on stream, this figure is likely to change drastically.

Marcopolo is a leading global company specialised in body-building for buses and coaches. Tata Motors, through the joint venture, would benefit from Marcopolo's technology for mass production of buses along with its expertise in the mass rapid transport (MRT) systems.

Marcopolo has got four manufacturing facilities in Brazil and one each in Portugal, Argentina, Mexico, Colombia and South Africa. India will be its tenth production base.

"The JV will make 7,000 buses during the first year of its operations, which will be scaled up in a modular manner," said a Tata Motors spokesperson. It will produce 16 to 54-seater standard buses, 18 to 45-seater luxury buses, luxury coaches and low-floor city buses.

"The technology and expertise in chassis and aggregates will be provided by Tata Motors, and know-how in processes and systems for bodybuilding and bus body design will come from Marcopolo. Both companies will actively participate in the management. The buses will be marketed not only in India but also in all Tata Motors focussed markets," said a company release. The JV will also explore emerging opportunities in bus rapid transit system in India.

"The rapidly expanding and improving road network, connecting cities and also rural areas, is expected to substantially grow passenger transport. The JV with Marcopolo, which is one of the largest bus body builders, will enable Tata Motors to successfully address the growing demand in India, as well as relevant markets abroad," said Tata Motors chairman Ratan N Tata.

Marcopolo chairman Paulo Bellini said: "The JV with Tata Motors will help us extend our presence in the high-potential markets of India and also other countries."

The Brazilian bus major was in talks with both Tata Motors and Ashok Leyland for a joint venture in India. Last year, Marcopolo director-general Jose Rubens said that the company's strategy was to enter a new market with a local player.

He had also said the proposed joint venture should be seen as an Indian outfit to the cause of the country.

In the global market, Tata Motors already has made some headway in markets like Middle East, South Africa and Russia.

"There is still plenty of headroom in these markets to expand our reach. This apart we will also exploring new markets globally," said a Tata Motors' spokesperson.