September 27 saw Tata Motors become the first Indian company from the automotive sector to float on the NYSE. The benefits of listing in New York should be a useful springboard for future international growth, though the quality of Tata’s vehicles will perhaps be the most vital determining factor in the firm’s future performance.
The company will not make any new shares available, nor will it raise any fresh capital, but stakeholders at Tata Motors are no less enthusiastic about their company’s recent listing on the New York Stock Exchange. Company chairman Ratan Tata rang the bell at the NYSE to open trading. “It is a privilege for us to be listed on the NYSE,” he said, “We hope it will provide our overseas investors with greater opportunities to enhance their interest in the company.”
Tata’s words may well ring true. Although the New York listing in itself will not raise further capital for the company, it is nevertheless a huge opportunity for Tata: the NYSE is the biggest and most efficient stock exchange in the world and its high liquidity will prove useful for the company.
Investors will recognise too that Tata Motors could well prove a shrewd company in which to trade. Tata branded cars, trucks and buses are exported to most parts of South Asia, Africa, the Middle East and Europe and the company recently entered into an agreement with MG Rover for the manufacture of Rover-branded Tata Indicas sold in the UK and continental Europe.
As India’s economy continues to develop, Tata is well placed for strong domestic growth. Its recent acquisition of Daewoo’s truck building operation ties Tata’s fortunes even closer to the economic expansion of its home market: as the economy expands, there is increased demand for commercial vehicles.
Although the emerging markets found in Asia, Africa and the Middle East should prove highly lucrative grounds for initial expansion, Tata Motors’ listing on the NYSE suggests it is taking a global perspective on its growth potential. Since it operates from a base in the low cost Indian economy, Tata could make a significant impact globally if it can offer products that are both value for money and – crucially – well built and reliable.
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