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    Tata Motors JLR Group 6

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    Anirban Chakraborty
    Tata Motors acquired Jaguar and Land Rover from Ford in 2008. This gave Tata a presence in the luxury vehicle market and access to European markets. However, Jaguar had been struggling and Tata faced challenges in integrating the new brands. Tata emphasized cost cutting measures and planned to invest in new products and expanding Jaguar Land Rover's global footprint to improve profitability over the long term. The acquisition was a big strategic move but also came with significant risks for Tata Motors.

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    Tata Motors JLR Group 6

    Uploaded by

    Anirban Chakraborty
    126 views36 pages
    Tata Motors acquired Jaguar and Land Rover from Ford in 2008. This gave Tata a presence in the luxury vehicle market and access to European markets. However, Jaguar had been struggling and Tata faced challenges in integrating the new brands. Tata emphasized cost cutting measures and planned to invest in new products and expanding Jaguar Land Rover's global footprint to improve profitability over the long term. The acquisition was a big strategic move but also came with significant risks for Tata Motors.

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    Tata Motors Jlr Group 6

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    Tata Motors acquired Jaguar and Land Rover from Ford in 2008. This gave Tata a presence in the luxury vehicle market and access to European markets. However, Jaguar had been struggling and Tata faced challenges in integrating the new brands. Tata emphasized cost cutting measures and planned to invest in new products and expanding Jaguar Land Rover's global footprint to improve profitability over the long term. The acquisition was a big strategic move but also came with significant risks for Tata Motors.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    126 views36 pages

    Tata Motors JLR Group 6

    Uploaded by

    Anirban Chakraborty
    Tata Motors acquired Jaguar and Land Rover from Ford in 2008. This gave Tata a presence in the luxury vehicle market and access to European markets. However, Jaguar had been struggling and Tata faced challenges in integrating the new brands. Tata emphasized cost cutting measures and planned to invest in new products and expanding Jaguar Land Rover's global footprint to improve profitability over the long term. The acquisition was a big strategic move but also came with significant risks for Tata Motors.

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    of 36

    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)

    WHAT TATA CAN DO..


    Tata motors will need to synergize better with Jaguar and Land Rover to get back into profits

    OVERVIEW

    COMPANY PROFILE

    TATA MOTORS

    TATA MOTORS ABOUT THE COMPANY


    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.

    JLR-One more step towards a Global Footprint

    COMPANY PROFILE
    JAGUAR LAND ROVER

    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

    JAGUAR The ups and downs


    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

    LAND ROVER
    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

    KEY ISSUES FOR FORD


    Ford acquired Jaguar for $2.5 billion in 1989. Ford acquired Land Rover for $2.75 billion in 2000.

    But the US auto major put the two marquees on the market in 2007 after posting losses of $12.6 billion in 2006 - the heaviest in its 103-year history.

    REASONS FOR SELLING


    Reports said losses at Jaguar stood at USD 715 million in 2006 The Land Rover's profit, on the other hand, was driven by the record sale of 2.26 lakh vehicles, an 18% growth in 2007

    Bringing down production costs and turning around the company successfully will be the challenge-Its a test that Ford failed Ford is combining both the brands

    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

    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

    DEAL HIGHLIGHTS

    Fund Raising (7200 Crore)

    Ordinary Equity Shares

    A-Class Equity Shares

    5 Year 0.5% Convertible Preference Shares

    Full Voting Right (2200 Crore)

    1 Vote for every 10 AClass Equity Shares (2000 Crore)

    * This is the first time a major Indian Co. is raising money by issuing shares with differential voting rights

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

    PROBLEMS IN DOMESTIC MARKETS


    The profits for the first quarter for the year 200809 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.

    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%

    THE PROCESS
    12/06/2007: Announcement from Ford that it plans to sell Land Rover and Jaguar. August 2007: Major bidders are identified Likely buyers: Tata Motors, M&M, Ceribrus capital Management, TPG Capital, Apollo Management. Indias Tata Motors and M&M arrive as top bidders ($ 2.05b & $ 1.9b) 03/01/2008: Ford announces Tata as the preferred bidders 26/03/2008: Ford agreed to sell their Jaguar Land Rover operations to Tata Motors. 02/06/2008: The acquisition is complete

    Tata Motors Financial Performance


    (In Rs. Million) Q3FY09 Revenue EBITDA Profit before Tax Net Profit 47,586.2 916.5 (4191.5) (2632.6) Q3FY08 72,518.3 8,197.4 6651.0 4990.5 Volume Summary Total Commercial Vehicles Total Passenger Vehicles Exports Total Volumes 49,546 42,187 7,027 98,760 82,5568 49,284 12,756 144,608 195,192 142,507 29,177 366,876 215,313 153,475 40,488 409,276 9MFY09 187,659.2 11,186.3 2839.5 4098.4 9M FY 08 199,813.0 21,608.6 18,784.2 14,926.5

    SWOT ANALYSIS
    Strengths Weaknesses

    Tatas strong management capability


    Strong monetary base to invest

    Jaguars declining sales record


    Inexperience of handling such luxury brands

    Tatas Jaguar Land Rover Acquisition


    Opportunities Support from Ford in terms of Technology, Engine, IT, Accounting Adding up of luxury brands in the product line Access to European Market Threats

    Market is volatile and driven by new products


    Strong presence of competitors like Mercedes, BMW, Lexus and Infinity

    INVESTORS CONCERS

    THE BIG PICTURE

    INVESTOR PESSIMISM

    LOW LEVERAGE

    KEY ASSETS AQUIRED FROM FORD

    VALUATIONS

    IMPACT ON TATA MOTORs PBT

    VALUATION OF STAKES IN GROUP Cos.

    POST MERGER SCENARIO


    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.

    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 to compete more effectively with Audi, BMW, Mercedes Benz

    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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