TATA's Acquisition of Jaguar and Land Rover

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The acquisition would help the company acquire a global footprint and enter the high-end premier segment. …

The acquisition would help the company acquire a global footprint and enter the high-end premier segment.

Tata to get access to advance design studios and technology as part of the deal.

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  • 1. Ankit Choudhary Anupam Saxena Rituparna Datta Rohit Pareek Sagar Jogani Sunil Kheria
  • 2.  12/06/2007- Announcement from Ford that it plans to sell Jaguar & Land Rover  08/2007 - Major bidders were identified Tata Motors, M&M, Ceribrus capital Management, TPG Capital, Apollo Management  India’s Tata Motors and M&M arrived as top bidders ($ 2.05b & $ 1.9b)  03/01/2008– Ford announces Tata as the preferred bidder  26/03/2008 - Ford agreed to sell their Jaguar Land Rover operations to Tata Motors.($ 2.3 bn)  02/06/2008– The acquisition was complete
  • 3.  The acquisition would help the company acquire a global footprint and enter the high-end premier segment.  Tata to get access to advance design studios and technology as part of the deal.  Competitive advantage as Corus was the main supplier of automotive high grade steel to JLR and other automobile industry in US and Europe.  Tata motors will diversify its present dependence on Indian markets(90%) and will to get footprints in South East Asia, US, Western Europe.  New product development and brand building experience enhancing Tata Motors in-house R&D and designing capabilities.  Better utilization of cash in the Tata Motors balance sheet.  Rising appetite for luxury automobile in growing markets like India and China  Potential for revenue synergy giving TATA greater international distribution, broader product range and better customer service skills
  • 4. Threats: Threats:
  • 5.  JLR sale to Tata Motors was greeted with approval but regretted by the Union.  Tata motors value plunged and the stock hit rock bottom.  Tata motors posted its first annual loss in at least seven years.  Then, in late 2009 the turnaround started. Sales improved upon introduction of newer, more fuel-efficient and contemporary models.  Debt-equity ratio improved to 1.6 times from 4.5 times.  Huge revenue from BRICS nations.
  • 6. Cost Rationalisation:     Single shifts and down time at all three UK assembly plants. Supplier payment terms extended from 45 to 60 days in line with industry standard. Receivables reduced from 38 to 27 days. Inventory reduced by £217m between June 2008 and March 2009 from 70 to 50 days . Labour actions:      Voluntary retirement to 600 employees. Agency staff reduced by 800. Offered leaves to 300 workers of Bromwich and Solihull plant. Additional 450 job cuts including 300 managers. Agreement with Unions to implement pay freeze and longer working hours (equivalent to approximately 20% reduction in labour costs.)
  • 7. Year ending Net income (loss) Turnover (£m) EBITDA (£m) before tax (£m) Net income (loss) attributable to shareholders (£m) 31 Mar 2013 15,784 2,402 1,675 1,215 31 Mar 2012 13,512 2,027 1,507 1,481 31 Mar 2011 9,870.7 1,501.7 1,114.9 1,035.9 31 Mar 2010 6,527.2 349.1 51.4 23.5 31 Mar 2009 4,949.5 (83.9) (375.7) (402.4)
  • 8. 1400 1200 1000 800 600 400 200 0 Close Price 3-Jan-08 24-Jan-08 2-Jun-08 791.6 658.55 564.45 31-Dec-08 31-Dec-09 31-Dec-10 159.85 791.55 1308.25
  • 9.  The merger seemed poorly timed  Demand for luxury cars collapsed as a result of financial crisis  Started making profits in 2010 up to 41 %  Now an example of a successful merger  Entered CHINA in march 2012 with a joint venture with Chery Automobiles