Tata Motors Jlr Group 6

7/31/2019 Tata Motors Jlr Group 6

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WHAT TATA CAN DO..Tata motors will need to synergize better with Jaguar and Land Rover to

get back into profits

Prepared by-

Gaurav Arya (7/2011)

Anirban Chakraborty

(18/2011)

Mrinal Sharma (26/2011)

Swati Nigam (30/2011)

Nikhil Jalali (50/2011)

Sujit Xavier(52/2011)

Rachit Pandey(61/2011)


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OVERVIEW


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PROFILE

TATA MOTORS


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TATA MOTORS ABOUT THE COMPANY

TATA GROUP is 150 year old, Previously Tata Engineeringand Locomotive Company, Telco.

India's largest passenger automobile and commercial

vehicle.

Tata Motors was established in 1945

Listed on the New York Stock Exchange in 2004.


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JLR-One more step towards a Global Footprint


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PROFILE

LAND ROVER

JAGUAR


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JAGUAR AND LAND ROVER

Jaguar and land rover(informally JLR) is a British automotive

company

Jaguar in 1975 - Nationalized in due to financial difficulties

1990 - Taken over by Ford

Founded in 1948 as a marquee of the Rover Company

Known for superior off-road performance, Used by military for

projects and expeditions, Safe but less reliable, Makeover in recent

times

In 1994 Rover Group is taken over by BMW & sold to FORD

MOTORS for 2.75 bn $ in 2000


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1922 - Founded in Blackpool as Swallow Sidecar company

Jaguar made its name by producing a series of eye catching sports car

such as XK120 of 1941, E type of 1961

1975 - Nationalized in due to financial difficulties

1984 - Floated off as a separate co in the stock market

1990 - Taken over by Ford , Ford acquired Jaguar for $2.5 billion

1999- it became part of fords new premier automotive group along with

Aston Martin, Volvo cars

A statement of ultra luxury, Holds Royal warrants, Rarely advertised,

Fords formula one entry since 1990s

JAGUARThe ups and downs


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British car manufacturer founded in 1948 as a marquee of the

Rover Company.

Known for superior off-road and road performance

1967 become part of LMC

1976 1 million cars running on the road

In 1994 Rover Group is taken over by BMW

Sold to FORD MOTORS for $ 2.75 b in 2000.

Used by military for projects and expeditions, Safe but less

reliable, Makeover in recent times

Expanding worldwide

LAND ROVER


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Reports said losses at Jaguar stood at USD 715 millionin 2006

The Land Rover's profit, on the other hand, was driven

by the record sale of 2.26 lakh vehicles, an 18% growthin 2007

Bringing down production costs and turning around the

company successfully will be the challenge-Its a testthat Ford failed

Ford is combining both the brands

REASONS FOR SELLING


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BENEFITS

Tata wanted to make a global impact and it thinksthat buying these brands at a lower rate now, will

give better value later on

This acquisition also eases the entry of Tata in

European market which it has been eyeing for long.

A previous JV with FIAT took place, this will furtherhelp them penetrate EU market


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Increase sales in emerging markets

Reduce dependence on mature markets

Opportunity to spread its business across different

customer segment

Reduce the company dependence on the Indian

market which accounted for 90% of its sales


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DEAL HIGHLIGHTS


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Fund Raising

(7200 Crore)

Ordinary Equity Shares

Full Voting Right

(2200 Crore)

A-Class Equity Shares

1 Vote for every 10 A-Class Equity Shares

(2000 Crore)

* This is the firsttime a major IndianCo. is raising money

by issuing shareswith differential

voting rights

5 Year 0.5% ConvertiblePreference Shares

Optionally convertibleinto A equity shares

after 3years but before5years from the date of

allotment

(3000 Crore)


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The profits for the first quarter for the year 2008-

09 were at 3.26 billion

Q3 the sales of passenger vehicles went down to41,287 units a drop of 14.14%

Tata Motors cut production across differentcategories.

PROBLEMS IN DOMESTIC MARKETS


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STATUS AFTER THE DEAL

Jaguar Land Rover global sales in December 2009

were 21,134 vehicles, higher by 33%

Jaguar sales for the month were 4,794, higher by 5%,

while Land Rover sales were 16,340, higher by 45%


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Tata Motors Financial Performance

Q3FY09 Q3FY08 9MFY09 9M FY 08

Revenue 47,586.2 72,518.3 187,659.2 199,813.0

EBITDA 916.5 8,197.4 11,186.3 21,608.6

Profit before Tax (4191.5) 6651.0 2839.5 18,784.2Net Profit (2632.6) 4990.5 4098.4 14,926.5

(In Rs. Million)

Total Commercial Vehicles 49,546 82,5568 195,192 215,313

Total Passenger Vehicles 42,187 49,284 142,507 153,475

Exports 7,027 12,756 29,177 40,488

Total Volumes 98,760 144,608 366,876 409,276

Volume Summary


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SWOT ANALYSIS

Strengths

Tatas strong managementcapability

Strong monetary base to invest

Weaknesses

Jaguars declining sales record

Inexperience of handling suchluxury brands

Opportunities

Support from Ford in terms ofTechnology, Engine, IT, Accounting

Adding up of luxury brands in theproduct line

Access to European Market

Threats

Market is volatile and driven bynew products

Strong presence of competitorslike Mercedes, BMW, Lexus and

Infinity

Tatas JaguarLand RoverAcquisition


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INVESTORS CONCERS


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THE BIG PICTURE


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INVESTOR PESSIMISM


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LOW LEVERAGE


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KEY ASSETS AQUIRED FROM FORD


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VALUATIONS


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IMPACT ON TATA MOTORs PBT


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VALUATION OF STAKES IN GROUP Cos.


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POST MERGER SCENARIO

Following Cost Rationalisation initiatives were takento improve cash flows:

1] Single shifts and down time at all three UK

assembly plants.2] Supplier payment terms extended from 45 to 60

days in line with industry standard.

3] Receivables reduced by 133 million from 38 to27 days.

4] Inventory reduced by 217m between June 2008and March 2009 from 70 to 50 days .


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Contd..5] Labor actions

- Voluntary retirement to 600 employees.- Agency staff reduced by 800.

-Offered leaves to 300 workers ofBromwhich and Solihull plant.

-Additional 450 job cuts including 300 managers.

6] Agreement with Unions to implement pay freeze and longer working hours

(equivalent to approximately 20% reduction in labor costs.)

7] Engineering and capital spending efficiencies.

8] Fixed marketing and selling costs reduced in line with sales volume.

9] Reduction in all other non-personnel related overhead costs.


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WAY AHEAD FOR TATA..

Grow the business through new products &market expansion

Started assembling Land Rover vehicles at Pune

Plant The company is also seeking to establish a

manufacturing base in China.

JLR to spend 8.2 mn over the next 5 years tocompete more effectively with Audi, BMW,

Mercedes Benz


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Transform the business structure to deliver

sustainable returns

Investment in product development and

technology to maintain high quality

The company aims to increase its marketing and

dealer network in emerging markets


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Documents

Tata Motors Jlr Group 6