N. Chandrasekaran: We need to take a holistic view on Tata Nano
Mumbai: Tata Motors Ltd will take a “concerted decision” on the Tata Nano, chairman N. Chandrasekaran said on Tuesday, as the company has to work towards improving cost structure across various platforms and introduce new models and platforms in the passenger vehicle (PV) business.
In a statement released on Tuesday, the office of Cyrus P. Mistry, the ousted chairman of Tata Sons Ltd, said that all decisions at Tata Motors should be taken with due regard to the consequences on all stakeholders.
The PV business accounts for a mere 3% in the consolidated revenue of Tata Motors.
“We can’t just switch off one product and switch on another,” Chandrasekaran, who is also Tata group chairman, said in response to shareholders’ questions on Tata Nano’s future at Tata Motors’ 72nd annual general meeting. “We need to take a holistic view,” he said, staying clear of offering a direct answer to the fate of a model that attracted much global attention owing to its low price tag.
With sales hovering at 500-plus units every month, Tata Nano has been a source of big worry for Tata Motors’ troubled PV business. Chandrasekaran conceded that even as the last few launches have done well, volumes need to pick up further and the business has a long way to go.
Meanwhile, touching upon Tata Motors’s plans for electric vehicles, the newly appointed chairman said while there are products in the works, the “company does not have a scale-up plan”. “It’s an area we want to focus on whether it’s in the truck, bus or car segment and we will come up with a detailed plan.”
Tata Motors has outlined a capital expenditure of Rs4,000 crore for the current fiscal year, but it will pump in investment “only where it is justified”, said Chandrasekaran. The firm will continue to explore non-core businesses it wants to exit in a bid to strengthen the balance sheet, he added.
Chandrasekaran said the UK subsidiary Jaguar Land Rover Automotive Plc, owing to intense competition from German rivals, will need to continue high investments, and therefore, one cannot expect the subsidiary to pay a higher dividend to the parent company. JLR has outlined a capital investment of $4-4.5 billion for this fiscal year.
In the statement, Mistry had said that Tata Sons, during his tenure as chairman, had highlighted the practice of lending without adequate risk assessment, particularly in the Nano and small commercial vehicle segment. This, Mistry pointed, out caused a huge loss at both Tata Motors and Tata Motor Finance, to the tune of nearly Rs4,000 crore.
On the Tata Nano, he said that after several attempts to revive the car failed, it was decided to stop production. But till date, a year after the original decision was taken, it continues to be produced. “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,” Mistry said.