Tata Motors' independent director Nusli Wadia, who will face a shareholders' vote called by Tata Sons for his removal next week, today said he had differences with Ratan Tata over continuation of Nano which has proved to be a serious drain on the financial resources of the company.
In a letter to the shareholders of the homegrown auto major ahead of the EGM on December 22, Wadia said the investment and losses on Nano have been in thousands of crore of rupees.
Giving reasons why he believed the small car should be closed, Wadia said: "The Nano, initially a car conceived to sell at Rs 1 lakh was launched in 2008 and has proved to be a serious drain on the financial resources of Tata Motors. Even at price Rs 2.25 lakh, the car neither sells nor is viable as every sale of the vehicle is at a substantial loss to the company."
He further said: "After its commercial failure, which became evident not too long after its launch, I differed strongly with its continued operations and funding. Huge losses have been incurred over the years. The plan on which the investment was made was for 2.5 lakh cars while the production in 2015-16 was in the region of 20,000 cars and presently far less."
Cautioning against continuation of the car, he said: "The delay in closure if Nano is a serious drain on the finances of the company, in addition it has created very negative image on the passenger vehicles business of the company.
"The investment and losses on Nano have been in thousands of crore of rupees. Concerns have been raised not only by me but by several others regarding the continuing operations."
Wadia also said the "alleged reasons for seeking my removal do not even remotely relate to my performance or my conduct as an Independent Director of Tata Motors for 18 years."
He also denied allegations that his "actions may put Tata Motors and its future in grave jeopardy and impact the overall morale of the workers, employees and management who have joined a Tata company", saying it was "false and untrue and is conjecture".
Claiming that no worker, employee or manager or director of Tata Motors has ever complained of his conduct, Wadia said, "On the contrary, it is they who have sought my advice on several occasions outside the board meeting on many issues."
Wadia further said he has already sent notices for defamation to Tata Sons for "carrying on a personal vendetta against me for not toeing their line".
"I believe that it is Tata Sons and its interim Chairman who have vindictively issued this notice with malicious intent to remove me from the Board of Tata Motors. I believe that it is their actions, which lack bona fide and in fact are malafide," Wadia wrote in his letter to the shareholders seeking their support.
Tata Sons, which holds 26.51 per cent stake in Tata Motors, asked the auto major last month to convene an extra- ordinary general meeting of the company to consider its resolution seeking removal of Cyrus Mistry and Wadia from its board. Wadia said the passenger vehicles business (PVB) of Tata
Motors over the years, from 2009-10 onwards, "for variety of reasons, be it design, product quality, execution, high cost, has had a serious negative financial impact on the company".
"The current capital employed in the PVB division is substantial, on which there is a serious level of loss impacting the overall financials of the company. These results have been linked to the manner in which the affairs of the company, with regard to its strategy was being formulated and centralised in the past," he said.
Lauding the leadership of Cyrus Mistry without naming him, Wadia said: "It is this issue that has been addressed since the last two years. A strategy has been evolved and present for the first time recently to bring the PBV to a level of international professionalism in terms of design, product cost, quality and viability."
Wadia also asked shareholders to note the various cross holdings that Tata Motors has in various Tata firm, including non-listed entities, the total value of which amounted to around Rs 8,800 crore.
"These cross holdings are being maintained in a debt ridden company only to indirectly keep the voting rights and control in Tata Sons," Wadia alleged.
He claimed that the figure across all the listed holdings in Tata Sons is "approximately 14 per cent of its capital to approximately Rs 70,000 crore" and "is being maintained only to share up the voting rights of Tata Trusts".
"It is for you the shareholders, who own around 70 per cent of the company to decide as to whether it is in your best interest to hold shares worth Rs 8,800 crore with no return or disinvest and pay off an equivalent debt and save approximately Rs 800 crore, thereby improving profit of the company by the same amount," Wadia told the shareholders.
Alleging Ratan Tata of "galvanising" the union of Tata Motors to take an adverse stand against the management of the company, he said the actions of Tata Sons interim Chairman has put a question mark on whether a productivity linked settlement with the workers would be signed or not.
"These actions on the part of Mr Tata 'by galvanising' the union and 'acting prejudicially against the interest of your company may put the company and its future in great jeopardy and impact the overall moral of workers, employees and management of Tata Motors," Wadia said.
He further went to allege that Tata and the Board of Tata Sons "sought access to information and documents of Tata Steel, Tata Motors and other Tata companies", even after the notification of Insider Trading regulations on January 15, 2015.
Lashing out at Tata Sons for intimidation and overstating role of promoter with regards to the Tata brand, Wadia said Tata Motors was incorporated as Tata Engineering and Locomotive Company in 1945 and in its certificate of incorporation was christened with the name Tata under the Chairmanship of JRD Tata.
"It is he who endowed Tata Motors with the name Tata. The products of the company have been sold since 1945 under the brand name Tata more than 50 years before any license agreement with Tata Sons was entered into by the company that too without payment of any fee," he said.
It is only from 1998 that Tata Motors have through this agreement, the validity of which needs to be examined and suitably addressed, paid royalty.
"To my knowledge no financial support has been given by Tata Sons to Tata Motors. No letters of comfort nor guarantees have been provided by Tata Sons to Tata Motors to my knowledge," Wadia wrote to the shareholders while seeking their support to vote against the move to remove him.