India's Tatas rue global ambitions as troubles pile up
Friday, 15 May 2009
NEW DELHI, May 14 (AFP): When India's Tata Group bought British luxury car icons Jaguar and Land Rover and Anglo-Dutch steelmaker Corus, the buys were hailed as signs of the nation flexing its new global economic muscle.
Now, in an unusually frank admission, Tata Group chairman Ratan Tata has said the tea-to-vehicles group, India's oldest business house, may have gone "too far, too fast."
In fact, the purchases of both Jaguar-Land Rover and Corus have created a bigger sea of troubles for the group than anyone could have imagined, analysts say.
"Jaguar-Land Rover is in a deep hole," Paul Newton, analyst at IHS Global Insight told AFP, while Corus has idled 40 per cent of its capacity due a sharp fall in demand brought on by the global recession.
Tata paid 2.3 billion dollars for Jaguar-Land Rover in 2008.
Lost in the patriotic tub-thumbing over the deal that included Indian headlines declaring "Jaguar now is an Indian beast" were analysts' warnings that the luxury marques had been a financial sinkhole for previous owner Ford-a situation the economic crisis has only worsened.
When Tata bought Corus for 13.7 billion dollars in 2007, it was India's biggest ever foreign takeover. And the price, measured as a multiple of Corus's earnings, made it also the most costly steel takeover ever.
Both acquisitions were made "at an inopportune time in the sense they were near the top of the market in terms of price," Ratan Tata told Britain's Sunday Times newspaper last weekend.
Now, in an unusually frank admission, Tata Group chairman Ratan Tata has said the tea-to-vehicles group, India's oldest business house, may have gone "too far, too fast."
In fact, the purchases of both Jaguar-Land Rover and Corus have created a bigger sea of troubles for the group than anyone could have imagined, analysts say.
"Jaguar-Land Rover is in a deep hole," Paul Newton, analyst at IHS Global Insight told AFP, while Corus has idled 40 per cent of its capacity due a sharp fall in demand brought on by the global recession.
Tata paid 2.3 billion dollars for Jaguar-Land Rover in 2008.
Lost in the patriotic tub-thumbing over the deal that included Indian headlines declaring "Jaguar now is an Indian beast" were analysts' warnings that the luxury marques had been a financial sinkhole for previous owner Ford-a situation the economic crisis has only worsened.
When Tata bought Corus for 13.7 billion dollars in 2007, it was India's biggest ever foreign takeover. And the price, measured as a multiple of Corus's earnings, made it also the most costly steel takeover ever.
Both acquisitions were made "at an inopportune time in the sense they were near the top of the market in terms of price," Ratan Tata told Britain's Sunday Times newspaper last weekend.