Tata Nano project loss at INR 1,000 crores – Mistry’s email to Tata Sons
The ongoing battle between Tata Sons board and ousted chairman Cyrus Mistry continues with a vengeance. Cyrus Mistry hits back at the board and the interim chairman Ratan Tata with a strongly worded five page letter citing various examples of flawed strategies and questionable transactions. Mistry states that the Tata Nano project was a failure since the start but was kept going purely for emotional reasons.
The Nano project called for a car below INR 1 lakh while costs were well above this mark. Losses peaked at INR 1,000 crores despite which the company continues with its production. Mistry states that the shutting down of Nano was the logical business choice. But emotional reason, and one that it would stop supply of ‘Nano gliders’ to an entity that makes electric cars in which Ratan Tata has a stake; stopped Tata Board from agreeing to discontinue the Nano.
Under the Mistry regime, Tata Motors tried to revive the Nano, repositioning it as a smart city car in March 2014 while in May 2015 the Nano was renamed GenX Nano. It was re-launched at an aggressive price at INR 1.99 lakhs but yet failed to achieve required sales targets. In the first 7 months of 2016-17 sales of the Nano have dropped to 4,459 units as against 11,321 units sold in the same period of the previous year.
Besides the failed Tata Nano project, Mistry also points out various other discrepancies where the management of the Tata Group is concerned. He states how he was forced to invest in joint ventures with both Air Asia and Singapore Airlines while he also questioned the group’s dispute with DoCoMo and drew attention to the acquisition of Searock properties in Mumbai which was purchased at highly inflated prices.
Below is the full letter, which Cyrus Mistry shot to board of Tata Sons.