TATA -JAGUAR -LAND ROVER

DEAL

Sourabh Bose Jigar Shah Madhav Nitish Abhishek

TATA MOTORS A SNAPSHOT

TATA GROUP is 150 year old, Previously Tata Engineering

and 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.

TATA MOTORS Company Profile

It is the 5th largest medium and heavy commercial vehicle

manufacturer in the world. listed in BSE, NSE & NYSE.

Subsidiaries-

JAGUAR CARS LAND ROVER TATA DAEWOO COMMERCIAL

JLR-One more step towards a Global Footprint

SWOT

Strategic logic
Long term strategic commitment to automotive sector.
Opportunity to participate in two fast growing auto segments- Luxury cars and all terrain vehicles. Enhanced human capital and managerial talent. Improvement in global market position through a combination of resources and strengths. Sharing of best practices in manufacturing and quality assurance systems and processes Benefits from component sourcing, design services and low cost engineering

Problems in the Domestic Market

The profits for the first quarter for the year 2008-09 were at 3.26 billion Q3 the sales of passenger vehicles went down to 41,287 units a drop of 14.14% Tata Motors cut production across different categories.

COMPETITIVE ADVANTAGE

Tata Motors is vulnerable to greater competition at home. Foreign vehicle makers including Daimler, Nissan Motor, Volvo and MAN AG have struck local alliances for a bigger presence.
Tata Motors, which has a joint venture with Fiat for cars, engines and transmissions in India, is also facing heat from top car maker Maruti Suzuki India Ltd, Hyundai Motor, Renault and Volkswagen.

COST SYNERGIES
Tata auto component Flagship company of TAMOs ancillary biz Manufacturing, Engineering and Supply chain management Customers include Global OEMs like Ford, Daimler, Chrysler, FIAT Tata Steel - Corus Leader in automotive grade steel in the European markets 16% of revenue from auto steel division Enjoys Q1 supplier status with Ford to supply steel for Jaguar and Land Rover

JLR
Tata Consultancy Services Provides services like engineering design, manufacturing solutions and sourcing services Automotive division accounted for 15% revenues Major customers are Chrysler, Ford, GM INCAT Provides services like supplier programs, consulting services and global sourcing Major customers are Chrysler, Ford, GM, Honda and Nissan

Fund Raising (7200 Crore)

Ordinary Equity Shares

A-Class Equity Shares

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)

Full Voting Right (2200 Crore)

1 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

Benefits

Tata wanted to make a global impact and it thinks that 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 further help them penetrate EU market.

Reduce the company dependence on the Indian market which accounted for 90% of its sales

Increase sales in emerging markets Reduce dependence on mature markets

Opportunity to spread its business across different customer segment

JLR had many new models lined up for next 3 years, so no much work just profits

Strong R & D culture and facilities

Component sourcing, engineering and design benefits

Post merger

Following Cost Rationalisation initiatives were taken to 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 to 27 days. 4] Inventory reduced by 217m between June 2008 and March 2009 from 70 to 50 days .

Contd..
5] Labor actions - Voluntary retirement to 600 employees. - Agency staff reduced by 800. -Offered leaves to 300 workers of Bromwhich 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.

Recommendations

Partnering

Keep acquisition structurally separate Maintain its identity Hunt for synergies in selected areas
Procurement synergies

Prevent their own antecedents from clouding established brands Share operational Know-how Operational Autonomy

Current Status
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%

Thank You