Global rating agency Moody's Investors Service has announced that it has placed the Ba1 corporate family rating of Tata Motors Ltd [Get Quote] on review for a possible downgrade.

This rating action follows the announcement by Ford Motor Company (Ford, which has a rating-B3/Stable) naming Tata Motors the preferred buyer for Ford's luxury Jaguar and Land Rover car brands.

Tata Motors will now be entering a period of more detailed negotiations with Ford.

"Should Tata Motors proceed with the transaction and acquire these two businesses, it will face considerable execution and integration challenges," says Elizabeth Allen, Moody's vice-president and senior analyst.

"Furthermore, while Tata Motors enjoys a strong position primarily in the low to mid-end vehicle segments in India and in some developing markets, the acquisition of the Jaguar and Land Rover brands will expose the company to the luxury product category as well as to broader geographies; these are areas in which Tata Motors lacks experience. Moody's, therefore, believes such a transaction would materially increase the business risk profile of Tata Motors," says Allen.