To be powered by two new engines -- a one-litre petrol power engine and an 800-cc diesel engine -- the car is expected to hit the road next year.

Image: Tata Nano. Photograph: Kind courtesy, Tata Motors

The Nano did not take off the way Tata Motors would have liked, despite aggressive pricing and Rs 4,000 crore (Rs 40 billion) of investments in development, marketing and a dedicated plant at Sanand in Gujarat.

But the company, Indias largest automaker by revenue, is looking to recover some of the cost incurred on the Nano platform.

The plan is to develop a slightly bigger hatchback at the Sanand factory, to take on the Maruti Suzuki Alto, Indias top-selling car.

The new car, code-named the Pelican, is being developed on the X302 platform, an upgraded version of the Nano, Business Standard has learnt from several industry sources.

To be powered by two new engines -- a one-litre petrol power engine and an 800-cc diesel engine -- the car is expected to hit the road next year.

The bigger car will be sold under a new brand. Its diesel variant, the cheapest diesel car in India, will later be exported to several other markets, a source said.

Another added: Tata has given its suppliers a modest sales target of about 2,500 units a month.

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Tata Motors' next from Nano factory to take on Maruti Alto