Responding to criticism from analysts who say Tata Motors' takeover of Jaguar and Land Rover from Ford is an expensive venture fraught with risks, the company said that it was confident that the $2.3-billion deal would improve its balance sheet in the long term. (See: Tata Motors confirms Jaguar, Land Rover deal with Ford for $2.3 billion)
Tata Motors managing director Ravi Kant, who had an integral part to play in the negotiations for this acquisition, was quite upbeat about the future prospects of this acquisition.
"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", he added.
Speaking on the sidelines of the ongoing Bangkok Auto Show, he said that although there would be some pressures on financials in the immediate future, Tata Motors was looking at a long-term plan, about which it was quite optimistic.
"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.
Tata Motors is already a name to reckon with in the manufacture of trucks and buses, and has lately created international globally for creating a ''paradigm shift'' in the automobiles segment by unveiling the cheapest production car in the world with the Tata Nano. Analysts have expressed concern about how Tata Motors would fund the deal and how it would fit the luxury brands in its existing repertoire.
Tata Motors has announced plans to raise $4 billion, out of which $3 billion is expected to fund the buyout and working capital, with the rest required for manufacture of the Nano.
However, Kant did express concern of a possible downgrade by rating agencies in the near future but hoped it would be positive in longer term.
His concern was not unfounded, as rating agencies Moody's Investors Service and Standard & Poor's had 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.