The ugly duckling turning into a graceful swan may be a story straight out of fairy tale realm but, after witnessing the progression of the Tata group's Indica over the past couple of years, you can't be blamed for wondering if that mythical fable actually did happen. It's certainly come true for Tata Engineering's automobile business with the Indica. The once-upon-a-time rattling-clattering racket-making machine has been refined to offer an elegant, noiseless and smooth ride (well, almost), thereby allowing India's first 100 per cent swadeshi car to rub fenders with the likes of Hyundai's Santro, Daewoo's Matiz, and Maruti's myriad small cars that make up the B-segment. The manifestations of the Indica makeover are the V2 diesel and petrol variants launched in February and September 2001, thereby allowing the Tatas to storm the market in 2002. The Santro may still be the overall winner in the B-segment in 2002, but the Indica was at the top of the heap in several months of last year (January, March, June, July). In fact, Ratan Tata's dream car could have well emerged top dog in 2002, had it not stopped production for a couple of months. This was done to ramp up capacity for the Indigo, the recently-launched three-box car. What's more, the Indica's sales have risen 27 per cent, even as the entire B-segment grew by 15 per cent.

Ratan Tata, Chairman, Tata Engineering: Indica's the new brand ambassador

More than the numbers, however, the amazing part about the Indica success is that a car that assorted analysts, auto-gurus and owners had written off as a non-starter (or at least a starter that makes a lot of noise) has found its place in the Indian sun. And Tata for his part isn't just content with accolades back home. He clearly sees potential for making the Indica a global vehicle for the Tata brand. "The passenger car business has the potential of being our most prominent brand ambassador in global markets," says Tata. A tentative step ahead in that direction was taken last fortnight when Tata Engineering signed a manufacturing and supply agreement with the mg Rover group of the UK. This alliance allows the Tatas to manufacture the Indica as per mg Rover's specifications at its Pune plant, and to then sell in Europe under the Rover brand name. And no, don't jump to any conclusion that this is a preliminary flirtation with Rover that will culminate in the foreign company buying into the commercial vehicle manufacturer's car business. "Making such presumptions (of a sell-off in future) is tantamount to underestimating the potential of the Tata group substantially," says a disapproving Rajiv Dube, Vice President (Commercial), Passenger Car Unit, Tata Engineering.

Indeed, there are three elements to the Indica success saga: one, its engineers have been able to slowly but surely eliminate the countless ghosts in the initial machines. Two, the Indica has given the Tata group the expertise (and confidence) to launch a three-box cousin, the Indigo, at Rs 4.35 lakh, thereby getting rid of the one-car-company tag (a station wagon variant of the Indigo is expected some time this year). And, three, the Indica is doing more than its fair share to wipe out the humungous shades of red on Tata Engineering's bottomline (and, at one time, equity analysts and hacks actually thought the company's bottomline needed to be shielded from the travails of the Rs 1,700-crore car project!).

The V2 Magic

No one at Tata Engineering believes that there was ever any problem with the Indica. But fact is that auto analysts had a field day tearing the car to shreds, bit by bit. Complaints about technical and quality snags too were numerous. The most common cribs: a hard rear suspension, a rough gearshift and a very noisy engine. "Perception-wise, the car was in trouble," says Dube. The only way to change that perception was naturally to win the confidence of existing customers. "Otherwise, they could not have been our ambassadors for Indica V2," says Dube. This was achieved through a mass customer contact programme and an open door policy at dealer points-dealers were told to fix the problems, irrespective of whether the warranty period had expired or not.

Then came a marketing campaign for Indica V2 diesel (launched in February 2001) in which Tata Engineering clearly spelt out the improvements made in the new avatar. The price wasn't tampered with. Result? A stupendous 48 per cent increase in sales soon after. By September 2001, two-and-a-half years after launch in March 1999, for the first time Tata Indica topped the sales charts in the B-segment. In 2001-02, Indica sales were 31 per cent up over the previous year. The marketshare today stands at 24 per cent (of the B-segment), and the Tata group hopes to sell 70,000 Indicas, and 100,000 car units (including the Sumo, Safari and Indica) this year.

In the meanwhile, those chart-topping performances have helped in no small way to reduce Tata Engineering's huge losses, which stood at Rs 500 crore in 2000-01. A year later these losses were down to Rs 54 crore, and in the first half of the current year the company was able to show a net profit of Rs 87 crore. By March, Tata Engineering would have comfortably returned to the black, thanks to the much smoother ride of the Indica.