Finally, Ratan Tata admits mistake

Finally, Ratan Tata has admitted that his companies “might have gone too far too fast” which is what I have stated on this blog long time back when everybody was going ballastic about Tata’s acquisition of Corus and Jaguar Land Rover (JLR).

Growth with debt-Keep your fingers crossed

I was surprised to note that Tatas have also borrowed heavily by pledging its shares. Growth with too much borrowed money is very risky. Public invests in Tata companies thinking they are financially sound without realizing that they have borrowed heavily. When I saw Tatas going in for huge acquisitions like Jaguar/Rover and Corus, I was concerned that even if one of them landed in trouble, Tatas could get into serious trouble. With the recession and financial crisis, trouble has landed in multiples. The interest of the common shareholders in the Tata companies could suffer.

Tata should not have bought JLR-I told you so

I have discussed earlier that there was no need for Tata to buy Jaguar/Landrover company. Not only Tatas didn’t have a strategic fit (its car brands are no where close to JLR in terms of positioning) but also they were looking for unnatural growth by buying a company and brands which were too big for Tatas car manufacturing capabilities and brands. Its going to be a tough time for Tatas in the coming months/years.