Tata Motors and the Automotive Industry The Smart People Emily Frey, Eric Harmon, Arielle Hord, Caitlin Kantosky.

Tata Motors and the Automotive Industry

The Smart People Emily Frey, Eric Harmon, Arielle

Hord, Caitlin Kantosky

Outline• History and Product offerings• Tata Group & Corporate Responsibility• Financial Analysis• Tata’s Future & what impact, if any, for the

American auto market

History

• Started in 1945 in Mumbai, India.

• Original production was on locomotives.

• 1954– First car rolled off of the

assembly line.• Tata’s are a family of

Indian industrialists and philanthropists.

• The family founded:– Ironworks– Steelworks– cotton mills– hydroelectric-power

plants • Are of their endeavors

have been proved to be crucial to India's industrial development.

History• Tata Motors is India’s

owns the largest independent company in India.

• Mercedes and Tata teamed up to create a truck line.– First major business deal

with another firm.

• Together both companies started their commercial vehicle operations in 1960.

• in 1986 the company created and sold the first LCV– LCV = light commercial

vehicle – Was the Tata 407

History

• Tata Motors decided to pursue joint ventures.– Cummins Engine Co.,

Inc., was the first company to jointly venture with Tata in 1993.

– Manufactured a diesel engine that had high horsepower and emitted less harmful chemicals.

• Began creating new lines in the late 1990’s and early 2000’s:– Compressed natural gas

buses– 1109 vehicle, used for

commercial purposes.– Ex-series– Newly designed LCV

called the 207 DI

Products

• Tata Indigo– Created in 2002– Mid-sized sedan.– Different models run on

either normal gasoline or diesel fuel.

– Seats 5 people.– Same luxuries as

American made vehicles.

Products

• Tata Indigo SW– Station wagon version of

the Indigo.– Same basic features as

the Indigo.– Seats 5 people.– Different models fun on

different fuels.– Different optional safety

features than other vehicles.

Products

• Tata Indica– Hatchback version of the

Indigo sedan.– Easily affordable.– Smallest in the line of

Tata vehicles to date. – Seats 5 people.– Same basic features as

the sedan.

Products• Tata Safari– Mid-sized SUV.– Has a special engine

called DICOR.• Direct Injection Common

Rail.• Allows the engine to

intercool itself.

– Comes in either a 4x4 or a 4x2.

– Can seat 7 passangers.

Products

• Tata Sumo– Runs off of diesel fuel.– Seats up to 7

passengers.– Has a separate rear and

front suspension for an optimal ride.

– Has two separate air conditioners for the front and rear of the vehicle.

Tata Group• 100 companies throughout 7 business sectors•Engineering, materials, energy, chemicals, services, consumer products, information systems and communications•Tata AutoComp Systems - Automotive•Tata Steel - Materials•Tata Power - Energy•Rallis India - Chemicals•Tata Realty and Infrastructure - Service•Tata Tea - Consumer Products•Tata Technologies - Information Systems and Communications

Corporate Social Responsibility

•“A Company that cares about the future”•Committed to corporate social responsibility•Signed the United Nations Global Compact

•Plays role in community development•Environmentally-friendly products and technology

Corporate Social Responsibility•Two main concerns:•Reduction of pollution•Restoration of ecological balance•Implemented soil and water conservation programs

•Cleaner Engines•Advanced emission-testing labs•Developing alternate fuel engines

•Sewage treatment facilities•Encourages tree planting

Corporate Social Responsibility

•India – Recycling Culture•Value in discarded products

•Europe – “Throw-away” culture•European ELV Directive

Corporate Social Responsibility•Community Development•Community Service Division•Promote economic independence•“Self-initiated cottage industries”

Tata Finance: overview

• Stock Trend• Growth and Expansion– Sales– assets

• Financing Operations• Tata vs. American Companies

Tata Motors Inc. Stock

• TTM• NYSE since 2004• $15.84 as of Friday (Yahoo, 2008)• Down 8% in last year

Since 2004: TTM

Growth and Expansion

• large Indian market– Familiar with market– Brand loyalty

• Fuel efficiency • Mahindra & Mahindra- $1.88 billion

Debt vs. Equity

• Debt growth: $2.3 billion $4.1 billion• Equity growth: $1.2 billion $2.1 billion– 55 million outstanding shares– ROE : 19%

• Debt/ equity ratio: .87 – Industry average: .58– Cash now for growth

Growth

• Asset growth doubled since 2005– Acquisition of Jaguar and Land Rover from Ford

• Sales:– $7.6 billion and grew 42.2% from 2006

• PROFITS!!– $.95 billion on 2005 $1.5 billion on 2007

Cash Management

• Liquidity and solvency are good• Inventory• Improved cash management:– 12% of assets in 2005– 4% of assets in 2007

Comparatively Speaking

Brand: Tata Ford GM

Sales: $7.6 billion $172 billion $181 billion

# of employees 33,900 246,000 266,000

Profit Margin 20% 17% 6.7%

Effects on U.S. Economy

• Slow economy– High oil prices– Demand for fuel efficiency– Cut backs

• Tata’s effect

Jaguar and Ford• Purchase from Ford– Concerns

• Changes or Plans– More Tata vehicles– Made in India• Future

U.S. Car Companies• $ 2 Billion in sales

• GM-$50; Ford-$40; Honda- $20

• In the U.S.

• Going overseas– 75% by 2017 for GM

• Expanding in India

U.S. Car Companies

• Toyota- 7.5% increase in profits

• Foreign Markets– No help– 1. Can’t offset– 2. India out of reach

The Next Auto Capital

• Detroit current auto capital

• 21st century belongs to India

• 2050 in India and China– Labor– Environment

Future of the Nano

• Not for the U.S.– 3rd world countries– U.S. standards

• Detroit make or buy version

Summary

• Tata history and products• Tata Group• Tata: Social Responsibility• Tata Motors Finance• Future

Questions