Company Analysis TATA MOTORS1

TATA Motors Promotion Video - YouTube

Tata Motors is a part of the Tata Group manages its share-holding through Tata Sons The company was established in 1935 as a locomotive manufacturing unit and later expanded its operations to commercial vehicle sector in 1954 after forming a joint venture with Daimler-Benz AG of Germany Despite the success of its commercial vehicles Tata realized his company had to diversify and he began to look at other products

TYPE PublicINDUSTRY AutomotiveFOUNDED 1945FOUNDERrsquoS JRD TataHEADQUARTERS Mumbai MaharashtraKEY PEOPLE Ratan tata chairman Ravi Kant vice chairman Carl Peter Forster CEOPRODUCTS Engines AutomobilesSERVICES outsourced engineering amp designREVENUE 3744650 crore(US$ 85 billion) in 2009NET INCOME 224008 crore (US$ 5085 million) in 2009TOTAL ASSETS $15430 billion (2009)TOTAL EQUITY $763 million (2009)

IMPORTANT DEVELOPEMENT TATA NANO In January 2008 Tata Motors launched

Tata Nano the least expensive production car in the world at about Rs 100000 (US $2500) The city car was unveiled during the Auto Expo 2008 exhibition in Pragati Maidan New Delhi

Tata has faced controversy over developing the Nano as some environmentalists are concerned that the launch of such a low-priced car could lead to mass motorization in India with adverse effects on pollution and global warming Tata has set up a factory in Sanand Gujarat and the first Nanos are to roll out summer 2009

Tata Nano Europa has been developed for sale in developed economies and is to hit markets in 2010 while the normal Nano should hit markets in South Africa Kenya and countries in Asia and Africa by late 2009 A battery version is also planned

TATA ACETata Ace Indias first

indigenously developed sub-one ton mini-truck was launched in May 2005 By October 2005 LCV sales of Tata Motors had grown by 366 percent to 28537 units due to the rising demand for Ace The Ace was built with a load body produced by Auto line Industries By 2005 Auto line was producing 300 load bodies per day for Tata Motors

Ace is still a top seller for TML with 5M units sold to date (June 2010)

TATA IN INDIA Tata Motors Limited is Indiarsquos largest

automobile company with revenues of 3565148 crore (US$ 809 billion) in 2007-08 It is the leader in commercial vehicles in each segment and among the top three in passenger vehicles in India with products in the compact midsize car and utility vehicle segmentsTata vehicles are sold primarily in India and over 4 million Tata vehicles have been produced domestically since the first Tata vehicle was assembled in 1954 The companyrsquos manufacturing base in India is spread across Jharkhand Maharashtra Uttar Pradesh Uttarakhand and Karnataka Following a strategic alliance with Fiat in 2005 Tata set up an industrial joint venture with Fiat Group Automobiles at Ranjangaon (Maharashtra) to produce both Fiat and Tata cars and Fiat powertrains The company is establishing a new plant at Sanand (Gujarat) Tatas dealership sales service and spare parts network comprises over 3500 touch points

TATArsquoS GLOBAL OPERATIONS The acquisitions is Jaguar Land Rover a business comprising two

struggling iconic British brands that was acquired from the Ford Motor Company in 2008 In 2004 Tata acquired the Daewoo Commercial Vehicles Company South Korearsquos second largest truck makerToday two-thirds of heavy commercial vehicle exports out of South Korea are from Tata Daewoo In 2005 Tata Motors acquired a 21 controlling stake in Hispano Carrocera a Spanish bus and coach manufacturerTata Motors continued its market area expansion through the introduction of new products such as buses (Starbus amp Globus jointly developed with subsidiary Hispano Carrocera) and trucks (Novus jointly developed with subsidiary Tata Daewoo) In May 2009 Tata unveiled the Tata World Truck range jointly developed with Tata Daewoo Debuting in South Korea South Africa the SAARC countries and the Middle-East by the end of 2009 In 2006 Tata formed a joint venture with the Brazil-based Marcopolo to manufacture fully-built buses and coaches for India and other international markets[29] Tata has franchiseejoint venture assembly operations in Kenya Bangladesh Ukraine Russia and Senegal

PRODUCTS Passenger cars and utility vehicles Tata Sierra (Discontinued) Tata Estate (Discontinued) Tata SumoSpacio Tata Safari Tata Indica Tata Vista Tata Indigo Tata Manza Nano Tata Xenon XT Tata Aria tata Tata Indigo Marina Tata Winger Tata Magic Tata pratul

TATA TECHNOLOGIES TTL

TTL provides Engineering and Design (EampD) solutions to the Automotive Industry Tata Motors holds 8691 of TTLrsquos share capital TTL is based in Pune (Hinjawadi) and operates in the US and Europe through its wholly owned subsidiaries in Detroit and London respectively It also has a presence in Thailand Tata Technologies is a software service provider in the IT services and BPO space Its global client list includes Ford General Motors Toyota and Honda to name a few It bought over the British engineering and design services company In cat International Plc for Rs4b in August 2005 In cat specializes in engineering amp design services and product lifecycle management in the international automotive aerospace and engineering markets

TATA MOTORS

Tata branda middot Tata Daewoo middot Jaguar middot Land Rover middot Tata Hispano

CarsMUVsSUVs middot Nano middot Indica middot Indigo middot Sumo middot Sumo Grande middot Safari middot Aria

Concept models middotOne CAT middot Indica Silhouette middot Xover middot Elegante middot Aria Coupe middot Cliff rider

Pick-ups middot 207 DI middot TL middot Xenon XT

Buses Globus middot Hispano Globus middot Star bus middot Marco polo Bus

Medium and heavy trucks middotCons truck middot Novus middot Prima

Mini vans middot Winger middot Magic middot Iris middot Venture

SCVsLCVs middot407 middot Ace

Historic models middot Sierra middot Estate middot Tata Mobile

TATA GROUP Companies ndash CMC Tata BP Solar Tata Coffee Tata Chemicals Tata Consultancy Services Tata Elxsi Tata Interactive Systems Tata Motors Tata Steel Tata Power Tata Tea Tata Communications Tata Technologies Limited Tata Teleservices Titan Industries Tata Voltas The Indian Hotels Company Trent (Westside) Notable non-Indian Companies middot Corus Group middot Tetley middot Tata Daewoo Commercial middot VSNL International Canada middot Jaguar Cars middot Land Rover middot Brunner Mond Brands middot Good Earth Teas middot Tanishq middot Taj Hotels middot I-shakti middot Tata Salt middot

Tata Sky middot Tata Indicom middot Tata DoCoMo middot Titan middot Westside middot Voltas middot Virgin Mobile India

SWOT Matrix

Internal Analysis

StrengthsWeaknesses

External Analysis

Opportunities Threats

ThreatsbullMaruti 800 is an established benchmarkbullSafety amp reliability issuesbullCompetition from second hand cars amp Maruti

OpportunitiesbullLargest aspiring middle classbullHuge unexploited marketbullProspective buyers from the two-wheeler segment

WeaknessesbullLack of CompetencebullLack of reliable technology

StrengthsbullGoodwill of TATA brandbullOwn Steel PlantsbullExisting dealers amp Service NetworksbullLarge shareholder base for capital needs

SWOT for TATArsquos 1 Lac Car Project

bull Strengths

Cost advantage Asset leverage Effective communication High RampD Innovation Online growth Loyal customers Market share leadership Strong management team Strong brand equity Strong financial position Supply chain Pricing Real estate International strategies

bullWeaknesses Bad communicationbullDiseconomies to scalebullOver leveraged fiancial positionbullLow RampDbullLow market sharebullNo online presencebullNot innovativebullNot diversifiedbullPoor supply chainbullWeak management teambullWeak real estatebullWeak damaged brandbullUbiquitiouegory products servicesbullweak brand image

bullOpportunities AcquisitionsbullAsset leveragebullFinancial markets (raise money through debt etc)bullEmerging markets and expansion abroadbullInnovationbullOnlinebullProduct and services expansionbullTakeovers

bullThreats CompetitionbullCheaper technologybullEconomic slowdownbullExternal changes (government politics taxes etc)bullExchange rate fluctuationsbullLower cost competitors or importsbullMaturing categories products or servicesbullPrice warsbullProduct substitution

SWOT FOR TATAlsquoS

Organizational Structure

Jamsetji Tata - Founder of Tata Group Dorabji Tata - Founder of New India Assurance Co Ltd in 1919 Nowroji Saklatwala - He was the only non-Tata chairman of the Tata group from

1932 till his sudden death due to heart attackHe was also a cricket player and represented the Parsees against the Europeans in 1904

J R D Tata -JRD was elected Chairman of Tata amp Sons making him the head of the largest industrial group in IndiaHe take over as Chairman of TATA SONS from his uncle Nowroji Saklatwala

Ratan Tata Present Chairman of Tata Group

Pallonji Mistry ndash Chairman Designate

The TATArsquos

Tata is an increasingly powerful multinational conglomerate with a market value of more than $70bn (pound35bn) and almost 290000 people in its workforce in 80 countries During the financial year March 2008 its revenues of about pound18bn were equivalent to some 32 of Indias gross domestic product

The Mumbai-based groups subsidiaries are major corporations in their own right active in industries ranging from IT services to power generation to tea production to steel In the UK it already owns Tetley Tea and steelmaker Corus

NEW IDENTITYTATArsquos ldquoJaGuar and LandRoverrdquo helliphellip

Equity and Debt ndash The Concepts

IMPORTANT FACTSbullTatas - the top choice for buying the US auto giant Fords iconic British brands Jaguar and Land Rover

bullThe firm demolished the competition from rival Indian firm Mahindra and Mahindra

bullWhen a private equity firm buys a company the cost of buying it often goes onto the companies books If anything then goes wrong how do you refinance the businessldquo

TATA MOTORndash JLR Deal process

12062007- Announcement from Ford that it plans to sell Land Rover and Jaguar

August 2007 - Major bidders are identified

Likely buyers Tata Motors MampM Ceribrus capital Management TPG Capital Apollo Management Indiarsquos Tata Motors and MampM arrive as top bidders ($ 205b amp $ 19b)

03012008 ndash Ford announces Tatas as the preferred bidders

26032008 - Ford agreed to sell their Jaguar Land Rover operations to Tata Motors

02062008 ndash The acquisition is complete

Why did Tatas acquire JLR

Long term strategic commitment to automotive sector Opportunity to participate in two fast growing auto segments Increased business diversity across markets and products Land rover provides a natural fit for TMLrsquos SUV segment Jaguar offers a range of ldquoperformanceluxuryrdquo vehicles to broaden the brand

portfolio Benefits from component sourcing design services and low cost

engineering

What Tata had got100 stake in Jaguar amp land Rover Business

TAMO has acquired the business amp initially they will be operated independently of the partner

3 Plants in UK These are well invested plants

2 advanced design amp engineering center

4-5000 engineers engaged in testing prototype design amp powertrainEngineering development amp integration

26 National sales company

Both existing national sales companies of jaguarland rover amp also those that are carved out of current Ford operation

Intellectual property rights

This covers all key technologies to be transferred to JLR amp perpetual royalty free license on technologies shared with Ford

Capital Allowance A minimum guaranteed amount of $11 bn which will help managing in Tax going forward

Support from Ford Motor Credit

Ford Motor Credit will continue to support the sales of JLR for around next 12 months

Pension Contributed by Ford

Ford will contribute $ 600 mn of the Pension Fund

bullConsidering that Jaguar and Land Rover are two of the most well-known automotive names in the world and that Ford had acquired them for a collective cost of about $5 billion almost a decade earlier Tata Motors seems to have got them at a steal at $2 billion

bullOver the years Ford spent close to a total of $10 billion on the brand but failed to return a profit After incurring heavy losses for two consecutive years in 2006 and 2007 Ford took this move

bullTata Motors has assured the employee union that both these factories will continue to operate without any retrenchments after the takeover

bullThe process which started in lsquo00 and reached new heights in rsquo07 was said to have reached a Zenith with this

bullThe Nanorsquos plans were said to have been targeted towards the down markets but with this deal going through this has been contradicted as Tata was equally bullish in the upmarkets

Strategic VIEW POINTS