Nano effect will be felt across all products: Kalyani

MUMBAI: As chairman and managing director of Bharat Forge, Baba Kalyani works closely with some of the biggest global automobile brands.

His company is today the world’s second-largest forgings manufacturer that meets the needs of practically every top-end car, truck and bus in Europe, the US and China.

Despite this impressive client portfolio, Kalyani is convinced that it is in India where a revolution in the car segment is under way that could impact the rest of the world.

It is his view that Ratan Tata’s dream car, the Nano, will change the technology paradigm across all vehicle segments.

“What Mr Tata has demonstrated extremely well is that a lot of things which many people otherwise thought were not possible can actually be done. All of a sudden, you have hundreds of entrepreneurs all over the world saying that this looks like a good idea and why they cannot extend this to their own area of business,” Kalyani told DNA in an exclusive interview.

The Nano concept, he says, will not only proliferate but “horizontally get deployed” for many other products like motorcycles, three-wheelers, small trucks and what have you.

As Kalyani elaborates, “Tomorrow, a customer might ask, ‘Why should I spend Rs 50,000 to get a motorbike? Why can’t I get one for Rs 15,000 instead?’ If someone can make a good car for Rs 1 lakh, then something much smaller can be made for much less.”

The Bharat Forge CMD is of the view that the Nano is one of the many “disruptive technologies” happening in the global auto space which has made everybody rethink their strategies.

Carlos Ghosn, the CEO of Renault and Nissan, was the first to declare that such a cost model was imperative for his own India programme and entered into a tie-up with Bajaj Auto for a $3,000 car. However, the bigger story here is that this philosophy could well extend to other product segments, too.

“The Nano has the kind of technology that has grabbed everyone’s attention and we are going to see many more of this happening. I see this business model creating huge applications, not in terms of using the same platform, of course, but people thinking in that direction across the world,” Kalyani says.

According to him, CEOs are aggressively rethinking their strategies in this direction. “Reality is beginning to sink in and it will be a global phenomenon eventually,” he says.

People are beginning to question the basic norms of the automotive industry which include issues like a) at what price can one make a car; b) what does it cost to develop it?; c) how do you create a supply chain?; d) how do you forge a collaborative effort?; e) how do you bring disruptive processes in a constructive way and do things differently?

The Nano could well be on the way to creating history but Kalyani is quick to point out that India still has some way to go before it reaches global scales in the automobile industry.

For one, it accounts for barely 1.5 million vehicles annually of the global output of nearly 60 million units.

Two, in terms of value, the average car price here is still about $7,000 while this is nearly six times more in a market like Europe. This is because it is still inherently a small-car market.

Kalyani believes that all this will gradually change with the economy growing but sounds a note of caution on the pace of road development. “With the existing roads, you will not have a chance to drive in a year and people will be stuck in traffic jams forever,” he says grimly.