Significance of Tata’s acquisition of the Land Rover and Jaguar
2008 was a particularly good year for India
Four out of top ten featured in the Forbes’ super rich list 2008 are Indians. Compare this with 2007 edition and you will find that there is a lone Laxmi Mittal from India at the fifth spot. There was a jump of nearly 30% in the number of tycoons who made it to the Forbes list from Asia, most of them are from India and China. That more and more Indians are getting attention from the world is something Indians, long known for their intelligence, hard work and deal making capabilities, should be definitely proud of.
Significantly, Tata’s move to close the Jaguar land Rover deal at 2.30$ Billion has promptly put the Indian Company and India on a global map in the automobile industry. Some of the headlines in prominent newspapers around the world read, “Indian Firm buys Land Rover, Jaguar” another was, “The Rupee’s rising clout” This is the second major announcement that the Tatas made recently, the previous one being “Nano”, the Tata’s version of the world’s smallest car priced at just Rs 100,000 or £ 1,200.
Ford bought the Jaguar in 1989 for $2.5 billion and Land Rover in 2000 for $2.7 billion. They also heavily promoted both the brands, spending millions of dollars. Unfortunately, this acquisition was not profitable, particularly Jaguar, which had a history of being unprofitable in the past decades. There were reliability issues with Land Rover. Because of these and other issues, the Ford company decided to go ahead and sell these two marques at nearly half the cost it took for them to acquire both of them. They acquired both at an aggregate sum of 5.2$ billion and now they are selling it to the Tatas at 2.5$ Billion.
This planned acquisition by the Tatas also reflects their mindset towards the future, which is Globalization. The Tatas felt that being dependent on just the Indian Market Economic cycle might leave them vulnerable. Particularly, the volatile nature of the market in India. So, it became their strategy to expand their base into foreign territories and expand their corporate wings. This global outlook towards Business is definitely the way to go in the future.
One is curious to see if the Tatas can finally break the Jaguar and Land Rover jinx and finally convert them to profitable brands. Given the calculated and shrewd Indian mentality that Indians have, I am tempted to say that both Jaguar and Land Rover will make a historical turn around in the near future.
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March 29th, 2008 at 8:25 pm
How true that this is yet another land mark in Tatas’ corporate journey.Considering the road blaocks put forth by the companies earlier, it is all the more a sweeter acquisiton for Ratan Tata. It can also be termed a snub to Orient Express hotel group who had told him that” coopertaing with him would odwn vale their image.” I wish ratan sets his eyes on that or even a bigger Hotel Chain to give a befitting reply.