MUMBAI: Ahead of Nusli Wadia's removal in the December 22 "extraordinary" general meeting, the independent director of Tata Motors Ltd (TML) said on Wednesday that the Nano small car has proved to be "a serious drain on the financial resources" of the company.
In a presentation to shareholders, he said that the company was burdened with "heavy debt" and has a "substantial funding requirement for its future strategy".
"The Nano, initially a car conceived to sell at Rs one lakh launched in 2008, has proved to be a serious drain on the financial resources of Tata Motors," the representation said.
"Even at a price of Rs 2.25 lakh, the car neither sells nor is viable as every sale of the vehicle is a substantial loss to the company," it added.
Wadia said huge losses were incurred over the years.
"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."
"The delay in closure of Nano is a serious drain on the finances of the company..." Wadia added.
He also said the small car had created negative image of the company's passenger vehicle business and the investment and losses on Nano have been in thousands of crores of rupees.
"Concerns have been raised not only by me but by several others regarding the continuing operation," he said.
In the 11-page representation to shareholders of the company, Wadia also said that the current capital invested in the passenger vehicle business division was substantial, on which there was a serious level of loss impacting the overall finance of the company.
The company has large cross holdings in various Tata companies, including non-listed and listed companies. The value of the unlisted shares is approximately Rs 8,600 crore.
The current value of the listed shares is in excess of Rs 200 crore, making a total of around Rs 8,800 crore, the letter said.
"These cross holdings are being maintained in a debt ridden company only to indirectly keep the voting rights and control in Tata Sons," Wadia said.
"The figure across all the listed companies holding in Tata Sons Ltd is approximately 14 per cent of its capital amounting to approximately Rs 70,000 crore and is being maintained only to shore up the voting rights of the Tata Trusts," Wadia added.
He said: "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 the shares worth Rs 8,800 crore with no return or to divest, and pay off an equivalent debt and save interest of approximately Rs 800 crore, thereby improving the profit of the company by the same amount."