Tata Motors couldn't shutdown Nano due to emotional reasons: Takeaways from Mistry's letter

Emotional reasons alone have kept us away from this crucial decision, said Mistry

Tata Motors has been unable to shut down the loss making small car Nano due to "emotional reasons" and doing so would also stop the supply of "gliders" to an entity that makes electric cars in which Ratan Tata has a stake, Tata Sons' ousted Chairman Cyrus Mistry has alleged.

ALSO READ: Full text of Cyrus Mistry's letter to Tata Sons Board

In clear indications that not all was well between him and Tata, Mistry in his letter to Tata Sons board members said for the group's automotive venture Tata Motors to make a turn around the company needed to shut down the Nano -- a pet project of his predecessor.

Here are the takeaways from the letter:

1. Not shutting down Nano was an emotional reason
The Nano product development required concept called for a car below Rs 1 lakh but the cost were always above this.

This product has consistently lost money, peaking at Rs 1,000 crore," Mistry said in his letter written a day after he was ousted as the Chairman of India's largest conglomerate.

He further said: "As there is no line of profitability for the Nano, any turnaround strategy for the company (Tata Motors) requires to shut it down. Emotional reasons alone have kept us away from this crucial decision." Moreover, raising issues of conflict of interest, Mistry said: "Another challenge in shutting down Nano is 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.

ALSO READ: Ratan Tata to meet PM Narendra Modi this week, Cyrus Mistry in queue too

2. Mistry says was pushed to a position of 'lame duck' 

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Full text of Cyrus Mistry's letter to Tata Sons Board

While Tata Sons followed up the sacking of its Chairman Cyrus Mistry on October 24 by inducting two new directors into the board, the now ousted former chairman has criticised the board room 'replacement' in an October 25 emailed letter and termed the move as 'shocking and unparalleled' in the annals of corporate history.

According to the letter Mistry has not only described the board proceedings as invalid and illegal but also alleged that he had not been given any free hand despite being assured of the same by Ratan Tata before he accepted the top job. Mistry alleged that after he was appointed as chairman, Tata Trusts amended the articles of association which  constrained his ability to engineer a turnaround. The text of the letter follows:

From Cyrus P. Mistry

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Lack of communication cost Cyrus Mistry his job? What led to his ouster? Cyrus Mistry may be a victim of back-seat driving

Everything from management style, egos and strategic decision seems to be behind the ouster of Cyrus Mistry as chairman of Tata group. While the real reason behind the sudden move in the most admired business house in the country has not been given, speculation and reports quoting ‘sources’ suggest that the decision to replace Mistry has been brewing for some time.

Mistry tried to consolidate group finances and stayed away from big-ticket acquisitions and large marquee projects.

Ratan Tata broke his silence on Cyrus Mistry's ouster and said that move was not an ownership battle, Indian Today reported.

According to media reports, lack of of communication is the reason behind Cyrus Mistry's replacement. CNBC-TV18, quoting sources, said that Ratan Tata & Tata Sons were not informed about major business decisions.

Read detailed stories here:Lack of communication cost Cyrus Mistry his job? What led to his ouster? Cyrus Mistry may be a victim of back-seat driving Cyrus Mistry Scorecard: Focus on consolidation and debt reduction