GCIP acquisition gives sustainability but also substantially increases the risk profile for TCL
Moreover, TCL will undoubtedly face integration challenges with the unlisted US firm. Complicating matters further is the size and operating profile of GCIP (Moody). The transaction and the resulting financial & operating profile is still not amply clear. “Exchange rate is another challenge that stands in front of TCL”, Nagraj adds.
Well, the plan looks picturesque perfect. However, the road for TCL as well as the Tata group isn’t an expressway. Tata Group of late has raised lot of debts in financing its elephantine acquisitions and servicing, which might be a problem. There’s a maddening race at Tata Group companies to leverage in-organic growth. Tata Steel acquired Corus for $13.7 billion and another group company Tata Motors is also in talks with Ford to acquire Jaguar & Land Rover for $2 billion apart from many multi–million dollar acquisitions done by TCS, Tata Tea & other group companies in the recent past. And as most of these acquisitions have significantly increased its exposure to the American & European economies, sluggishness in there two markets could place Tata’s plans in jeopardy for quite some time to come.
Moreover, TCL will undoubtedly face integration challenges with the unlisted US firm. Complicating matters further is the size and operating profile of GCIP (Moody). The transaction and the resulting financial & operating profile is still not amply clear. “Exchange rate is another challenge that stands in front of TCL”, Nagraj adds.
Well, the plan looks picturesque perfect. However, the road for TCL as well as the Tata group isn’t an expressway. Tata Group of late has raised lot of debts in financing its elephantine acquisitions and servicing, which might be a problem. There’s a maddening race at Tata Group companies to leverage in-organic growth. Tata Steel acquired Corus for $13.7 billion and another group company Tata Motors is also in talks with Ford to acquire Jaguar & Land Rover for $2 billion apart from many multi–million dollar acquisitions done by TCS, Tata Tea & other group companies in the recent past. And as most of these acquisitions have significantly increased its exposure to the American & European economies, sluggishness in there two markets could place Tata’s plans in jeopardy for quite some time to come.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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