What are Tata Steel executives doing these days at Ford India's car manufacturing unit near Chennai? They are advising engineers of the world's second largest automobile company on how best to use steel in the new car it is planning to launch in the next 5-6 years.

The marriage between the steelmaker and the carmaker has come about from the latter's Early Vendor Involvement scheme, whereby a key vendor is involved in a new project right from the drawing board stage.

"Ford has appointed Tata Steel as the local vendor for the supply of steel under this scheme. So we are involved right from the design stage for the new car," a Tata Steel executive told Business Standard. Tata Steel, of course, will supply all the steel for the car.

What also helped in forging the alliance was an ongoing Tata Steel programme called Customer Value Management. "We have a programme where a group of people from various departments of the company -- works, R&D, marketing -- come together and the group is attached to a customer.

The idea is to add value to how a customer is using steel. In an automobile, steel accounts for a significant part of the inputs. Its use affects the functioning of the car in a critical way," the executive added.

On its part, Ford is tight-lipped about the project and its association with Tata Steel. Sources in Ford said the company was working with several vendors for the project and Tata Steel could be one of them. Ford India is also working on at least three new vehicles specially designed for India, one of which could be on the road as early as next year.

Ford Vice-President Vinay Piparsania declined to comment. "We have an ongoing relationship with several suppliers, and we are bound by a confidentiality agreement with each. Neither we nor our suppliers are expected to talk about projects they are working on. So I cannot comment on whether we are in talks with Tata Steel or are developing a new car," he said.

He, however, added that Ford had been trying to locate more local vendors with the aim of reducing costs and to offer Indian customers more value for money. In fact, the number of Q1 certified -- a certificate is granted by the parent company to suppliers who meet Ford's global standards -- has increased over the past year to over 10.

Ford executives have said in the past that research showed the Indian consumers would shift to the mid-sized three-box cars like the Ikon over the years and hence Ford wanted to be present primarily in this segment.

But sources said the company was also working on a compact car on the Ikon platform in order to have a stake in the hatchback market, which comprises as much as 75 per cent of the Indian car market.