Taking its alliance with Fiat Auto a step forward, Tata Motors is jointly bidding with its partner Fiat Auto for Ford?s Jaguar and Land Rover brands, sources close to the deal told FE. Funding the Rs 6,000-crore deal would not be an issue, as an under-leveraged Tata Motors balance sheet (the current debt-equity ratio is at 0.64:1) could easily mop up the required money, they said.
Industry analysts, however, claimed the Tatas might want to draw upon Fiat?s experience and expertise in handling brands like Ferrari and Alfa Romeo. Citigroup is reportedly advising the Tatas on this deal.
So far, Tata Motors has offered no official comment on the deal. Announcing the first quarter results at a press conference in Mumbai on Tuesday, managing director Ravi Kant maintained a similar stance, refusing to entertain any questions on the Jaguar-Land Rover deal. On the sidelines, he told FE, ?We are exploring opportunities of taking our alliance with Fiat Auto beyond India to other geographies.?
Tata Motors, which recently formed a JV with Fiat, has decided to use the Tata brand for entry-level cars, while the Fiat brands will be positioned at the mid to premium end of each segment.
?Tata Motors does not have a presence in the premium segment in the domestic market. So its decision to enter the most high-end segment on its own does not seem to be a strategic move, as managing the brands would be no mean task,? said a Mumbai-based auto analyst. ?Given that it is banking on Fiat to have a presence across segments in the domestic market, Tata Motors could well extend that arrangement by bidding jointly with Fiat,? he added.
Interestingly, Fiat and Renault had reportedly not expressed any interest in the European brands put on the block by Ford. Land Rover is a luxury brand that was bought by Ford Motor from BMW in 2000. It set a new global sales record in the first half of this year, helped by strong sales abroad. Also headquartered in the UK, Jaguar produces a series of elegantly styled sports cars and luxury saloons. The two firms have a combined UK workforce of 19,000.
