Feb 3: Tata Motors, which has been in the thick of a controversy over its bleeding Nano project, has redeemed its Rs 300 crore, non-convertible redeemable notes dot on time as part of the company’s debt reduction programme. The company is reportedly planning to halt some of its assembly lines, and that include the manufacturing platform that makes its low cost polemical model Nano.
Nano was launched by Tata Motors with much fanfare in the sub-Rs 1 lakh segment targeting customers migrating to a family passenger car from two-wheelers. But the project did not take off as expected and had cost the company dear as sustaining the model led to considerable amount of cash burn. Bad governance issues were raked up by the ousted Group chairman Cyrus P Mistry in his war of words with Group Patriarch Ratan Tata during the battle for Bombay House, a matter that is now sub-judice and is in the court of National Company Law Tribunal’s (NCLT’s) Mumbai bench.
The country’s second largest commercial vehicle maker and fourth largest passenger vehicles manufacturer, said in a statutory filing with regulators post market hours on Thursday, that it has successfully redeemed the outstanding Rs 300 crore Non-Coverable Debentures (NCDs) priced at a coupon rate of Rs 8.60% payable annually that it raised a couple of years back to fund its working capital needs. “The company has made full payment of principal along with annual interest to the holders of Debentures upon redemption of Rated, Listed, Unsecured 8.60% Coupon Redeemable, Non-Convertible Debentures of Rs 300 crore as of February 02, 2017,” Tata Motors said in the mandatory filing with stock exchanges.
The company has recorded lackluster sales performance during the month of December with sales skidding off the road while its rivals were gaining market share in its core commercial vehicle segments – light CVs (LVVs) and Heavy CVs segments (HCVs). The company’s sales hit the reverse gear of growth during January, 2017, in the middle of unconfirmed reports that it is planning to phase out some of its product lines in the near future as part of its overall business recast after N Chandrasekaran took over the reins of the Group’s holding company Tata Sons and was also inducted into Board of Directors of the company.
The management of the company was quoted as saying by news agencies that Tata Motors Ltd has set itself an ambitious target of making it to the top three global commercial vehicle players and one among the top three passenger vehicle makers in the country by 2019. The vehicle maker will stick to only two of its six platforms in its car division, which was interpreted by the media as the company may stop producing Nano.
The management, however, kept a thick upper lip on the future of its low-cost car project, whose production cost is said to be higher than its ex-showroom price.
The transformation to two platforms using Automated Modular Platform will be through by 2018 and all other platforms will be phased out by then. Some of the models will be phased out along with the platforms by 2018, as part of the strategy it set rolling since June 2016, the company’s top officials were quoted as saying.