[extreme_torque]

I agree.. the threah should be closed. They dont deserve this after the Nano.

[adzegeek]

Before you close the thread, just to show from financial perspective things aren’t all that bad and what Tata Sons and TML may do to get out of the current situation. The data is based on IIFL analysis and some whacked from the annual reports and statements (however usual disclaimers apply).This was based on Q3 results and analysis.


TML cash requirements are estimated between 2.5 billion USD (2.1 Bill loan re-finan + 0.4 b loss over 18 months) to 3.1 Billion USD(in case JLR gets a loss of 1 Billion USD in next 18 months. The other group company requirements push the overall requirements to a range of 3 billion USD to 5.5 billion USD.

Tata sons cash reserve is 0.9 billion USD and just sensibly balancing the dividend income they can generate an additional debt funding of 1.5 to 2.8 billion USD at the current market debt servicing costs without any problems in paying the interest on the debt.

For TML what it means is:

1.Use the fact that 12,500 UK staff will suffer to ask for bail-out package from UK Govt – no harm in that – the other side of Atlantic is doing it.

2.If not possible, Tatas can just increase the dividend income and finance a debt which can be used for refinancing the loan

3.In case the losses continue to mount, Tata Sons can easily add more cash as follows - Increase in TCS payout ration by extra 50% - Generates approx 10 Billion INR straight, Stake diluation in TCS from current 74% by letting go of 5-10%, Stake dilation in Tata Tele from 60% to 51%, Few more divestments to yield 5-2.4 billion INR

4.Worst case, larger dilution in TCS stake, sellout in a few ventures will keep it going

However at the end of the day, market conditions in UK and the world have to improve to help TML recover – but for next 18 months or even 36 months, they have a strong group to back it up.

So go buy your nano-s (and get 8.75% interest if you are not in lucky 1 L club – the cash is secure

[romeomidhun]

A 'development' or 'progress' should take its own time. Making too-aggressive steps for fulfilling egos or for mere namesake, will lead to total destruction of the system.

Tata should not go like that way. They were over-ambitious, and made a lot of take-overs last year, just before all these financial recession things happened.

Remember, slow and steady wins the race.

[Amartya]

I would like to request the moderators to close this thread. Not only was it started with the news that has already been posted in another thread, but the very title of the thread points to the India TV brand of sensationalism. "Tata Motors going Bust!!".
Next they'll come up with a thread like, "Toyota may pull out of India, Toyota made losses for the first time in xxxx years!!!!!!!!!!!!!" (perhaps add some more exclamation marks.

[adzegeek]

Originally Posted by romeomidhun

A 'development' or 'progress' should take its own time. Making too-aggressive steps for fulfilling egos or for mere namesake, will lead to total destruction of the system.

Tata should not go like that way. They were over-ambitious, and made a lot of take-overs last year, just before all these financial recession things happened.

Remember, slow and steady wins the race.

Well last year everyone was saluting the Global Outlook & Ambitions of Indian Companies and now we are burning them quoting Hindu Rate of Growth (No offence intended).

Hindsight is great....but dont blame Tatas - enough has been discussed and debated over what they wanted from JLR deal and only time will tell whether they will get what they wanted.

But seriously 19 Billion USD worth of investments over a decade is sensible risk from financial perspective for Tata Sons and as I was trying to show in earlier post, the unexpected recession created problems can be mitigated.

Which global automotive player had mitigation plans for recession last year - it caught everyone off-guard. Take a look at ratings of some of the great american auto giants. Tatas arent in that bad a shape at all.

[travelmate]

TATA is not going bust but they certainly are gasping for breath. This has nothing to do with their car sales which are down anyway but the commercial vehicle business has gone for a six. When you have a steady revenue stream like their CV business which was a cash cow of sorts reduced to a trickle and all those expensive acquisitions coupled with the general worldwide slowdown and then the Singur drama, it is a wonder they are even still standing.

[vinayasurya]

Tata also has to pay 8.5 % interest for Tata Nano bookings in case waiting period is long. So this also adds financial burden as there is a large demand-supply mismatch.

[aerohit]

If Ratan Tata was browsing this thread right now, he would assume that this website is a community of jokers.

Better to cancel the thread.

[phamilyman]

Aerohit,

not only do you studiously avoid any semblance of numbers or logic unlike our friend adzegeek - you insult other BHPians just on the semblance of your internal conviction. Kindly take your convictions elsewhere - you have no right to call people a bunch of jokers because it offends you.

The title can be misleading, but the credit rating cut is real - and impacts their collateral provisioning and cost of capital.

Smelling the roses never hurt anyone - and yes this thread can be cleaned up and merged.

[harry10]

Thread is a joke so dont take it seriously guys and go home and chill.
Tata getting bust is like India getting drowned in water in next couple of months, both can't happen.

@Adzegeek- Nice data compilation.

[NetfreakBombay]

Originally Posted by vinayasurya

Tata also has to pay 8.5 % interest for Tata Nano bookings in case waiting period is long. So this also adds financial burden

TATA's Credit rating is pathetic at the moment.

Its rating is B+ (Subprime, Highly Speculative)

Bond credit rating - Wikipedia, the free encyclopedia

It would be happy to get loans at rates lower then 20%.

So 8.5% interest is a really good news for them.

[devarshi84]

Ratan Tata is a smart man. But recession has effects on every company. Tata like every other company is going through a lean phase. Doesnt mean it will go bust.

Close this thread.

[Rotorhead]

Tata defenitely will not go bust, especially since they have quite a say in the indian economy and the political goodwill that this organization is gained amongst the political circle, even if it does go lean on cash, the indian govt is defenitely going to bail it out. Just my opinion. The govt will not want the economy to crash since it is already under great turmoil due to recession.

[abk]

Originally Posted by devarshi84

Close this thread.

Yes, please close this thread. Such wild speculative noises do not contribute healthily. For the records, TATA motors, although is a public company, yet part of the Tata empire. Tata still has vast unlocked wealth. The current global climate is not conducive enough to liquidate part of the cache. However, should things go from bad to worse, a plug or two could be pulled to extract what it needs to put Tata motors back to long term operational business. Cash flow is the current problem compounded by lack of British political inclination towards resurrecting JLR along the same line as was done during the Tony Blair days with MG Rover. Surely, one can debate on my last statement but the topic of the thread, at least until today, sounds unrealistically apocalyptic.

[harry10]

Considering this report i dont think this thread holds any value.

Manchester United eye Tata Group as sponsor