S&P lowers Tata Motors credit rating

Standard & Poor's Ratings Services has lowered its corpoarte credit rating on Tata Motors to 'BB' from 'BB+'.

The agency has also lowered its rating to 'BB' from 'BB+' on all Tata Motors' rated debt. The ratings remain on CreditWatch with negative implications.

These rating action comes after Tata Motors' recent announcement on its agreement with Ford Motor Company for the purchase of Jaguar and Land Rover, comprising brands, plants, and intellectual property rights.

The transfer of ownership to Tata Motors, as announced, is expected to close by the end of the second quarter of 2008, subject to applicable regulatory approvals.

Tata Motors will pay about $2.3 billion in cash for Jaguar and Land Rover, out of which Ford will then contribute up to $600 million to the Jaguar-Land Rover (JLR) pension plans.

"The rating action reflects Tata Motors' heightened financial leverage, resulting from the $3 billion bridge loan mobilized to fund this transaction," said Standard & Poor's credit analyst Anshukant Taneja.

"It also reflects a more challenging business environment, both for the company's domestic passenger and commercial vehicle segments in India and for the high-end luxury car segments in the key markets for Jaguar and Land Rover."

Tata Motors intends to fund the acquisition with new equity of up to $1 billion. While the company has demonstrated adequate financial flexibility and benefits from its parentage, S&P's would factor in the impact of such equity inflows only when they are successfully concluded, a release from the company stated.

While JLR has recently demonstrated some improvement in its profits and cash flows, this trend remains susceptible to changing demand and rising operating costs, both of which are currently vulnerable in prevailing macroeconomic conditions.

In this backdrop, Tata Motors also intends to continue with its relatively aggressive capital spending plans for its existing Indian operations as well as the newly acquired JLR operations.

"This could result in still higher leverage and a potentially protracted improvement in its credit metrics," Mr. Taneja said. "Nonetheless, the increase in Tata Motors' geographic diversity and presence in uncorrelated business segments, which may add to revenue stability, has been factored in the current ratings."

The CreditWatch negative position reflects concerns related more to Tata Motors' long-term financing arrangements for replacing the existing bridge facility and limited details on its plans for the transition of JLR operations. A greater level of certainty addressing these issues would be required for the CreditWatch resolution.

Overall, the likelihood of a further lowering of the ratings is relatively low assuming: (1) the bridge facility refinancing risks are addressed, (2) Tata Motors' capital commitments to its domestic operations and to JLR remain broadly at the levels given by the company, and (3) the transition of the JLR assets from Ford proceeds as expected.

Tata Motors launches Xenon in Thailand

Tata Motors (Thailand) today pulled the wraps off the Tata Xenon 1-tonne pickup truck at the annual Bangkok International Motor Show. The Xenon would be sold across Thailand through the company's own dealer network.

Commenting on the initiative Ratan Tata, Chairman Tata Motors said, "I am pleased that Tata Motors (Thailand) is launching the Xenon pickup in Thailand. The Xenon pickup has been developed and built in Thailand, specifically keeping the Thai customers in mind. We are hopeful that Thailand and Asean region will become key markets for Tata Motors in the near future."

The Xenon features a 2.2-litre Direct Injection Common Rail (Dicor) engine with Variable Turbine Technology (VTT) and intercooler promising high durability, ease of maintenance and low spare part prices. The 2.2L VTT DICOR common-rail diesel technology offers excellent power delivery and low fuel consumption. The Xenon has been designed with high suspension from origin.

Tata gets JLR for knock-down price

Ford will pay about $600 million to the Jaguar-Land Rover pension funds.

After nine months of negotiation, Tata Motors finally signed a deal to buy luxury brands Jaguar and Land Rover (JLR) from Ford Motor for $2.3 billion in cash, the largest acquisition by an Indian company in the automobile business.

The purchase price is less than half what Ford paid ($2.5 billion each) to acquire the two brands. Ford bought Jaguar in 1989 and Land Rover from BMW in 2000.

The deal will extend Tata Motors’ product portfolio span from a price point of $2,500 to $170,000 and expand its distribution network more than four times to 2,700 outlets in 138 countries.

Ford will pay about $600 million to the Jaguar Land Rover pension funds, the two companies said in a joint statement today.

Along with the two brands the deal will involve the acquisition of plants and Intellectual Property Rights (IPR) held by the two brands.

The transfer of ownership to Tata Motors is expected to close by the end of the next quarter subject to regulatory approvals.

Tata Motors will raise $3 billion (Rs 12,000 crore) through bridge finance for 15 months from a clutch of banks, including JP Morgan, Citigroup and State Bank of India (SBI) to finance the deal. This will be replaced by a combination of long-term debt and equity.

The company is also planning to raise money through equity divestment in some Tata Motors subsidiaries in the next few months.

8 banks may join SBI to raise $3 bn for Tatas` Jaguar bid

Atleast four public sector banks and four foreign lenders are likely to join the State Bank of India-led consortium to raise $3 billion to fund Tata Motors’ foreign acquisitions including the $2 billion Jaguar and Land Rover deal.

The public sector banks that may join the consortium of financiers are Bank of India, Bank of Baroda, Indian Overseas Bank and Syndicate Bank, while the foreign banks are Barclays, HSBC, DBS and the Singapore-based United Overseas Bank, a source close to the development, said.

“SBI is looking at enhancing the number of entities in the consortium to 20 so that the burden of financing such a huge sum can be distributed,” the source added.

The country’s largest lender has already started talks with banks that would be a part of the consortium, including Citi Bank, JP Morgan, Standard Chartered, BNP Paribas, Tokyo Mitsubishi UFJ and Mizuho Financial Group. It will issue an official announcement soon, the source said.

Sources said SBI plans to raise the amount by the second half of April to enable Tata Motors to complete the acquisition soon.

SBI has emerged as the leading merchant banker in the country over the past two years. The bank sealed around 40 deals worth about $27 billion in 2007-08 and this contributed significantly to its revenues.

Tata Motors to raise Rs 4,000cr

Tata Motors is planning to raise Rs 4,000 crore of long-term resources by issuing securities in the domestic and overseas markets.

According to a release issued by the company to the BSE today, the funds are being raised to part-finance overall funding requirements to meet strategic plans.

The company has major growth plans for expanding its position in the domestic and global markets in both the commercial vehicle and passenger vehicle business. This will be achieved by upgrading and enhancing the company's product portfolio, expanding manufacturing facilities in India and strategic acquisitions or alliances in India and abroad.

"While this may require incurrence of expenditure for organic growth over the next 3-4 years, the acquisition opportunities will have to be financed upfront. The said funds are being raised to part-finance overall funding requirements to meet some of the strategic plans," the statement added.

Tata Motors` bond risk hits record on Jaguar loans

The risk of Tata Motors, India’s biggest truckmaker, defaulting on its bonds rose to a record after the company sought to borrow $3 billion to fund the planned purchase of Ford Motor Co’s Jaguar and Land Rover units.

Credit-default swaps (CDS) on the Mumbai-based company rose 10 basis points to a record 503 basis points at 3:48 pm in Hong Kong, according to ABN Amro Holding prices. That means it costs $503,000 annually to protect $10 million of Tata Motors’ debt from default for five years.

Tata Motors’ five-year credit-default swaps have more than doubled and its share price fallen 12 per cent since Ford announced the automaker as the preferred bidder for Jaguar and Land Rover on January 3.

Investors are concerned that Tata may struggle to integrate the UK brands, while also taking on significant amounts of debt and pension liabilities.

“The market is not happy about the deal because there is no synergy in the short term and it’s a burden on Tata’s balance sheet,’’ said Ashutosh Goel, a Mumbai-based analyst at Edelweiss Capital. Still, “for the long term, Tata is doing the right thing’’.

Credit-default swaps are financial instruments based on bonds and loans that are used to speculate on a company’s ability to repay debt. They pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements.

A decline indicates improvement in the perception of credit quality. Tata Motors plans to raise the 15-month loan from nine banks led by Citigroup and JPMorgan Chase & Co, three people with direct knowledge of the deal said yesterday.

It will pay less than 2 percentage points more than the London interbank offered rate (Libor) as interest and fees for the loan, the people said. About $2.5 billion will fund the cost of the acquisition and the rest will be used for working capital, the people said.

The three-month Libor, a benchmark for corporate borrowing, was set at 3 per cent yesterday.

Tata Motors is also talking to Bank of Tokyo Mitsubishi UFJ, BNP Paribas, Calyon, ING Groep, Mizuho Financial Group, Standard Chartered and State Bank of India to arrange the loan, according to the people who declined to be identified because the information was not public.

Tata Motors gained 0.1 per cent to Rs 702.65 on the Bombay Stock Exchange yesterday. The market is shut for trading today due to a public holiday.

Open to granting mfg licence for Nano: Tata

Ratan Tata, chairman, Tata Motors, said the company was open to giving other manufacturers the licence to make Nano - the new mass car that will sell for a little over Rs 1 lakh.

Speaking at the Geneva Auto show, Tata said the measure will be considered in case Tata Motors was not able to meet the demand for Nano.

Tata unveiled the car for the European market today but did not diclose its price.

Tata Motors reduces prices of Indica/Indigo

Tata Motors has reduced the prices of Indica and Indigo model by Rs 8,500- 15,300.

The price cut is a result of the 4% excise duty cut announced by Finance Minister P Chidambaram on Friday.

While the Indica will see a price cut ranging between Rs 8,500-14,600, the Indigo compact sedan (CS) will witness a drop of Rs 12,700-15,300 across variants.

The company has also cut prices of its commercial vehicle range, which includes trucks and buses, by 2%.

Nano launch in October: Ravi Kant

The rollout of Tata Motors' Nano, the Rs 1 lakh car, from the Singur factory will coincide with the Durga Puja in October, said Ravi Kant, managing director, Tata Motors.

Briefing the media after an almost three-hour tour of the site to review the progress, Kant said trial production would commence in June-July and regular production will follow after two months. "Commercial production, the real thing, will come some time in October - around Durga puja time," he said.

Kant reiterated that the timeline was being maintained and said, "We have always maintained that we will launch the vehicle in the second half of the next financial year. We have maintained the timeline, and we are maintaining the same today."

Kant also pointed out that were lots of challenges, and Tata Motors, along with Shapoorji Pallonji which is constructing the mother plant, and the West Bengal government were working to put an action plan together to ensure that production was not hampered.

"The equipment is now beginning to come and we will start putting up the equipment. Weld shop, press shop, paint shop, assembly shop, engine shop are all priority areas. Plus, the service areas are all being worked out, and we do hope that things go on barring very unforeseen circumstances like the rains we had," said Kant.

Tata Motors showcased the Nano on January 10 at the auto show in New Delhi, and the company plans to produce 2.5 lakh units of Nano from Singur in the first phase.

Tata Motors arm, Boeing tie up for Dreamliner

The Boeing Company, the world’s leading aerospace company and the largest manufacturer of commercial jetliners and military aircraft combined, has entered into an agreement with India’s TAL Manufacturing Solutions, a wholly-owned subsidiary of Tata Motors, for the manufacturing of structural components for Boeing’s 787 Dreamliner airplane programme.

Under the agreement, TAL Manufacturing Solutions will build floor beams for the 787 using new technology with advanced titanium and composite materials. These floor beams will be used on the 787 Dreamliner and provide for a best-value solution and significant weight savings.

Financial terms of the agreement were not disclosed.

Carolyn Corvi, vice president and general manager, Airplane Programmes, Boeing Commercial Airplanes, said: "Boeing is proud to welcome Tata into its family of world-class aerospace suppliers and we are confident that this partnership will help Boeing and Tata leverage mutual best-value capabilities."

“This partnership between Boeing and Tata will further increase the value of the 787 to our customers, helping make it the world’s leading commercial airplane," Corvi said.

The floor beams for the 787 airplane will be produced at TAL’s new facility in Nagpur, India, and then transported to Boeing partners in Japan, Italy and the United States for further assembly.

Ravi Kant, chairman, TAL, and managing director, Tata Motors : "The production of Boeing’s structural components by TAL indicates technical and manufacturing excellence within the Group. We believe that this agreement has the potential to develop into a more broad-based alliance that would enable both organizations to utilize the best and most competitive resources within themselves and thereby offer greater value to customers.”

Atam P Arya, managing director, TAL, said: "TAL already has an established reputation in the state-of-the-art precision engineering. The agreement with Boeing allows us to open yet another frontier. This would be a turning point for the Indian manufacturing industry to gain a footprint in the global aerospace business.”

Results Update - 31/01/2008 - Part 3

Tata Steel Q3 net flat at Rs 1,069cr

Tata Steel today reported a net profit (standalone) of Rs 1,068.58 crore for the third quarter ended December, 2007 when compared with Rs 1,063.75 crore reported in the corresponding quarter of the previous fiscal.

According to a release issued by the company to the BSE today, total income for Q3FY08 increased 10.3% to Rs 5,040.95 crore from Rs 4,568.72 crore in Q3FY07.

BPCL Q3 net down marginally at Rs 291cr

Bharat Petroleum Corporation (BPCL) today announced a 4.01% decline in net profit at Rs 291.3 crore for the quarter ended December 31, 2007 when compared with Rs 303.5 crore in Q3FY07.

According to a release issued to the Bombay Stock Exchange, total income increased to Rs 29,118.8 crore for the quarter ended December 31, 2007 from Rs 24,354.3 crore for the quarter ended December 31, 2006.

RCom Q3 consolidated net up 48%

Reliance Communications today reported a 48.5% increase in consolidated net profit at Rs 1,372.83 crore for the third quarter ended December 31, 2007 when compared with Rs 924.45 crore in Q3FY07.

According to a release issued by the company to the BSE today, total income for Q3FY08 was up 29.8% at Rs 4,874.20 crore as against Rs 3,755.30 crore in Q3FY07.

On a standalone basis, the net profit for the quarter ended December 31, 2007 dropped 43% to Rs 436.48 crore from Rs 771.04 crore in the quarter ended December 31, 2006. Total income increased 12% to Rs 3,410.82 crore from Rs 3,044.49 crore in Q3FY07.

Tata Motors Q3 net up 9% at Rs 655cr

Tata Motors today reported a 8.75% increase in consolidated net profit at Rs 654.79 crore for the third quarter ended December 31, 2007 when compared with Rs 602.07 crore in Q3FY07.

According to a release issued to the BSE, the company's total income has increased to Rs 9,324.69 crore for the quarter ended December 31, 2007 from Rs 8,189.66 crore in Q3FY07.

The company, on a standalone basis, reported a 2.75% decline in net profit at Rs 499.05 crore for the quarter ended December 31, 2007 as compared to Rs 513.17 crore in Q3FY07.

The company's total income increased to Rs 7,343.64 crore for the quarter ended December 31, 2007 from Rs 6,910.07 crore for the quarter ended December 31, 2006.

Tatas take a look at Jaguar's new models

According to a media report, the British luxury car maker Jaguar has shown its new models and the planned product cycle to its probable new parent company, Tata Motors.

Tata Motors was named earlier this month as the preferred bidder by the US car giant Ford for the sale of its two British luxury brands, Jaguar and Land Rover, after evaluating interests by two other suitors -- India's Mahindra and Mahindra and private equity firm OneEquity.

"We have shown Tata our new model lines and the planned product cycle," Ian Callum, director (design), Ford Motor Company, who is responsible for the Jaguar's new XF and XK model ranges, told Financial Times.

The Tata group company is currently holding advanced-level talks for buying Jaguar and Land Rover from Ford and a final decision is expected to be announced by the end of February.

"The two national cultures (Jaguar and Land Rover) appear to fit together very well and Tata is being very respectful about what we are doing," Callum told the financial daily. However, he stopped short of acknowledging Tata's purchase of Jaguar and Land Rover for an estimated $2 billion.

The executive told the newspaper that Jaguar's management was "entirely relaxed" about the prospect of Tatas taking over the carmaker. The daily noted that Ian Cullum believed the possible takeover would allow unfettered development for Jaguar.

Tatas have pipped Indian automaker Mahindra and Mahindra as well as US-based private equity firm OneEquity, led by former Ford CEO Jacques Nasser, to attain the preferred status to hold advanced discussions for a final deal.

The Tatas, as owners of Anglo-Dutch steelmaker Corus, are already one of the top suppliers for Jaguar and Land Rover.

According to the Financial Times, Ian Cullum said there had been frequent tensions in the relationship between Jaguar and Ford, following the purchase by the latter in 1989. Ford had bought Jaguar for about $1.4 billion.

"He disclosed that, in spite of Jaguar management denials at the time, the X-Type small Jaguar -- sales of which have fallen far below expectations -- was essentially designed in Detroit and presented as close to a fait accompli to reluctant designers and engineers at Jaguars Whitley design centre, near the Midlands city of Coventry," the report said..

The report pointed out that many of the problems associated with Jaguar cars, which have persistently failed to attract enough buyers and its descent into losses that hit around $600 million several years ago, lay within Jaguar itself.

It had failed to "move on" and keep pace with its major rivals, Ian Cullum added.

Tata may hire Ford exec for Jaguar, Land Rover

Indian conglomerate Tata Group, which is the front-runner for acquiring British marques Jaguar and Land Rover, is expected to appoint a senior executive of Ford Motor to run the two luxury brands, media reports said here.

“Senior industry sources said last week that Tata was likely to name a top Ford executive in Europe as chief executive of the Jaguar-Land Rover group,” The Sunday Times reported today.

The current chief executive is Geoff Polities, an Australian car industry veteran.

“It is understood that Tata plans few immediate changes to the businesses, with the UK operations and model plans kept intact,” the report added.

Ford, the second-largest US carmaker, said on January 3 it was into discussions with Tata Motors for Jaguar and Land Rover, but a final decision for the sale was yet to be taken.

However, another report in The Guardian quoted industry sources as saying that being named preferred suitor might not mean Tata Motors has a clear field as yet.

The Daily Telegraph had earlier reported quoting unidentified sources: “It is possible, Ford, which is likely to continue to supply engines and components for the cars, may retain a stake in the businesses — similar to the deal it struck with the Gulf-based consortium which bought Aston Martin — although there is no certainty this will happen.”

The report said talks could run into February as Tata needs to negotiate a settlement with pension trustees and would have to convince the unions about the safety of 15,000 British jobs accounted for by Jaguar and Land Rover.'

Suzuki may cut Maruti 800 prices to compete with Tata`s 1 lakh car

Suzuki Motor, facing growing threats to its 50 per cent share of India’s car market, may cut the price of its cheapest car in the country to counter Tata Motors’s proposed Rs 100,000 ($2,500) car.

“We will have to do at least that,” Shinzo Nakanishi, managing director of Suzuki’s local unit, Maruti Suzuki India, said in an interview at the company’s head office in Hamamatsu, Japan, yesterday. Suzuki’s cheapest car in India, the Maruti 800, now costs from Rs 192,124 in New Delhi showrooms, according to Maruti’s website.

Cutting prices may help Suzuki maintain dominance in its biggest market as the company faces greater competition from Tata and foreign rivals including General Motors and Hyundai Motor. Other automakers including Renault have also proposed selling ultra-cheap cars in India, the world’s second-fastest-growing major auto market.

“By cutting prices, the profit margin will drop, and it may also hurt the brand image,” said Koichi Ogawa, who helps oversee $28 billion at Daiwa SB Investments in Tokyo. “Investors care more about profitability than market share.”

Suzuki fell 2.3 per cent to 3,370 yen at the 11 am close on the Tokyo Stock Exchange. The Topix Transportation Equipment Index declined 1.4 per cent. Today is the last trading day of the year, and the exchange closed after the two-hour morning session.

Concern about instability after the assassination of former Pakistani Prime Minister Benazir Bhutto may have contributed to today’s share decline, Ogawa said. Suzuki’s Pakistani unit, Pak Suzuki Motor — the country’s largest automaker — plans to increase production capacity to 250,000 vehicles by 2009, from 120,000 now to meet rising demand.

India sales
In India, automakers are spending $6 billion to increase capacity as economic growth and rising incomes make cars affordable to more people. Vehicle sales may triple by 2015 in the country, where only seven in 1,000 people now own an automobile.

Suzuki, which started selling cars in India in 1983, is relying on growth in the country and in Europe as demand wanes at home. Sales in India of the company’s Swift, Alto and other models rose 18 per cent to 336,758 in the six- months ended September 30, surpassing Suzuki’s sales in Japan for the first time.

The country’s annual passenger-car sales more than doubled in the past five years to 1.08 million in the 12 months ended March 31, according to the Society of Indian Automobile Manufacturers. The total is likely to reach 3 million by 2015, the government estimates.

Renault, Volkswagen
Aiming to tap the growth, Renault and Volkswagen began selling cars in India in the past two years, while Honda Motor — Japan’s second-largest carmaker — plans to unveil its first hatchback model in the country to take on Suzuki.

CSM Worldwide estimates Suzuki’s share in India may drop to 24 per cent in 2013, as cheap cars increase competition. “So far, it’s been easy to maintain a 50 to 55 per cent share, because there weren’t strong competitors,” Nakanishi said yesterday. “But from now on, it won’t be the case.”

Tata Motors, the country’s largest truckmaker, will unveil its $2,500 car in New Delhi on January 10. The yet-to-be-named model would be the nation’s cheapest car and target motorcycle buyers. India is the world’s second-largest motorcycle market behind China.

Suzuki won’t sell a car as cheap as Tata’s because it will be unprofitable, Nakanishi said.

“Demand for both Tata’s car and the Maruti 800, when prices are cut, will be immense,” said Amit Kasat, an analyst at Motilal Oswal Securities in Mumbai, who recommends buying shares in both automakers. “We need to see how much the price will be reduced and how Tata’s cars will be accepted.”

Nissan, Bajaj
Renault and Nissan Motor, Japan’s third-largest automaker, are planning to build a $3,000 model with Bajaj Auto, the country’s second-largest motorcycle maker, to compete in India. Renault, based in Boulogne-Billancourt, France, owns 44 per cent of Nissan.

Spending on expanding factories in India will bring down Maruti’s net income margin, Nakanishi also said. The profit ratio will fall to “7 or 8 per cent” beginning next year, compared with 10 per cent this year, he said.

Suzuki will spend 200 billion yen ($1.75 billion) to expand capacity and to build a research facility in the northern state of Haryana, already home to Maruti’s factories. The research facility will develop cars designed for the Indian market.

The company will invest an additional 200 billion yen by 2010, to raise factory capacity to build the new A-Star car. It will boost output capacity by 300,000 units, increasing total capacity in India to 960,000 by financial year 2009.

Suzuki will start exporting the A-Star to Europe next year. The automaker is counting on the new model to boost annual European sales to 420,000 vehicles from 310,000 last business year.

Maruti Suzuki will use its cash to fully-fund the investments, said Nakanishi. Suzuki will build 1.2 million vehicles in India in financial year 2009 — 1 million for India and the rest for exports, he said.

Tata Motors unveils range of tough CVs

In a bid to align its products with global trends and preparing itself for the huge strides expected to be witnessed in infrastructure, Tata Motors today unveiled a new range of commercial vehicles that promise to deliver greater return on investment and higher user satisfaction.

The vehicles include multi-axle trucks, heavy-duty trucks, tractor trailors and tippers. The new products will largely cater to sectors such as mining, construction, road building, logistics and petrochemicals.

Prakash Telang, executive director, commercial vehicles business, told mediapersons that the introduction of the vehicles is part of the company’s programme to redefine its products to bring in customised solutions with latest technologies.

The company unveiled Tata LPS 4923 TC, which is a 49-tonne Novus tractor customised to offer optimum performance under Indian conditions.

The vehicle has an air-conditioner fitted driver cabin and has a GPS / data logger solution. The product is pitted to be the right solution for transporting containers, steel, cement and petroleum loads.

The Tata LPS 4923 TC tractor has a Cummins engine and Eaton gear-box, and offers 25 per cent higher gradeability for use in tough terrains. The vehicle would be ideal for carrying steel coils, cement or over-dimensional cargo, company sources said.

The company also launched a 3118 truck which is India’s first multi-axle truck with a lift axle fitted with automatic load sensing value for optimum lift axle function.

The other products launched were 2516 Super Turbo multi-axle truck, 2518 tipper and 1618 tipper.

Thailand plant to begin production in mid-2008

Manufacturing activities at Thonbury Assembly Plant Company of Thailand, with which the Tatas have set up a joint venture some time ago, would begin around the middle of the next year, Telang informed.

The plant will make two vehicles – Xenon and SpaceCab – which will be versions built on the same platform meant to build products for composite use of goods and passengers, he said.

The initial production would be 25,000 units and the company could expand the numbers as and when necessary, he added.

Tatas bid $2.05 bn for Land Rover, Jaguar

Jaguar and Land Rover, two iconic auto brands in the UK, are set to see a change of ownership in the new year, with their current American parent Ford Motor looking to finalise a winner by the end of 2007 or early 2008.

The bids from leading Indian conglomerates and the front-runners for the deal, Tatas and Mahindras, are worth over $2.05 billion and $1.9 billion, respectively, sources close to the development said.

While no official confirmation could be obtained, another suitor, a private equity firm led by former Ford CEO Jacques Nasser – OneEquity – is still in the reckoning, but Ford is understood to be preferring a buyer directly involved in the auto manufacturing business.

According to the sources, Ford is looking to finalise the name of the buyer by the end of 2007 or early next year.

Meanwhile, American daily The New York Times on Tuesday reported that Jaguar and Land Rover are poised to join Tata Motors and a decision could be made in the ‘next few days.’

However, the report added that ‘a final deal, which is expected to be worth about $2 billion, will not be announced until early next year.’

The report noted that Jaguar dealers in the US have expressed concern over an Indian buyer, saying it could adversely impact the value of the luxury brand, as Tata Motors is currently in process of launching its ‘People’s Car’ with a price tag of about $2,500, which is about one-twentieth of the cost for least expensive Jaguar model.

“The combination of luxurious, specialised products and cheap, commodified ones may seem like an unlikely business model, but the Tata Group, the family-run conglomerate that owns one-third of Tata Motors, is full of similar contradictions,” The New York Times said.

Source - PTI