‘Global sales may soon zip ahead of local volumes’
Economic Times — March 28, 2008

Tata Motors is on the move. Less than 24 hours after the acquisition of Jaguar and Land Rover, company MD Ravi Kant flew off to Bangkok to officially launch its operations in that country. Not surprisingly, the focus was on Tatas’ acquisition of JLR. This is what he had to say about the transaction and future prospects.

What will be the future strategy for Land Rover and Jaguar?

As we have always maintained, these two iconic brands will remain so. And we will allow them to have the freedom to strengthen their brand personality further. We have seen the proposed plans for the next five years and we have bought into those business plans based on the assumptions shared with us . We believe in those plans. There are exciting times and both the brands are geared up for the future. Under the Jaguar brand, a new model XK has been a successful model. The new sedan XF has got great reviews in the auto expos and bookings for 15,000 cars have already been received. I think there is a good product line and the company should do well.

How is the acquisition being financed? There have been concerns about the cost of acquisitions and the debt that you will have to raise.

We strongly believe that we have paid a good price for the deal. The $600 million that will go back to the company as pensions, and therefore, that is investment back into the company, which would be put in for the employee welfare. We have already said we would raise bridge loans, which we will convert into equity. The loans would be raised on the balance sheet of Tata Motors.

Is this the right time for you to buy these brands when the US, the world’s largest market is undergoing a recession ? When and how will you turn around these companies?

We have bought Jaguar and Land Rover as one company with two brands. If you look at their consolidated balance sheet they are not making a loss. There was no option for us to choose the time. We have been in the industry for more than 60 years and do not make investment decisions looking at three-four quarters. We are here for the long-term.

What are your marketing plans for the brands and when would we see them being sold in India aggressively?

We would have an independent marketing structure for these two brands. The key market for these brands are the UK, Europe and the rest of the US. The brands’ India strategy will be worked upon.

How will these brands be integrated into your company?

Jaguar-Land Rover will function just as any other 100% subsidiary of Tata Motors.

With acquisitions of Daewoo in Korea, operations in Thailand and now Land Rover and Jaguar, will your vehicle sales abroad surpass the domestic sales figures?

After the Jaguar and Land Rover deal gets consummated, I think the international vehicle sales might surpass our domestic vehicle sales. JRL sales are more than Tata Motors. Moreover, international vehicles sales have been growing faster in the past five years both organically and inorganically.

What was your first reaction after Tata Motors sealed the deal to acquire Jaguar and Land Rover?

Actually, there are no first reactions. We have been in the midst of the deal for so long that there was just a sense of achievement. Right now, all I can comment is that we have done the share and purchase agreement for $ 2.3 billion. This will require regulatory approvals and that should happen in the next 3-6 weeks and that is when more details will surface. This will go for required regulatory approvals in Europe and other countries. We expect that within the next quarter, the deal should be completed.