ePaper_2nd Edition_November 16, 2016

22
WEDNESDAY, NOVEMBER 16, 2016
DT
Opinion
The Tata is out of the bag
When public money is used to help a private company, people are naturally enraged
• Garga Chatterjee
The Cyrus is out of the
opaque bag called the
Tata Group, one of India’s
largest corporate groups
with its strong presence across
South Asia and beyond. After the
unceremonious ouster of Cyrus
Mistry from the chairmanship of
the Tata group, the ousted man
decided to spill some beans by
giving details of the reasons for
his possible ouster and also raising
huge questions about the Tata
group itself in the process.
Whether the beans are real,
we do not know. Given that it
comes from a person who was
not only chairman but also has
huge financial stakes in the Tata
group itself, the chances are that
what he has said is not completely
false. After all, no businessman
says things that would hurt his
own stakes unless he thinks that
bringing certain issues out in
the open and their subsequent
resolution will actually help the
profitability of the company. And
Cyrus Mistry is a businessman.
In a sense, Cyrus Mistry has
done for the rest of us what
Wikileaks has been doing for the
whole world -- bringing out the
truth that is hidden behind the
curtains of power. More often
than not, the truth comes out due
to contradictions within power
circles, as it is in the present case.
In other cases, it is driven
by people of conscience. Such
moments are rare and are of much
more than voyeuristic interest.
For entities that are not your
local hardware store but whose
interests, needs, and priorities
determine government policies,
we have a right to know what is
going on, even if it affects them.
Lack of transparency is key to
crony power. Truth is people’s
power.
What Cyrus Mistry revealed
in his letter is of special
significance to West Bengal. He
writes in the letter: “Historically,
the company had employed
aggressive accounting to capitalise
substantial proportion of the
product development expenses,
creating a future liability.
Beyond this, the Nano product
development concept called for
a car below Rs100,000, but the
costs were always above this.
This product has consistently lost
money, peaking at Rs1,000 crore.
“As there is no line of sight
to profitability for the Nano,
any turnaround strategy for the
company requires to shut it down.
Emotional reasons alone have kept
Cyrus Mistry has revealed a lot about the goings-on of the Tata group
us away from this crucial decision.
Another 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 a stake.”
This tells us a few things.
The shutting down concerns the
Sanand factory of Tata Motors that
produces the Nano car. However,
there is an alleged conflict of
interest in shutting it down since
the same factory produces Nano
gliders that are used in an electric
car. Ratan Tata has financial stake
in that.
What it means is that the Nano
factory by itself produces a lossmaking
product. Cyrus Mistry, as
the chairman till recently, thinks
closing down the operation is the
only way to cut the losses. Closing
down the operations means loss
of jobs in the factory and loss
of livelihood in the ancillary
industries around it.
All this within a period of
less than 10 years from the time
the factory was set up. The land
however is gone from the hands of
its original owners, permanently.
The letter also makes clear
that the actual cost of making the
Nano car is more than its pricetag.
Who pays this extra amount?
No sane businessman would
produce a Tk100,000 price tag
product, where his input costs are
more than that. Unless, of course,
someone else subsidises it.
Thus the Nano business plan
where costs are higher than the
For entities that are not your local hardware store, but whose interests,
needs, and priorities determine government policies, we have a right to
know what is going on, even if it affects them. Lack of transparency is
key to crony power. Truth is people’s power
car’s price tag automatically calls
for external subsidy, which
is precisely what the Gujarat
government and hence the people
of Gujarat provided, per car, for
every car. And all that subsidy
seems to have yielded little.
The Nano project is in doldrums
with shutting down being the
sanest recommendation. Such
subsidies are public money. When
public money is used to help
a private group make profit, it
naturally enrages people. Such
a subsidy arrangement also
existed between Tata Motors
and the erstwhile government of
West Bengal when Tata planned
their Singur plant.
This is also why both the
erstwhile CPI(M) government of
West Bengal and the Tata Motors
administration have been so
adamant about making public all
the terms of the understanding
between them. The people of West
Bengal have a right to know what
sort of support did the CPI(M)-led
government commit to, so that the
so-called one-lakh car could be
sold at that price.
In all this, Mamata Banerjee’s
steadfast stance in protecting the
interest of landowners and farmers
in the historic Singur movement
becomes all the more significant.
The Singur factory structure was
blasted by dynamite recently to
make the land arable again for
the original owners to whom the
lands have now been returned
after the Supreme Court’s order
that deemed the erstwhile CPI(M)-
led West Bengal government’s
land acquisition for the Tatas as
patently illegal.
The lesson in all of this is for all
governments who are desperately
seeking investments at all costs.
They need to know the number of
jobs created more than the volume
of money invested. They need
to know the long-term business
plan and be privy to the feasibility
studies. For others may have
emotional reasons for not shutting
down a factory subsidised by
public money and permanent land
acquisition.
But the livelihood security of
the people can’t be dependent
on the mood-swings and
sentimentality of corporate
mandarins. It is the job of the
government to ensure that
security. By advocating for a land
acquisition law that disregards the
opinion of the people whose land
will be acquired, the BJP-led Union
government has shown whose side
they are on.
Mamata Banerjee has shown
that she stands for land acquisition
only with people’s consent. It
should be plain to anyone that, in
a political democracy, which of
these two stances are more propeople.
Most good thoughts about
people’s welfare don’t emanate
from Delhi. •
Garga Chatterjee is a political and
cultural commentator. He can be
followed on twitter @gargac.
REUTERS