May be a little early to call this one but the formerly sprawling Tata Group (including its Tata Motor's ambitious plan to deliver a $2,500 car seems to be running out of gas quickly. Ratan "the Man" Tata very visibly promised over and over that he will deliver on-time the $2,500 micro-car named, with breathtaking originality, the Nano. Those plans have been scaled back and rumors, certainly apocryphal, are that he is re-engineering his Nano and is trying to convince Steve Jobs to put little wheels on Apple's fabulously successful micro-device so he can meet his pledge. But time is running short. After crapping out seeking money from big global investors (I thought he was supposed to be one of those a big global investor himself--no?) Ratan will take money from just about anyone and has resorted to doing a retail rights offering in his native India. People aren't exactly rushing out to sell their kidneys to get into this one.
Seems that the trophy-hunting Mr. Tata has severely misunderestimated the extent of the global financial crisis and owes $3 billion comin' due in June. In a spectacularly mis-timed effort to create a portfolio of international luxury brands including the very British Land Rover and Jaguar Ratan is folding in his wings. The Tata legacy has been around for 140 years and Ratan Tata (wow say that five times fast) has emerged as the symbolic success story and iconic entrepreneurial poster child for India asa serious global player. (India has achieved the clearly non-alphabetic third position "I" in BRIC which as you can imagine has severely off pissed the Chinese due to its last place position in the curious acronym). Ratan,is the Indian equivalent of one part Al Gore, one part Richard Branson and a dollop of the Donald. As to his success, it is attributed to his Englophonic propensities or as he likes to says, "Dress British, think Yiddish"). As for delivering a $2,500 car to market Tata might consider snapping up GM's otherwise unsalable inventory of Hummers at market value, re-sell them for $2,500 and probably still make a profit.
Tata Motors Struggles to Raise Cash, Introduce Nano by Deadline
By Vipin V. Nair
January 12, 2009
The Indian car maker needs to raise cash by June to repay a bridge loan taken to fund last year's purchase of Jaguar and Land Rover from Ford Motor Co. The $2,500 Nano car, already delayed, is crucial to revive falling demand in the car maker's home market.
The global credit crunch has forced Chairman Ratan Tata to reconsider a plan to raise $600 million from investors abroad. Instead, the company is offering small investors up to 11 percent interest for three-year deposits after raising 41 billion rupees ($840 million) through a rights offer in October. Collapsing sales at Jaguar and Land Rover in the U.S. and Europe are echoed by plummeting demand for cars and trucks in India.
"They are now fighting on three fronts: their core business is collapsing, the small car project will have to prove itself and the global credit availability is a problem,'' said Rashesh Shah, chairman of Edelweiss Capital Ltd. "Companies don't open multiple flanks and go after every attractive opportunity. That is ambition, and that has affected them.''
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