Tata Motors says Ford deal to improve balance sheet
The Economic Times — March 27, 2008

Tata Motors Ltd said on Thursday it was confident its $2.3 billion deal to buy Jaguar and Land Rover from Ford should improve its balance sheet in the long term.

"We have gone through the profit and loss and balance sheet. We think we are pretty confident that they will add positively to our consolidated balance sheet," managing director Ravi Kant told Reuters on the sidelines of Bangkok's auto show. "We may have some pressure. That doesn't mean we have to change position because we have a long-term plan," he said without elaborating. Tata announced the deal to buy Jaguar and Land Rover, which will give it a line-up ranging from the world's cheapest car to some of its more expensive, on Wednesday.

Analysts have expressed concern about how Tata Motors would fund the deal and how it would fit the luxury brands into its stable of trucks, buses and cars, including the Nano, set to be the world's cheapest car at about $2,500 when it goes on sale later this year.

Tata has announced plans to raise $4 billion, expected to help finance the Ford deal and the manufacture of the Nano, which it unveiled in January.

"We are raising bridge loans for the acquisition of Jaguar and Land Rover. This is only for a certain specific period. During this period, we would come to some long-term arrangements, which will consist of loans and some possible equity," Kant said.

"I think in the next six to eight months, the picture will become much clearer," Kant said. Kant said he was worried about a possible downgrade by ratings agencies but hoped it would be positive in longer term. "Certainly, we are concerned with that. But I think they have to understand over philosophy that we are not taking this just for the next two or three quarters," he said.

"We take this for the next 20 to 30 years. So we have to see the value of this transfer for the very long term, rather than a short period," he said.

Rating agencies Moody's Investors Service and Standard & Poor's placed Tata Motors on review for a possible downgrade in early January, when it was named the front-runner for the Ford brands, citing funding and integration challenges.