Cyrus Mistry, the former Chairman of Tata Sons has stated that even though the Tata Nano, the pet project of Ratan Tata was losing money it was kept on for emotional reasons.
Mistry mentioned this in his letter to Tata Sons and Trust Board members. Even though the Nano was suffering lose to an extent of Rs 1,000 crore the emotional reasons behind the project kept the group from shutting down the project.
Mistry in his letter said, "Another challenge in shutting it down was that it would stop the supply of the Nano gliders to an entity that makes electric cars and in which Mr. Tata has a stake."
He added, "As there was no line of sight to profitability for the Nano, any turnaround strategy for the company requires to shut it down."
He also stated that in order to boost the sales and market share Tata Motors Finance extended credit with lax risk assessment. And the result was NPAs mounted to being in excess of Rs 4,000 crore.
He said that he was forced to take tough decisions with sensitive care to maintain the group's reputation as well as containing panic among the internal and external stakeholders.
He also revealed that he had to reduce dividends in some companies such as IHCL and Tata Motors to conserve funds for the needed investments.amidst the shareholder's fury.
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