Tata Motors defends strategy for $1500 Nano car - Stock Cash Future Option Tips
Tata Motors, part of India's Tata group, defended its strategy for producing
the $1,500 Nano but shied away from commenting on the loss-making car's future,
after the conglomerate's ousted chairman said there were emotional reasons for
not shutting down production.
Tata Motors' issued the statement to the
stock exchange late Friday after an internal letter by ousted chairman Cyrus
Mistry said the cost of Nano's production was always higher than its 100,000
rupees ($1,497.33) price tag and the project needed to be shut down if the
company wanted to remain profitable.
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Mistry was sacked in a boardroom coup last
week with group patriarch Ratan Tata taking over the reins as interim chair of
Tata Sons. A bitter public feud has since erupted between the two sides, raising
prospects of a legal battle.
The Nano's concept received global interest for its affordable
pricing but a change in its manufacturing location and the perception of a
cheap car hurt production and sales, Tata Motors said in the statement.
Mistry's leaked letter, addressed to the Tata
Sons directors on Oct. 25, said emotional reasons were keeping Tata Motors away
from shutting down the Nano's production.
Nano sales declined more than three-fifths to
4,459 cars in the in the six months of the fiscal year beginning April 2016.
The car maker had written off some costs
associated with the Nano, it said.
Tata Motors also said investments in the Nano
factory could be used for making other products and that the company would
focus on "growing and attractive segments of the passenger vehicle
market."
The company denied Mistry's accusation of
aggressive accounting for product development expenses and said it followed
standard norms which present a fair and true picture of its financial health.
Tata Sons on Friday announced a new
management team for the $100 billion steel-to-software group under interim
chairman Ratan Tata.
While Mistry has been removed as chairman of
Tata Sons, he is still chairman of some of the key listed group companies such
as Indian Hotels Co, Tata Motors, Tata Consultancy Services Ltd and Tata Steel.
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