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Small Car Nano a Loss-making Product in Highly Price-sensitive Market, says Tata Motors

As there is no line of sight to profitability for the Nano, any turnaround strategy for the company requires to shut it down

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Tata Motors
Cyrus Pallonji Mistry. Flickr
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Mumbai, November 04, 2016: Echoing Tata Sons’ ousted Chairman Cyrus P. Mistry, Tata Motors on Friday said its Nano small car has been “a loss-making product” in the highly price-sensitive market, coupled with low volumes.

Mistry had earlier stated that “as there is no line of sight to profitability for the Nano, any turnaround strategy for the company requires to shut it down.”

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“Considering the attention and excitement it created, project investments were set up for capacities for around 2,50,000 cars per annum. However, unfortunately, and due to combination of several factors, including project delays due to change in location of the factory, and the perception of being a ‘low priced’ car, the volumes initially anticipated did not materialise and utilisation of capacities are significantly lower,” said the car maker responding to clarifications sought by BSE.

In a highly price-sensitive segment of the market, coupled with low volumes, it has been a loss making product, it added.

Mistry had also alleged that the Nano product development concept called “for a car below Rs 1 lakh, but the costs were always above this”. “This product has consistently lost money, peaking at Rs 1,000 crore,” he said.

Tata Motors
A Nano car on display. Wikimedia

The company further said that a major part of the investments in the factory are “capable of being utilised for other products” as is “evident from the production of company’s Tiago cars” in the same factory.

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“As far as development cost and investments in Nano specific dies and toolings are concerned, these have significantly written off, in line with the accounting policies, over the last several years,” the filing said.

Mistry had also pointed out that 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 stake”.

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Responding to that, the company said, “We would like to clarify that the matter is in a preliminary exploratory stage and no arrangement for supply of gliders has been conducted.”

The car maker said that it got approval of the board for its future passenger vehicle product and business strategy, which envisages refocusing its strategy on growing and attractive segments of the passenger vehicle market in terms of volumes and profitability, and “aligning with the changing and enhanced expectations of the consumers regarding contents and features”.

The company also said that it would pursue the refocused long-term strategy. (IANS)

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Atal Bihari Vajpayee: A Peace Visionary and a Man Who Believed in India’s Destiny and was Ready To Fight For It

It was precisely this persona of Vajpayee -- one merged in Hindutva ideology yet seemingly not wholly willing to bow to it -- that won him admirers cutting across the political spectrum.

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Atal Bihari Vajpayee,
Atal Bihari Vajpayee, India's peace visionary. Image: Flickr

Atal Bihari Vajpayee was a man of moderation in a fraternity of jingoistic nationalists; a peace visionary in a region riven by religious animosity; and a man who believed in India’s destiny and was ready to fight for it.

Former Prime Minister Atal Bihari Vajpayee (93), who died on Thursday, will go down in history as a person who tried to end years of hostility with Pakistan and put development on the front burner of the country’s political agenda. He was also the first non-Congress Prime Minister to complete a full five-year term.

Even though he lived the last 13 years of his life in virtual isolation, dogged by debilitating illnesses and bedridden, he has left an enduring legacy for the nation and the region where he was much loved and respected across the political spectrum and national boundaries, including in Pakistan.

Vajpayee, former Indian Prime Minister
Vajpayee stunned the world by making India a declared nuclear state. Image: Wikimedia Commons

In the tumultuous period he presided over the destiny of the world’s largest democracy, Vajpayee stunned the world by making India a declared nuclear state and then almost went to war with Pakistan before making peace with it in the most dramatic fashion.
In the process, his popularity came to match that of Indira Gandhi, a woman he admired for her guts even as he hated her politics.

He also became the best-known national leader after Indira Gandhi and her father Jawaharlal Nehru.

After despairing for years that he would never become Prime Minister and was destined to remain an opposition leader all his life, he achieved his goal, but only for 13 days, from May 16-28, 1996, after his deputy, L.K. Advani, chose not to contest elections that year.
His second term came on March 19, 1998, and lasted 13 months, a period during which India stunned the world by undertaking a series of nuclear tests that invited global reproach.

Although his tenure again proved short-lived, his and his government’s enhanced stature following the world-defying blasts enabled him to return as Prime Minister for the third time on October 13, 1999, a tenure that lasted a full five-year term.

When finally he stepped down in May 2004, after an election that he was given to believe he would win, it marked the end of a long and eventful political career spanning six decades.

Vajpayee had gone into these elections riding a personality cult that projected him as a man who had brought glory to the nation in unprecedented ways. The BJP’s election strategy rested on seeking a renewed mandate over three broad pillars of achievement that the government claimed — political stability in spite of the pulls and pressures of running a multi-party coalition; a “shining” economy that saw a dizzying 10.4 percent growth in the last quarter of the previous year; and peace with Pakistan that changed the way the two countries looked at each other for over 50 years.

The results of the elections could not have come as a greater shock to a man who was hailed for his achievements and who was named by Time magazine as one of the 100 influential men of the decade.

Success didn’t come easily to the charismatic politician, who was born on Christmas Day in 1924 in Gwalior, Madhya Pradesh, into a family of moderate means. His father was a school teacher and Vajpayee would later recall his early brush with poverty.

He did his Masters in Political Science, studying at the Victoria College in Gwalior and at the DAV College in Kanpur, Uttar Pradesh, where he first contested, and lost, elections. He began his professional career as a journalist, working with Rashtradharma, a Hindi monthly, Panchjanya, a Hindi weekly, and two Hindi dailies, Swadesh and Veer Arjun. By then he had firmly embraced the ideals of the Hindu nationalist Rashtriya Swayamsewak Sangh (RSS).
But even as he struggled to win electoral battles, his command over Hindi, the lingua franca of the North Indian masses, his conciliatory politics and his riveting oratory brought him into public limelight.

Also read: For Modi, Road To 2019 Will Be Steeper

His first entry into Parliament was in 1962 through the Rajya Sabha, the upper house. It was only in 1971 that he won a Lok Sabha election. He was elected to the lower house seven times and to the Rajya Sabha twice.

Vajpayee
Vajpayee spent months in prison when Indira Gandhi imposed Emergency rule in June 1975. Image: Wikimedia Commons

Vajpayee spent months in prison when Indira Gandhi imposed Emergency rule in June 1975 and put her political opponents in jail. When the Janata Party took office in 1977, dethroning the Congress for the first time, he became the foreign minister.

The lowest point in his career came when he lost the 1984 Lok Sabha polls, that too from his birthplace Gwalior, after Rajiv Gandhi won an overwhelming majority following his mother Indira Gandhi’s assassination. And the BJP he led ended up with just two seats in
the 545-member Lok Sabha, in what looked like the end of the road for the right-wing party.

In no time, Vajpayee was replaced and “eclipsed” by his long-time friend L.K. Advani.
Although they were the best of friends publicly, Vajpayee never fully agreed with Advani’s and the assorted Hindu nationalist groups’ strident advocacy of Hindutva, an ideology ranged against the idea of secular India.

Often described as the right man in the wrong party, there were also those who belittled him as a moderate “mask” to a hardline Hindu nationalist ideology. Often he found his convictions and value systems at odds with the party, but the bachelor-politician never went against it.

It was precisely this persona of Vajpayee — one merged in Hindutva ideology yet seemingly not wholly willing to bow to it — that won him admirers cutting across the political spectrum. It was this trait that made him the Prime Minister when the BJP’s allies concluded they needed a moderate to steer a hardliner, pro-Hindu party.

He brought into governance measures that created for India a distinct international status on the diplomatic and economic fronts. In his third prime ministerial stint, Vajpayee launched a widely acclaimed diplomatic initiative by starting a bus service between New Delhi and Pakistan’s Lahore city.

Its inaugural run in February 1999 carried Vajpayee and was welcomed on the border by his Pakistan counterpart Nawaz Sharif. It was suspended only after the 2001 terror attack on the Indian Parliament that nearly led to a war between the two nuclear-armed neighbours.

The freeze between the two countries, including an eyeball-to-eyeball confrontation on the border for nearly a year, was finally cracked in the spring of 2003 when Vajpayee, while in Kashmir, extended a “hand of friendship” to Pakistan. That led to the historic summit in January 2004 with then President Pervez Musharraf in Islamabad — a remarkable U-turn after the failed summit in Agra of 2001. Despite the two men being so far apart in every way, Musharraf developed a strong liking for the Indian leader.

His unfinished task, one that he would probably rue, would be the peace process with Pakistan that he had vowed to pursue to its logical conclusion and a resolution of the Kashmir dispute.

He was not known as “Atal-Ji”, a name that translates into firmness, for nothing. He could go against the grain of his party if he saw it deviate from its path. When Hindu hardliners celebrated the destruction of the 16th century Babri Mosque at Ayodhya, he was full of personal remorse for the apocalyptic action and called it — in a landmark interview to IANS — the “worst miscalculation” and a “misadventure”. He even despaired that “moderates have no place — who is going to listen to the voice of sanity?”

In his full five-year term, he successively carried forward India’s economic reforms programme with initiatives to improve infrastructure, including flagging off a massive national highway project that has become associated with his vision, went for massive privatisation of unviable state undertakings despite opposition from even within his own party.

While his personal image remained unsullied despite his long innings in the murky politics of this country, his judgment was found wanting when his government was rocked by an arms bribery scandal that sought to expose alleged payoffs to some senior members of his cabinet. His failure to speak up when members of his party and its sister organisations, who are accused of killing more than 1,000 Muslims in Gujarat, was questioned by the liberal fraternity who wondered aloud about his secular proclamations. He wanted then Chief Minister — now Prime Minister, Narendra Modi — to take responsibility for the riots and quit but was prevailed upon by others not to press his decision.

A day before his party lost power, Vajpayee was quoted as saying in a television interview that if and when he stepped down he would like to devote his time to writing and poetry. But fate ruled otherwise. The man who once rued that “I have waited too long to be Prime Minister” found his last days in a world far removed from the adulation and attention — though across the nation people prayed for his well-being — surrounded only by care-givers and close family whom he even failed to recognize. (IANS)