Tata’s Acquisition of Jaguar Land Rover

Tata Motors – A Brief View

Tata Motor’s Product Profile

Tata Motors

Passenger Cars

Indica V2Indica V2

TurboIndica V2

XetaIndica V2

DicorIndigo XL

IndigoIndigo Marina

Indigo CSFiat Cars

Utility VehiclesSafari Dicor

Sumo GrandeSumo

TrucksMedium

and Heavy – Tata Novus

Intermediate

Light – TL 4x4

Small

BusesStarbus

and GlobusOther Buses

Defence

Vehicles

Tata Moto

rs Ltd.

Mar 2004

Mar 2005

Mar 2006

Mar 2007

Mar 2008

Mar 2009

Sales

15311.72

20276.56

23568.37

31119.5

32496.03

PAT 810.34

1236.95

1528.88

1913.46

2028.92

PAT (as a % on Net

Sales)

6.58 7.18 6.86 4.8 4.36

Change in PAT (+/-)

3.29 0.6 (0.32)

(2.06)

(0.44)

Profitability Trend of Tata Motors

Rs. in CroreTata Motors Limited is India's

largest automobile company, with revenues of Rs. 32,426 crores (USD 7.2 billion) in 2006-07.

It is the leader by far in commercial vehicles in each segment, and the second largest in the passenger vehicles market.

The company is the world's fifth largest medium and heavy commercial vehicle manufacturer, and the world's second largest medium and heavy bus manufacturer.

Market Share (%) of Passenger Vehicle Manufacturers

0%

51%

1%

6%1%2%

1%

4%

17%

0%

17%

%Fiat Maruti HM Honda Toyota GM

Skoda Ford India Hyundai M.Benz Telco

Dec '04 Dec '05 Dec '06 Dec '07Sales 172316 176896 160123 172455

PAT3466 1924 (12405) (2452)

Ford Motor Company

General Motors

Toyota Motors

Ford Motor Company

Founded by Henry Ford in 16th June, 1903 in Michigan,USA

World’s Third Largest automaker based on world-wide vehicle sales in 2007

In 2007, Ford became the third-ranked automaker in US sales after General Motors and Toyota, falling from the second-ranked automaker slot for the first time in the previous 56 years

Figures in US mn $

Ford Motor’s Product Profile

Ford

Cars

SUVs

Trucks

The Deal on 2nd June,2008

Key Points:Tata motors acquired Jaguar and Land Rover for $2.3billion on a cash-free, debt-free basis Contribution of $600 million by Ford to JLR Pension PlansDavid Smith, the acting CEO of Jaguar and Land Rover will continue in his position. Tata gets access to Ford's hybrid and low-emission powertrain technologyThe purchase consideration includes the ownership by Jaguar and Land Rover or perpetual royalty-free licences of all necessary Intellectual Property Rights, manufacturing plants, two advanced design centres in the UK and worldwide network of National Sales Companies.

Reason for the Deal

Ford purchased Jaguar in 1989 in a bidding war with General Motors paying 2.5billion dollars which was quite higher than industry estimates (1.3 billion)

Land Rover was sold by BMW to Ford Motor Company for 2.7billion dollars in 2000 Jaguar sales in the U.S. were down by 25.7% in May 2007 from the same period a

year ago. Land Rover sales were down by1.8% despite having an entirely new model, the LR2, on sale.

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Jaguar sales dropped 33% in the US and Europe in the first two months of 2008

Land Rover sales fell 13% in the US and around 7.7% in Europe during the same period.

Ford has lost 15.3 billion dollars over the past two years and responded by shuttering plants and slashing its workforce in North America by more than 40,000 workers.

Ford is getting less than half what it paid for the two brands Ford sold Jaguar and Land Rover as a package since the

engineering, purchasing, and distribution of the two brands have become interdependent as Ford has tried to find efficiencies running the businesses. Jaguars and Land Rovers are even manufactured at a common plant today

Ford is considering a restructuring plan in North America with the amount it is getting from the deal

Reason for the Deal (Contd.)

SWOT Analysis

Opportunities:Support from Ford in terms of Technology,Engine, IT, AccountingAdding up of luxury brands in the product lineAccess to European Market

Market is volatile and driven by new productsStrong presence of competitors like Mercedes, BMW, Lexus and Infinity

Tata’s Jaguar Land Rover Acquisition Threats:

Tata Motor’s Strategy to Fund JLR Deal

Fund Raising (7200 Crore)

Ordinary Equity SharesFull Voting Right(2200 Crore)

A-Class Equity Shares1 Vote for every 10 A-Class Equity Shares(2000 Crore)* This is the first time a

major Indian Co. is raising money by issuing shares with differential voting

rights

5 Year 0.5% Convertible

Preference Shares

Optionally convertible into A equity shares after 3years but before 5years from the date of allotment(3000 Crore)

Future Prospects The Indian Automobile Market is expected to grow at a CAGR of

9.5 percent amounting to Rs. 13,008 million by 2010

The liberalization policies followed by the Indian government had been inviting foreign investors and manufacturers to participate in the car market in India.

It is expected that by 2030, the Indian car market will be the 3rd largest car market across the globe.

Recent Developments

Though Land Rover sales have been softening in some markets especially in Europe, on a six month basis Land Rover sales have gone up over 2007 globally, mainly because of higher volume of sales in Russia and China.

In June 2008 Jaguar was sold 3836units in West Europe as compared to 2924units sold in June 2007. It was a 31% increase.

Thank You…..!!!!