Tata Nano could have survived, reveals Ratan Tata’s letter to Cyrus Mistry: Details

Tata Motors produced just 3 units of the Nano hatchback in June 2018, and serial production of the world’s cheapest car has now seized at the Sanand factory. Tata Motors has not discontinued the car yet, and is willing to build the Nano on specific orders from customers. However, the Nano could not just have survived but could have actually thrived, and Ratan Tata’s letter to Cyrus Mistry reveals why.

On 16th September 2015, Ratan Tata (ex-chairman of Tata) wrote to the new Chairman of Tata, Cyrus Mistry,

You would recall when we were together in Pune on September 1, I mentioned to you that Bhavish Aggarwal (co-founder of Ola cabs) told me that they were keen to acquire 10,000 Nanos and Indicas /Indigos from Tata Motors on outright purchase, lease or joint venture. On annual basis, they had plans to acquire 150,000 such vehicles. He mentioned while Ola was keen to do the transaction with Tata Motors, there was no positive response from Tata Motors. By contrast, Maruti Suzuki was chasing him every day. A proposal to offtake 150,000 Indicas and Nanos should be welcomed by the company, as it constitutes about 15 months’ production at current sales levels. If Tata Motors could execute both the Ola cabs and Uber proposals it would be even better and would be a real shot-in-the-arm for the company. While Tata Motors has turned away the Ola cabs proposal as being inferior, I hope for your sake and for that of Tata Motors that the Uber proposal for a similar number of vehicles, which Tata Motors is pursuing, does indeed get concluded.

Ratan Tata was one of the earliest investors in cab aggregating app Ola. Cyrus Mistry’s counter was that the proposal from Ola to buy the Nano, Indica and Indigo cars were inferior to that of Uber. However, even Uber did not purchase the cars at the end, which means that Tata Motors lost sales of more than 150,000 cars. Currently, all three cars that Uber and Ola intended to purchase from Tata Motors – the Nano, Indica eV2 and Indigo eCS – are now discontinued.

Ratan Tata and Cyrus Mistry had a showdown a year later, and Mr. Mistry was ousted from the chairmanship of the Tata group. Mr. Mistry then went to the National Company Law Tribunal (NCLT), which heard his complaints against Mr. Tata earlier this year. However the NCLT has dismissed Mr. Mistry’s complaints against Tata and has ruled in favour of Mr. Ratan Tata.

Via BusinessToday