Tata Nano Doesn’t Sell And Is Not Viable Says Nusli Wadia
Wadia said he had always opposed operations and funding of the Nano.
Nusli Wadia, who along with Cyrus Mistry, stands to be removed from the board of Tata Motors Ltd. on December 22, at the extra ordinary board meeting, pointed at lapses in business strategy and corporate governance in the company.
In his 13 page representation to Tata Motors' shareholders, Wadia said he had always opposed the continued operations and funding of the 'Rs 1 lakh' car Nano which had incurred huge losses.
The NANO, initially a car conceived to sell at Rs.1 lakh was launched in 2008, has proved to be a serious drain on the financial resources of Tata Motors. Even at a price of Rs.2.25 lakhs, the car neither sells nor is viable as every sale of the vehicle is at a substantial loss to the Company.Nusli Wadia’s Representation To Tata Motors’ Shareholders
The investment plan for Nano was made for 2,50,000 cars but the production figure in 2015-16 was around 20,000 and far less currently, he explained.
The delay in the closure of NANO is a serious drain on the finances of the Company, in addition it has created very negative image of the Passenger Vehicle Business (PVB) of the Company. The investment and losses on NANO have been in thousands of crores rupees. Concerns have been raised not only by me but by several others regarding the continuing operation.Nusli Wadia’s Representation To Tata Motors’ Shareholders
Wadia noted how a debt ridden Tata Motors had large cross holdings in various non-listed Tata companies. He approximated the value of unlisted shares of Tata Motors to be around Rs 8,600 crore while that of listed shares is only around Rs 200 crore.
These cross holdings are being maintained in a debt ridden company only to indirectly keep the voting rights and control in Tata Sons. The figure across all the listed companies holdings in Tata Sons Ltd. is approximately 14% of its capital amounting to approximately Rs.70,000 cr. and is being maintained only to shore up the voting rights of the Tata Trusts.Nusli Wadia’s Representation To Tata Motors’ Shareholders
On Tuesday, the promoter group Tata Sons raised their stake in Tata Motors by 1.73 percent buying an additional 5 crore shares, according to bulk data available on the National Stock Exchange.
Wadia then went on to allege coercion by Tata Sons saying that two unsigned legal opinions were issued to influence the meeting of Independent Directors and Board of Tata Motors on November 14.
The first opinion informed the independent directors that Tata Sons may disassociate themselves from Tata Motors if Cyrus Mistry continued to be the chairman of the company. The second opinion stated that if the independent directors expressed support for Mistry, the then existing chairman, then it wouldn't be considered "material" and should not be disclosed to the stock exchanges, Wadia's representation claimed.
This serious illegal and inappropriate act of corporate misgovernance is a contravention of law. It contradicts the claims preached by Tata Sons and its interim Chairman Ratan Tata on ethics, morality and governance.It flies in the face of the Tata Code of Conduct, which Tata Sons claims to be the author of.Nusli Wadia’s Representation To Tata Motors’ Shareholders
Wadia also alleged that Tata Sons, and Ratan Tata himself, have sought to acquire unpublished price sensitive information through financial and strategic presentations from key managerial personnel. He added that Ratan Tata in addition to the above had demanded that important and strategic matters be shared with him as Trustee with regard to the affairs of Tata Motors.
I believe that presentations and other material and unpublished price sensitive information I matters were given to Mr. Ratan Tata- a violation of the SEBI Insider Trading Regulation.Nusli Wadia’s Representation To Tata Motors’ Shareholders
Here is the full text of his representation: