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“TATA MOTORS MAY STRUGGLE TO REV UP”
Source: economic times dated 15-02-2017
An Analysis by : 1. ABISHEK SANTHOSH RAJ A 2. ANOOP RAJAN MATHEW 3. DARSHANA GOGOI 4. GANESH KUMAR 5. JOSEPH ARNOULD MARIAN 6. MADDI BHADHRI NADH
THE NEWS
Revenues increased Net profit falls 96% in Q3 Shares fall 10.3% - biggest decline in 5yrs Jaguar Land Rover (JLR) misfires
TATA MOTORS
Established in 1945 by J R D Tata CEO : Guenter Butschek Chairman : Natarajan Chandrasekaran Headquarters : Mumbai Subsidiaries: JLR, Tata Daewoo, Tata
Hispano Net worth: $12.7 billion
JAGUAR LAND ROVER (JLR)
Acquired by TATA Motors in 2008 Contributes 83% of TATA Motors’ total revenue Manufacturing units in UK, Slovakia, India and China No 1 manufacturer in UK Sales :
EUROPE CHINA UK US REST21.6% 20.6% 19.3% 16.8% 21.7%
ANALYSIS ON TATA MOTOR’S STRUGGLE TO REV UP
Unfavorable marketing expenses Higher new model launch Lower wholesale volumes Surge in Variable cost
INCREASE IN EXPENSES
POSSIBLE REASONS FOR THE CAUSE- GLOBAL
Tianjin Explosion Brexit Trump effect
IMPACT OF TIANJIN EXPLOSION
28th August 2015, Port Tianjin, China 5800 JLR’s destroyed Incurred a loss of £154 mn Spent £85 mn on recovery in FY16-17
IMPACT OF BREXIT
8 operations of JLR in UK Estimated decrease in Revenue: £ 1.10
billion 10% levy on exports to Europe 4% levy on import of components Fall in pounds sterling Fall in share price
2015-2016 2016-2017126000
128000
130000
132000
134000
136000
138000
140000
Sales units of JLR-Q3
Sales: 6700 units decrease(5%)
2015-2016 2016-20170
10
20
30
40
50
60
70
80
90
100
Tax Paid
mn pounds
80% increase in tax
IMPACT OF DONALD TRUMP
US taxation policies- Border tax adjustments
Negative impact for automakers for sales US accounts for 20% of subsidiary JLR May hit EPS by 50%
SHARE PRICES WITH RESPECT TO THE EVENTS-NASDAQ
POSSIBLE REASONS FOR THE CAUSE- DOMESTIC
Ouster/Leadership of Mr. Cyrus Mistry Demonetization effect Tata Nano Project
IMPACT OF CYRUS MISTRY
Focused more on increasing EPS Invested £3.1 billion in product creation Lost £ 65 billion (TATA group) : poor
investments Set up innovation centres globally Introduced 8 new products in FY 16-17 Stock fell by 16.4% after his ouster
INVESTMENT BY CYRUS MISTRY ON R&D
IMPACT OF TATA NANO PROJECT
Drain on financial resources 3000 Crores loss 2,50,000 cars are not on roads 8500 Crores cross holdings
IMPACT OF DEMONETIZATION
08th November,2016 Affected commercial and passenger vehicle
sales 13% decline in sales OEM’s were affected Share price fell
SHARE PRICES WITH RESPECT TO THE EVENTS-BSE/NSE
22/8/2015 24/8/2015 23/6/2016 24/6/2016 1/8/2016 1/9/2016 24/10/2016 27/10/2016 11-Nov 15/11/2016 9/2/2017 15/02/20170
100
200
300
400
500
600
700
444
308.25
488448
493
589559
521 534.15
457.25
512
436
Share price
DATE
SHAR
E PR
ICE
Tianjin Explo-sion Brexit Raise in sales of JLR Cyrus Mistry Demonetization/US Elec-
tionsRelease of Financial State-
ments
TIME-LINE OF EVENTS
24th Oct 2016 - ouster of
Cyrus Mistry
23th June 2016 - Brexit
28th August 2015 – Tianjan
Explosion8th Nov 2016 –
DemonetizationNov 2016 – US Elections(Tax
Policies)
Feb 2017 – Release of Financial
Statement for Q3
BIBLIOGRAPHY
The Economic Times Indian Express Business Line Tata motors press release for Q3 JLR Automotive, Annual Report
2015-16 Financial statement of Tata
Motors till Q3
www.tatamotors.com www.forbes.com www.theguardian.com www.moneycontrol.com www.google.com www.nasdaq.com
THANK YOU