Mr Raj Rishi Singhal
Resident Editor
The Economic Times
Bennett, Coleman & Co. Ltd.
The Times of India Bldg.
Dr. D N Road
Mumbai 400 001

Dear Mr Singhal,

This is to convey our extreme disappointment at the write up on the Indica which appeared in the December 8^th issue of the Economic Times in the Reporter’s Diary column.

The report is based on hearsay, is speculative and ascribes imputations which are totally unfair. While the Indica plant at Pune indeed went in for a block closure for a week in the month of November along with the rest of the commercial vehicle manufacturing activities for the specific purpose of maintenance shut down, the report tries to link the closure, to the "alleged" rising complaints on the car. We take strong exception to the innuendo as the plant infact resumed production on November 24th and is currently rolling out cars - contrary to the impression which has been sought to be created.

While the reporter may have his or her own perspective of what determines the success of a car, the Indica’s performance in the current financial year needs to be seen in a wholesome perspective and not in isolation or along one dimension of its volumes alone, as the column would seem to suggest. The passenger car industry has registered a decline of 3.7% in the first 8 months of the current financial year and in keeping with the general industry trend, the volumes of the Indica have declined from an initial level of around 4500 units at the beginning of the year to a level of 2500 units in November this year - a cumulative decline of 4.9% over the first 8 months of the last financial year. This needs to be seen against the performance of other models in the same segment in which the Indica competes – the Zen has declined from an initial level of 6000 – 6500 units a month at the beginning of the year to a level of around 3300 units a month currently - a cumulative decline of 27% over the first eight months of the last financial year. Wagon R has come down from a level of 2200 units a month to around 550 units a month currently. Uno is down from a level of 1000 units a month to 550 units a month (cumulative decline of 52%). Even Santro sales have declined from a level of 5800 units a month to 5200 units currently (cumulative growth of 0.4%). And all these are cars which are "reportedly" relatively better off in terms of quality if the results of the 2000 India Initial Quality Study (IQS) of J D Power were to be used as a reference.

Moreover, the Indica sales have been achieved without any direct or indirect price cuts and discounting in the market which has been indulged in rampantly by competition, thereby enabling the Company to achieve one of the fastest cash break- evens on a project of this scale. We do not know what measures of performance have been used by your reporter as a benchmark to judge the Indica but obviously the big picture is missing from the perspective. Only tracking top line numbers of sales growth without an industry perspective presents a distorted picture, especially when the cost of those sales are not reflected by the bottom lines of most industry players, which the media never reports.

The Indica even today enjoys an 8% share of the passenger car market, is amongst the top 3 selling cars in its category in a 7 model segment and is the largest selling diesel car across the industry. We would expect that a paper of the standing of the Economic Times would present the correct picture after validating its facts and refrain from publishing a column which is speculative and has the potential to unfairly hurt the interests of the Company.