Ratan Tata may go with move to hold back Nano investment

MUMBAI: Ratan Tata is unlikely to reverse Cyrus Mistry's decision to hold back future investment in the Nano, the people's car that is close to the heart of the current interim chairman at the Tata Group. In August, then under Mistry, the Tata Motors management agreed to slow down investment in the development of a new Nano and focus on a two-seat sports car, in addition to funding the development of the Hexa and Nexon SUVs and the Kite 5 sedan.

With the change of guard, there has been speculation that Tata Motors will review all decisions taken under Mistry, who was ousted as the Tata Group chairman last week.

However, three people that ET spoke to confirmed that there was no plan to undo Mistry's decision at least on the Nano's proposed new avatar. The sports car plan, too, is likely to get the go-ahead. "On all the product plans (under Mistry), Mr Tata was kept in the loop," one of the people said. A "final sign-off" on the product portfolio and investments will be taken soon, he added.


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Sources close to the company said they do not visualise any drastic change in plans. They declined to be named as they are not authorised to speak on future projects.


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"We are proceeding according to plan and its business as usual," a Tata Motors spokesperson said, while not responding directly on the queries on the sports car and the future of the Nano. "You are already aware that we have a welldefined new PV (passenger vehilces) strategy, which has been approved by the Board of Tata Motors and Mr Ratan Tata has been kept informed of the same," said the spokesperson.


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An email sent to Mistry's office did not elicit any response till press time Thursday.

In recent months, Mistry and his team's effort to radically change the company's profile in the market has started paying dividends in the marketplace. The successful test runs of the new Hexa and the success of the Tiago hatchback, which boasted over 58,000 bookings, and the recent turnaround of operations thanks to strong offtake of commercial vehicles, had rubbed off on the sentiment.

In a letter to the Tata Sons board last week, Mistry said the group was losing money on the Nano and that the project wasn't closed down only due to emotional reasons, a veiled reference to Ratan Tata's interest in the car.


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The 3-cylinder 1-litre new Nano — the project was called Pelican — was scheduled to be launched in 2016-2017. It has been put on hold due to lack of visibility on profitability, the people ET spoke to said. Continuing with the project would have meant spending a large amount of money, as it needed work to meet new crash and emission guidelines.

Also, the entry car segment in India is changing and many first-time car buyers are jumping to premium hatchbacks, which may have also made Tata Motors review the Nano concept, said an industry executive who was associated with the project said.