The new products are expected to benefit Tata Motors’ business only in the medium term.

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Yet, the ifs and buts don’t end. As per Manuel Guerena, Standard & Poor’s credit analyst, “Debt levels could further increase as the company is expected to have negative free operating cash flow on a consolidated basis after funding significant capital expenditure for FY’09, largely toward new product development. The new products are expected to benefit Tata Motors’ business only in the medium term.” Add to that the prospective onslaught of more companies in the space, like Bajaj and Maruti. Even two wheeler manufacturers would not like to see this ‘four-wheeled’ threat to their territory lying down. Also, given the uncertainty in input prices, Tata’s ability to keep the prices at their current levels could be hampered. All in all, Tata Motor’s bid to reduce their troubles to ‘Nano’ levels may not actually turn out as planned.


Surbhi Chawla


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Source : IIPM Editorial, 2008
An Initiative of IIPM, Malay Chaudhuri and Arindam Chaudhuri (Renowned Management Guru and Economist).

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