Friday, September 30, 2011
By Pranjal Gera
Tata Motors struggling for a better future
Tata Motors, that owns Jaguar and Land Rover too, seems to be in no hush to replace its CEO, who resigned on September 9. Shares of the company are constantly falling down and being traded at heavy discounts. The company's market value has gone down by about 30 percent in the last six months. The enterprise value, as per a trusted source, has now become 3.2 times. Whereas, it's competitor Askhok Leyland's equivalent number is 6.3. According to an estimate, Tata Motors' market value sits at $10 billion. Though, Jaguar Land Rover's market value is alone around $13 billion. It's true that drawing such parallels is not easy as there are some important differences that can be missed. But Tata Motors value is really going down and the company, needs a new CEO who can lift the company back up.
The discounts on share price can be explained with company's concern over the current economic condition and thus, sales of Jaguar Land Rover in the United Kingdom and United States. Earlier, there were rumours that Jaguar Land Rover might get separated entity in London, but the company is now working hard to run both the units together and attaining real benefits from the same. New engine technology is being developed and new markets are being targeted, including China, but this is just a start.
Tata bought Jaguar Land Rover (JLR) in the year 2008, and the company deserves full credit for bringing back these upmarket brands to profit. The huge sum of 1.15 billion pounds paid to Ford for acquiring JLR, now seems as a bargain. But, Tata should move on, and replace its CEO, Forster, as soon as possible.