Tata Motors, wing of India's Tata group, defended its strategy for the production of USD1,500 Nano. It refused to comment on the loss-making car's future, post the conglomerate's ousted chairman said there were emotional reasons for not shutting down production. Tata Motors' gave the statement to the stock exchange after an internal letter by chairman Cyrus Mistry claimed that the cost of Nano's production remained higher than its Rs 100,000 (USD1,497.33) price tag and the project needed to to be closed if the company wanted to stay profitable.
The Nano's concept received global interest for its pocket friendly price but an alteration in its manufacturing location and the perception of a cheap car affected production and sales. Mistry's leaked letter, addressed to the Tata Sons directors on Oct. 25, cited that emotional reasons were preventing Tata Motors from shutting down the Nano's production. Nano sales reduced more than three-fifths to 4,459 cars in the in the 6 months of the financial year beginning April 2016.
Tata Motors also said investments in the Nano factory could be used in order to make other products and that the company would stay focused on growing and attractive segments of the passenger vehicle market. The company refused Mistry's accusation of aggressive accounting for product development expenses and said it maintained standard norms which highlight a fair and true picture of its financial health. Tata Sons on Friday disclosed a new management team for the USD100 billion steel-to-software group under interim chairman Ratan Tata. While Mistry has been sacked as chairman of Tata Sons, he is still chairman of some of the key listed group companies which include Indian Hotels Co, Tata Motors, Tata Consultancy Services Ltd and Tata Steel.
On the other hand Tata Motors share price settled above 0.65 per cent at Rs. 512.30 on 4th Nov. The stock was trading at Rs. 513.50. For further details on the stock, refer to Tata Motors share price forecast.
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