The vehicle will cater largely to the rural segment and compete with two of M&M's utility vehicles, Commander and Marshall. M&M has over the years established a strong grip over rural buyers and the Telco game plan is to challenge the rival at its home turf.

Telco officials did not wish to comment to the issue. "We are looking at various possibilities to strengthen our presence in the rural segment," said a senior company official. It may be recalled that Hindustan Motors has launched its own rural transport vehicle (RTV) in technical collaboration with Oka of Australia.

The stripped-down version, sources say, will be around Rs 80,000 cheaper than the standard Sumo and will be competitively priced to take on the M&M models.

The ex-showroom price of the 10-seater Sumo (Standard) is Rs 4.43 lakhin Mumbai, while that of Marshall and Commander are around Rs 3.50 lakh and Rs 4 lakh. "The new version will have fewer seats and may have a derated engine," industry sources said.

Telco's Sumo has been facing stiff competition from M&M, which due to its product range is better positioned to cater to various market segments. Marshall and Commander enjoy decent market shares in the rural segment, where Telco has not been able to make much headway due to a price disadvantage.

With an upturn visible in the rural economy, M&M has clocked a 15 per cent rise in the sales of utility vehicles in the first quarter. Telco, on the contrary, has posted a 16 per cent drop in sales in the segment in the same period. The company's sales of UVs fell to 6,620 units from 7,874 units in the first quarter last year.

"Sumo is not losing market share to M&M's Armada range as is made out to be and is doing quite well on the urban circuit," company sources said, adding that Telco is working on strategies to emerge a strongplayer in the rural segment.

M&M has reported sales of around 5,859 utility vehicles last month, against 5,018 units in the corresponding period last year. The quarterly sales of utility vehicles shot up from 14,160 units to 16,294 units during the period.