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23
August 2017
 |
Tata Nano (The Total Investment & Insurance
Solutions)
Cyrus
P Mistry, the ousted Chairman of Tata Group, has raised questions on Tata
Motors' practice of lending without risk assessment especially to Nano and
small commercial vehicle segment. "This caused a huge non-performing asset
(NPA) loss in both Tata Motors and Tata Motor Finance, to the tune of nearly
Rs4,000 crore. If we are to benchmark the gross NPA percentage as against any
other finance company in the similar segment the difference would be in
multiples. This easy finance, artificially bolstered the market share figures
and as soon as this was reigned in, we saw a steep drop in the volumes of small
commercial vehicles (SCV) and the Nano. In case of SCVs’, volumes fell by more
than 50%," the Office of Mr Mistry said in a statement. The Total Investment & Insurance Solutions
Refuting
certain observations made in the 2017 Annual Report of Tata Motors, the
statement says, "Recently Tata Motors has raised large amount of capital
from the shareholders, the company has not been able to pay dividends to its
shareholders and is undergoing a huge retrenchment of its loyal employees, is
wholly irresponsible of the Board not to take action so as to stem losses as
soon as possible. I raise these issues with a view to ensure such decisions in
the future are taken with due regard to the consequences on all
stakeholder."
Talking
about Nano, the Office of Mr Mistry says, the project as conceived was indeed
brave. However, for a number of reasons, the car was not profitable for many
years. "During my time as chairman of Tata Motors, we tried to make
significant products improvements based on market feedback such as an openable
tailgate, power steering and an AMT version. All these initiatives did not bare
fruit. It was only then that a unanimous decision was taken to discontinue the
Nano Production. It has been almost one year since then."
However,
despite the decision, Nano production continued for next one year after the
original decision was taken to discontinue it, the statement says, adding,
"I had drawn attention to potential areas of conflict of interest in the
supply of Nano body shells to Jayem motors where Mr Ratan Tata has made
investments in his personal capacity, thus forcing the Nano production to
continue on a subscale basis for almost one year after the original decision
had been taken. As I understand the Nano today, continues to incur heavy
losses. At the very least this continuous loss for nearly a year has depressed
the share value by thousands of crores on the present PE multiple." The Total Investment & Insurance Solutions
The
Office of Mr Mistry also raised question on the silence of the Board in sharing
confidential information about Nano to Mr R Venkataraman. It says, "I am
also surprised to see complete silence from the board when it comes to the
issue of sharing confidential detailed cost information about the Nano Cars to
Mr R Venkatraman who used to be on RNT (Mr Tata) associates and conflicted,
which is substantiated by the e-mail trails in my submissions and available to
the board."The Total Investment & Insurance
Solutions
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