But many investors and automotive industry analysts question whether a bid by India's Tata Motors — maker of workhorse trucks and low-end mass market cars — for the two luxury brands would make much business sense.
But while the Corus acquisition was widely seen as a good match — and since appears to be paying off — experts don't see similar synergies in a Tata Motors takeover of Jaguar and Land Rover.Long a giant in truck and bus manufacturing, Tata has only about a decade of experience selling cars — and most recently, has grabbed headlines with its plan to make an ultracheap car costing just 100,000 rupees (US$2,400, €1,750) The company has been successful selling into the burgeoning Indian market, which is dominated by hatchbacks and subcompacts.
Jaguar and Land Rover are luxury brands that cater to a small percentage of customers and have a limited distribution network. What Tata needs more, if it wants to reduce its dependence on Indian buyers, is a large overseas sales network that targets the mass market, experts say.
"It makes no sense at all," said S. Ramnath, an auto analyst at Mumbai-based brokerage firm SSK Securities Ltd. "It's passion that is behind this move."
Morgan Stanley analyst Balaji Jayaraman called such an acquisition "value-destructive given the lack of synergies and the high-cost operations involved," in a note to clients.
Indian companies, including the Tata Group, have often tried to improve profitability of acquired businesses by shifting some production to India, where wages and raw material costs are low. But that option may not work out with Jaguar and Land Rover.
"Indian auto parts suppliers do not have the technical capabilities to make such a transition," said the Morgan Stanley note. "Even if they had a production set-up in India, they would need to import the auto parts."
Moreover, a possible acquisition of Jaguar and Land Rover could upset Tata Motors' plan to spend up to 120 billion rupees (US$2.9 billion, €2.1 billion) in expanding production, including investment in the 100,000-rupee car project, said Ramnath at SSK Securities.
But Ratan Tata is no stranger to this sort of criticism, and has had a long record of proving his critics wrong.
It may actually be a blessing in disguise if tata's loose the bid for jaguar,landrover.Already one indian manufacturer has pulled out of the race.Would tata be third time unlikely considering this would be the third time tata goes against analysts advice[first being the indica,second being the one lakh car].Another factor working against this acquisition is that these auto companies[in particular landrover ] will find it real tough to meet the strict emission norms to be implemented in europe and possibly worldwide even in the near future.
