Will Tatas' Nano cost more than Rs 1 lakh? See More

A delay in the launch of Nano appears imminent as protesters in Singur refuse to budge and the festering political controversy could make it difficult for Tata Motors to stick to the Rs 1-lakh price tag. Although the company has refused to comment on the issue, several component and spare part manufacturers associated with the Nano project said rising input costs are already putting pressure on their margins and any delay would only escalate the situation.

Sandipan Chakravorty, managing director, Tata Ryerson, said that there is bound to be a cost overrun if the project is delayed. The Kolkata-based company has been commissioned to produce roll forming equipment required for chasis components in the car.

"Our machinery has arrived but what will one do if it remains inoperative," Chakravorty said. "Depreciation begins from day one.

We have to pay interest from the beginning." His comments came a day after Trinamool Congress leader Mamata Banerjee joined local protesters to lay siege to the Nano project in Singur.

On Monday, West Bengal Chief Minister Buddhdeb Bhattacharya's urged Banerjee to end the protests and seek a resolution through talks, but the latter rejected the offer. "I will to discuss anything only after land is returned to farmers", Banerjee said.

The protesters want the government to return some 400 acres of land that was acquired for the Nano project without consent of farmers who owned the land. A large chunk of that land is meant for ancilliary units involved in the project and the political uncertainty has made the vendors jittery.

Several vendors have already put their investments on hold and some have even indicated at a renegotiation of their contracts with Tata Motors. "Our input costs have gone up substantially and what looked difficult to us a year back, seems impossible to us now," said a New Delhi-based vendor, who didn't want to be named.

"Any delay will push costs further and we are looking at renegotiation in that case." Subros, which will supply air conditioners to Nano, said there would be initial losses for everybody due to the delay.

"The biggest challenge currently is to get the project off the ground," said its chairman, Ramesh Suri