INSUBCONTINENT EXCLUSIVE:
Tata Group should treat the speed bump at Jaguar Land Rover as a timely memo: The $102 billion salt-to-software conglomerate can no longer
put off listing its closely held parent.UK-based Jaguar Land Rover Automotive Plc is burning cash on electric-vehicle technology just as the
double whammy of a Chinese auto slowdown and Brexit threatens margins and sales
At average cash burn rates of 670 million pounds ($882 million) a quarter, the British carmaker may struggle to make it through another
year, my colleague Anjani Trivedi wrote last month after it took an asset impairment charge of 3.1 billion pounds.Had holding company Tata
been a publicly traded firm, it could have raised equity relatively easily to help tide JLR over
Instead, Tata Motors Ltd., which acquired JLR in 2008, is exploring strategic options including a sale of a stake in the U.K
unit, Bloomberg News reported
dissipated, and that shows the problem with the sprawling Tata Group's structure
In the current scheme of things, the holding company and its 66-per cent owners - who happen to be charitable trusts - depend on payouts
from software services provider Tata Consultancy Services Ltd
between patriarch Ratan Tata and Chairman Cyrus Mistry, who was abruptly ousted after less than four years
Borrowing on the strength of operating companies' cash flows has a limit
Next year will see a record $17.5 billion of debt mature, according to bonds and loans data compiled by Bloomberg
Ltd., which supplies metal to auto and appliance makers, is a step in that direction
The move helps group boss Natarajan Chandrasekaran cut Tata Steel Ltd.'s reliance on a less-than-rewarding construction industry.Still, it's
Jaguar Land Rover that should worry him
JLR has avoided investing in entry-level crossovers - which account for a quarter of sales at rivals BMW AG and Daimler AG's Mercedes-Benz -
because of its expensive focus on electric vehicles, as Deepesh Rathore, analyst at Emerging Markets Automotive Advisors, said in a
Global auto sales have been growing very slowly for two years at least
Short-term volatility aside, that may not change unless income growth is disrupted, says Jonathan Wilmot, global strategist at Aletheia
Even so, with potential buyers waiting for electric cars to mature, the opportunity to list JLR has been lost for the moment.When I
suggested a Jaguar Land Rover IPO in Hong Kong or London, Chandra, as he's known, had just been named Tata Sons' chairman
Two years on, however, it may be better to float the parent
In his recent book, Mukund Rajan, who formerly oversaw brands across the group, estimates the value of the Tata Sons assets owned by the
philanthropic trusts at $80 billion to $90 billion
If the trustees sold $10 billion to the public, the offer would almost equal India's three biggest IPOs combined
The market wouldn't be able to digest it.But Hong Kong could
The Securities and Exchange Board of India might have to tweak its rules and allow Tata Sons to go overseas
The trusts could then plow the proceeds back into Tata Sons as 20-year redeemable preference shares, which is what they used to do before
they prematurely liquidated them over disagreements with ex-chairman Mistry's dividend policy.Preferred shares would give the charities
assured dividends to carry on with their social mission; Tata Sons would get liquidity to pay down debt, especially at Jaguar Land Rover;
the marquee British automaker would get time to shore up its product portfolio; and the Tata Group would have a stronger hold over the
(tarnished) jewel in its crown
Meanwhile, a bitter legal battle with the Mistry family, which can't freely sell its 18 percent stake, might end if Tata Sons bought back
the shares at fair market value
And Hong Kong would snag its biggest IPO since insurer AIA Group Ltd.'s 2010 float.It's time Chandra put an IPO plan into top gear.(Andy
Mukherjee is a Bloomberg Gadfly columnist covering industrial companies and financial services
He previously was a columnist for Reuters Breakingviews
He has also worked for the Straits Times, ET NOW and Bloomberg News.)Disclaimer: The opinions expressed within this article are the personal
The facts and opinions appearing in the article do not reflect the views of TheIndianSubcontinent and TheIndianSubcontinent does not assume
any responsibility or liability for the same.
