By Sumantra Barooah, CNBC-TV18

Jaguar and Land Rover will be prestige boosters for Tata Motors without doubt. But what does it offer to Tata Motors and will it be a stretch financially?

It's like coming full circle. Tata Motors started its automobile journey in collaboration with the leading European truck maker Daimler Benz in 1954. It has now bid for two iconic European brands-Jaguar and Land Rover (JLR). Some say that it may emerge as the winner.      

JLR Assets snapshots
Assets ($ m)	2007	2006
Receivables	758	590
Inventories	1,530	1,404
Net Property	2,246	2,119
Intangibles	2,010	3,210
Pension Assets	696	3
Other Assets	297	122
Total	7,537	7,448

At the outset, Tata Motors’ globalisation drive will get a boost with this deal. Jaguar and Land Rover are present together in close to 230 countries. Their cumulative sales of close to 2.87 lakh vehicles last year will propel Tata's passenger vehicle sales to over half a million units. Future generation of Tata's Safari-which was touted as the desi Pajero and its utility vehicle range, will get a major tech boost with access to Land Rover's research and development (R&D) division. Jaguar will bring a prestige factor, which is difficult to match by any another brand in India.

JLR Liabilities snapshots
($ m)	2007	2006
Payables	2,395	2,202
Pension	19	380
Warranty	645	759
Others	2,022	2,050
Total	5,081	5,391

The expected price of around USD 2.5 billion will wipe out a good part of the Rs 7,300 crore surplus cash lying with Tata Motors, if it taps that resource. So, the company will strengthen its financial strength, by raising an additional Rs 4,000 crore. Even after the acquisition, Tata will have to invest in increasing the competitiveness of the brands.

Jaguar and Land Rover have an average annual R&D spend of 450 million pounds or Rs 3,600 crore, as compared to Tata Motors' Rs 797 crore last year. The question remains whether Tata be able to implement JLR's expensive technology in its vehicles in India without pushing up the price significantly.

Tata may tap its group companies like Tata Technologies, Tata Consultancy Services (TCS), and Tata Auto Comp Systems (TACO) for engineering services and components to curtail costs. But there may be a limit to shifting production in the deal. While it may not be too much of a stretch for buying Jaguar and Land Rover, given its financial strength, analysts are concerned that it should not be at the cost of the companies’ business in the mainstream segments, not to mention the Rs 1 lakh car, that will debut later this year.