Forster: Bidding adieu
Mumbai, Sept. 9: In a surprise development, Carl-Peter Forster, group CEO and managing director of Tata Motors, has stepped down with immediate effect. His resignation from Indias top vehicle maker after an 18-month tenure at the top has been attributed to unavoidable personal circumstances.
Forsters resignation comes at a time automobile sales have been falling across the industry, the low-cost car Nano has failed to make the anticipated blockbuster debut on Indian roads and, as recently as this week, Italian auto maker Fiat broke off its distribution alliance with Tata Motors.
The former head of General Motors in Europe with over two-and-a-half decades experience in the global automobile industry will, however, at the request of the board of directors, continue to serve the board of Tata Motors as a non-executive member, said a media release issued by the company.
Forsters contract as MD and group CEO was supposed to run till March 31, 2013. Last year, he received a salary of Rs 4.19 crore and perquisites and allowances worth Rs 7.91 crore, according to Tata Motors annual report for 2010-11.
The contract with Forster had no provision for the payment of severance fees. Under its terms, Forster was supposed to pay six months basic salary if he terminated the contract. If, however, the company terminated the contract, it would have to pay Forster all the salaries and benefits under the agreement for the three-year period.
Since Forster is staying on as a non-executive director, neither side is expected to incur penalties for the termination of the contract.
The Tata Motors scrip fell 3.21 per cent to Rs 764 on the Bombay Stock Exchange on Friday.
Sources said the company would not seek to replace Forster and pointed out that the role of group CEO and managing director had been carved out especially for the global manager.
The Tata Motors statement said Prakash Telang, MD, India-operations, and Ralph Speth, CEO, Jaguar and Land Rover, would represent their respective operations on the board.
Tata Motors chairman Ratan Tata said, The board respects Carl-Peters personal circumstances that led to this move. We would like to thank him for his contributions to the successful development of our company in his role as group CEO and MD. We are looking forward to continue working with him as a non-executive member on the board.
Forsters statement said, I deeply regret that my personal circumstances make it difficult for me to continue to perform the challenging duties of managing the thriving global activities of the Tata Motors group with its main activities in India and the UK and increasingly in additional overseas markets.
At the time of Forsters appointment in February last year, Ratan Tata had expressed hope that Forsters induction would greatly facilitate Tata Motors ambition towards being a truly international company.
During Forsters tenure, sales of Jaguar Land Rover fared extremely well, especially in China. According to Tata Motors annual report for 2010-11, while wholesale sales of Jaguar cars rose 11.8 per cent over the previous year, Land Rover/Range Rover sales grew over 30 per cent compared with last year.