UPDATE 1-Tata Motors sees Nano demand outpacing supply

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By Rina Chandran

MUMBAI, July 24 (Reuters) - Tata Motors (TAMO.BO) (TTM.N), India's top vehicle maker, sees initial demand for its ultra-cheap Nano topping supply, but expects the full year to March to be tough because of high input costs, the chairman said.

Tata Motors, which recently purchased the Jaguar and Land Rover luxury brands for $2.3 billion, is scheduled to roll out the Nano, the world's cheapest car, around October.

It is expected to be priced at just above $2,500, but will yield sufficient margins from the different models, Tata said.

"We expect demand to exceed supply and we will have to figure out an appropriate system of deliveries," Chairman Ratan Tata said at the annual shareholders' meeting on Thursday.

A plant in Singur in the eastern state of West Bengal will have an initial capacity to make 250,000 units, which can be scaled up to 350,000 units.

The Nano, which is likely to grab share from other car makers and shift motorbike users more quickly to cars, will have a gasoline engine at first and will then come in a diesel variant.

Tata Motors will make a more fuel-efficient variant of the Nano at the eco-car project in Thailand, he said, adding the company is also looking at building an electric car as well as a model that uses compressed air, in alliance with a French firm.