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Mr Ravi Kant, Executive Director, Commercial Vehicle Business Unit, Tata Motors, with the new range of Tata Motors-built buses and coaches, launched in Mumbai on Monday. - Paul Noronha

Mumbai , March 7

TATA Motors has big plans for its bus body-building and chassis business. "We hope to make it a billion-dollar operation in a few years from now," Mr Ravi Kant, Executive Director (Commercial Vehicle Business Unit), said at a press briefing in connection with the launch of the company's new range of fully-built buses and coaches.

Priced from Rs 6.1 lakh to Rs 35 lakh, the vehicles sport the brands Starbus and Globus, the latter being in the luxury segment. Seating capacity spans 13-67 with three levels of luxury. In a departure from the past when bus bodies were built by outside parties, Tata Motors intends to have a clutch of dedicated body-builders doing the job with the company wielding control on process and quality.

The country has around 150 body-builders. Tata Motors has short-listed seven-eight players but that number falls short of required capacity, Mr Ravi Kant said. Senior officials said the road ahead could be to get more from the remaining lot of body builders upgraded to the required specifications and also hope for new players to enter the business.

However, Tata Motors has no plans to partake in investments at the builders' end. The short-listed bus body-builders will be outsourced manufacturers doing the task for a fee. Tata Motors will have control on such aspects as design, raw material and quality.

According to Mr Shyam Mani, Vice-President (Sales and Marketing), Commercial Vehicles, the new bus range comes against the backdrop of a 35 per cent sales growth in light buses in India, but stagnation in numbers for medium and heavy buses.

Typically, bus sales rise sharply with GDP growth and a reason capping potential in medium/heavy segments here has been the few new permits issued by State Governments and the poor health of many State transport corporations.

The trend has begun changing with private players getting rights for select routes. "We believe the upper end will get deregulated," Mr Mani said. In contrast, light buses, which enjoyed sales growth, have traditionally been demand-led, as it is a less regulated market. The company has 50 per cent share of the domestic bus market. In India, just 11 out of 100 commercial vehicles sold are buses against 40 in China and 50 in Russia.

Margins from the body built business model, as compared to simply selling bus chassis, varies according to the vehicle type. Some of these new buses have imported components and efforts are on to make them locally. Tata Motors' emergent global business should help as production elsewhere opens up access to cheaper supply bases.

Currently buses on the Tata chassis are made in Ukraine and Turkey with Senegal also on the cards. Overseas orders on hand include those for 500 buses from Bangladesh, 350 from Senegal and 130 from Bahrain. Hispano Carrocera, the Spanish bus maker in which Tata Motors acquired equity recently, has a facility in Casablanca, which in turn enjoys proximity to Francophone Africa where the Tatas have cited potential for their vehicles.

Notwithstanding the branded range, the company's existing chassis business will continue, as would the `City Rider', its only fully built bus so far. Inputs from Hispano Carrocera will come at a later stage. Tata Daewoo Commercial Vehicles is developing a bus chassis for Hispano Carrocera, which has traditionally built its buses on outsourced chassis.