Cab aggregators Ola and Uber have pulled out a huge order of around 2.7 lakh vehicles from Tata Motors. The long tiff between Ratan Tata, the chairman emeritus of Tata Group and former chairman Cyrus Mistry has allegedly led this order to fail and finally, it has gone to its rival Maruti.
These ride-hailing companies procure cars from automakers to make it available for drivers on installments.
According to a Business Standard report, Tata asked Mistry to consider a proposal by Ola, which wanted to buy 150,000 cars. He also questioned Mistry through a letter if Tata Motors could execute both the Ola and Uber proposals it would be even better and profitable for the company.
“How will Tata Motors justify turning away any proposal for a guaranteed offtake? “, asked Tata.
According to him, the deal would have constituted about company’s 15 months production at current sales levels. Additionally, it would help the auto major to come out from the loss due to the company’s Nano model downfall.
The report further added that Tata was in talks with Ola co-founder Bhavish who was keen to acquire 10,000 Nanos and Indicas/Indigos from Tata Motors on outright purchase, lease or joint venture. On annual basis, they had plans to acquire 150,000 such vehicles.
Due to the lack of positive response from Tata group, Ola pulled out from the deal which was already approached by Maruti Suzuki.
Ola’s rival Uber was also in talks with Tata Motors for a similar deal with a requirement of 120,000 Indicas and Indigos.
One of the major reason for the failure of the deal is that Mistry had an objection to Tata personal investment in Ola.
Meanwhile, National Company Law Tribunal’s (NCLT’s) Mumbai Bench observation, who has been observing the case also slammed Mistry and said that Ratan Tata was not in the wrong for suggesting business ideas to Mistry. NCLT also added that Mistry looked to undermine the authority of the majority shareholders of Tata Sons.