Tata Group’s practice of lending without adequate risk assessment, particularly in Nano and small commercial vehicle (SCV) segment, has resulted in non-performing assets (NPA) of ₹4,000 crore, ousted Chairman Cyrus Mistry has alleged.
However, he termed the Nano project as a “brave” one, even though the project could not be shut and continues to incur losses.
“I had highlighted the practice of lending without adequate risk assessment, particularly in the Nano and SCV segment…. If we are to benchmark the gross NPA percentage as against any other finance company in the similar segment the difference would be in multiples,” Mistry’s office said in a statement.
“This easy finance, artificially bolstered the market share figures and as soon as this was reigned in, we saw a steep drop in the volumes of SCV and the Nano,” it said, adding in case of SCVs, the volumes fell by more than 50 per cent.
Mistry was reacting to statements in Tata Motors’ annual report, which had termed the ousted Chairman’s observations as “incorrect and careless”.
Nano projectTerming the Nano project as “conceived was indeed brave”, the statement added that it was not profitable for a number of reasons.
Mistry also drew attention to an alleged area of conflict of interest in the supply of Nano body shells to Jayem Motors, a company in which Ratan Tata had investments in his personal capacity. This forced its production to continue on a sub-scale basis for almost one year after the original decision had been taken.
Responding to Mistry’s statement, sources close to Tatas said that the fall in Tata Motor’s market shares happened in five years when Mistry was at the helm.
The source said that Nano constitutes a very small part of Tata Motors and it was Ratan Tata himself who had brought it to the attention of the Tata Sons board on his personal investment with Jayem.
“There has been no commercial arrangement whatsoever between Tata Motors and Jayem. Also no confidential information has ever been shared with anyone,” the source said.