Nano leading to giga losses, Wadia tells Tata Motors shareholders

After losing his seat on the Tata Steel board, Nusli Wadia stayed away from the Tata Motors’ EGM on Thursday. Going by the overall sentiments expressed by the shareholders, Wadia is likely to lose his position on the Tata Motors board by a heavy margin.

The meet saw near unanimous support from shareholders for the removal of Wadia, many questioning his decision to be absent from the EGM instead of facing the shareholders and explaining his position against the Tatas. The meeting was chaired by non-executive independent director Subodh Bhargava.

However, a few shareholders raised objections towards the way things have been handled and urged Wadia, Cyrus Mistry and Ratan Tata to sit together and find a solution instead of spending millions of dollars on advocates and eroding shareholder value.

One shareholder, who did not get a chance to speak, shouted out during the meeting that the Nano project should be shelved as it is incurring heavy losses.

“I request all the three Parisis to come to a negotiation table and sort out the differences over a peg of whiskey,” said one of the shareholders at the meeting.

“The only people to benefit from this would be the corporate lawyers, who would walk away laughing to the bank with crores of rupees,” said a shareholder who identified himself as Gonsalves. “In the process to remove an independent director, the promoters should not be allowed to vote. JLR in the recent past has done extremely well at the behest of strong tailwinds in China. Once JLR goes down during bad times, Tata Motors would be very badly impacted. Every year Tata Motors is losing market share. I think Ratan Tata wants to install a yes man as the next Chairman.”

Many others questioned Wadia’s move to sue Tata Sons for ₹3,000 crore. They urged the board to sue Wadia for the reputation damage caused to Tata Motors due to the entire controversy.

“I am perturbed that Wadia is suggesting that Tata Nano production should be stopped. It is a people’s car and a pride for the company,” said a Pune-based shareholder who travelled to Mumbai just to vote in favour of the Tatas.

In a letter to shareholders sent hours before the EGM, Wadia had reiterated the point raised by Mistry in the past, about how the Nano has been a big burden to the company. He said the project was an "ill-conceived investment” that has caused significant losses.

“The plan on which the investment was made was for 250,000 cars while the production in the year 2015-16 was in the region of 20,000 cars and presently far less,” Wadia said. The delay in closure of Nano is not only causing financial damage but also creating a negative image for Tata Motors in the passenger vehicle segment, he added.

Wadia also pointed towards cross holdings within Tata Group companies and said: “It is for you shareholders of Tata Motors, who own 70 per cent of the shares of the company, to decide whether you want to be the holder of shares with minimum return, zero liquidity and no exit.”

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