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    Project on-tata-motors Project on-tata-motors Document Transcript

    • INTRODUCTION“A promise is promise and I kept my promise”- this is the historical statement which Mr. RATANTATA said when he launched his ambitious TATA NANO; the people’s car in India on 23 rd march2009. Tata has always given value products in the Indian Car Market whether it is path breakingrecently launched TATA NANO or TATA INDICA (which created great brand into the car industryin the diesel segment).Not only is the passenger car, even into the heavy vehicle segment TATA is the only sole leader inIndia.TATA has created its brand value not only in India but even outside India it has created its brand byacquiring Jaguar-Land Rover, Corus Steel during 2007-08.TATA has been named among top 10 brand companies by Fortune Magazine in the year 2008. It hasgot into top 100 companies in the survey of Standard & Poor Mody’s research in the year 2008.Being into most valued brand in world the consumer satisfaction to its customers is very importantfor TATAS and thus they are continuously working into this area where their objective is to providebest products with full value of the money of their customers.The TATA INDICA VISTA has been one of those products you just cannot ignore. While it gotmedia coverage around the world, the reactions, though mixed, flowed easily. On the one hand therehas been pride in the “World’s mid size small car” tag, as a great achievement for Indian industry.The “World’s mid size small Car” tag has been well received with the hope that a whole newcategory of people can look to buy a car now. 1
    • 1. STUDY OF THE INDUSTRY a) Historical BackgroundIn India there are 100 people per vehicle, while this figure is 82 in China. It is expected thatIndian automobile industry will achieve mass motorization status by 2014.Since the first car rolled out on the streets of Mumbai (then Bombay) in 1898, the AutomobileIndustry of India has come a long way. During its early stages the auto industry was overlooked bythe then Government and the policies were also not favorable. The liberalization policy and varioustax reliefs by the Govt. of India in recent years has made remarkable impacts on Indian AutomobileIndustry. Indian auto industry, which is currently growing at the pace of around 18 % per annum, hasbecome a hot destination for global auto players like Volvo, General Motors and Ford.A well developed transportation system plays a key role in the development of an economy, andIndia is no exception to it. With the growth of transportation system the Automotive Industry ofIndia is also growing at rapid speed, occupying an important place on the canvas of Indianeconomy.Today Indian automotive industry is fully capable of producing various kinds of vehicles and can bedivided into 03 broad categories : Cars, two-wheelers and heavy vehicles. The first automobile in India rolled in 1897 in Bombay. India is being recognized as potential emerging auto market. Foreign players are adding to their investments in Indian auto industry. Within two-wheelers, motorcycles contribute 80% of the segment size. 2
    • Unlike the USA, the Indian passenger vehicle market is dominated by cars (79%). Tata Motors dominates over 60% of the Indian commercial vehicle market. 2/3rd of auto component production is consumed directly by OEMs. India is the largest three-wheeler market in the world. India is the largest two-wheeler manufacturer in the world. India is the second largest tractor manufacturer in the world. India is the fifth largest commercial vehicle manufacturer in the world. The number one global motorcycle manufacturer is in India. India is the fourth largest car market in Asia - recently crossed the 1 million mark.40% of the three-wheelers are used as goods transport purpose. Piaggio holds 40% of the marketshare. Among the passenger transport, Bajaj is the leader by making 68% of the three-wheelers.Cars dominate the passenger vehicle market by 79%. Maruti Suzuki has 52% share in passenger carsand is a complete monopoly in multi purpose vehicles. In utility vehicles Mahindra holds 42% share.In commercial vehicle, Tata Motors dominates the market with more than 60% share. Tata Motors isalso the worlds fifth largest medium & heavy commercial vehicle manufacturer. 3
    • b) Current ScenarioThe growth of the Indian middle class along with the growth of the economy over the past few yearshas attracted global auto majors to the Indian market. Moreover, India provides trained manpower atcompetitive costs making India a favoured global manufacturing hub. The attractiveness of theIndian markets on one hand and the stagnation of the auto sector in markets such as Europe, US andJapan on the other have resulted in shifting of new capacities and flow of capital to the Indianautomobile industry. According to the International Yearbook of Industrial Statistics 2008 releasedby United Nations Industrial Development Organisation (UNIDO), India ranks 12th in the list of theworld’s top 15 automakers.Indian OEMs Come of AgeIndian original equipment manufacturers (OEMs) are making their mark today with Tata andMahindra & Mahindra as leading Indian OEMs emerging on the global scene. With increasingcompetition from the global players, Indian OEMs have upgraded their technology and aremanufacturing superior-designed vehicles.Frugal Engineering has become the hallmark of the Indian automotive industry, with Indian OEMsleveraging the Indian lead in cost-effectiveness and a highly-skilled human resource pool to bringdown the product development cost. Additionally, competencies of their suppliers have also helpedto lessen costs and manufacturing time. In fact, global OEMs are now looking at benefiting from theIndia advantage by using India-based design and development centres. Tata Ace, Indica and Nano,and Mahindras Scorpio are examples of products developed by Indian OEMs after painstakingmarket research about the specific needs of the Indian consumer. 4
    • ProductionAlthough the sector was hit by economic slowdown, overall production (passenger vehicles,commercial vehicles, two wheelers and three wheelers) increased from 10.85 million vehicles in2007-08 to 11.17 million vehicles in 2008-09. Passenger vehicles increased marginally from 1.77million to 1.83 million while two-wheelers increased from 8.02 million to 8.41 million.In recent times, India has emerged as one of the favourite investment destinations for automotivemanufacturers. Volvo Buses India is eyeing 35 per cent growth in domestic sales this year at 550-600 units as against around 440 units sold in 2008. Toyota Kirloskar Motor Pvt Ltd (TKML), the Indian subsidiary of Japan’s Toyota Motor Corp, is increasing its investment by US$ 164.8 million at its manufacturing site near Bangalore, to touch US$ 824.32 million by 2016. French carmaker, Renault, has completely recast its plans for India as part of a new, aggressive approach that will see it producing cars in its Chennai plant by 2011. Hyundai has made India its global hub for manufacturing small cars. It will invest US$ 1 billion in its second plant in Chennai by 2013. In addition, it is also investing US$ 40 million in its research and development (R&D) facility in Hyderabad. General Motors has so far invested about US$ 1 billion into its Indian operations. Mercedes-Benz will invest about US$ 64. 21 million in its plant at Chakan near Pune.Domestic MarketSales of cars and commercial vehicles have been impacted due to global economic slowdown.However, in spite of that there has been a marginal increase in the number of vehicles sold in 2008- 5
    • 09 as compared to 2007-08. Total number of vehicles sold including passenger vehicles, commercialvehicles, two-wheelers and three-wheelers in 2008-09 was 9.72 million as compared to 9.65 millionin 2007-08. According to an Ernst & Young analysis, passenger vehicle sales in the country willgrow at a CAGR of 12 per cent to touch 3.75 million units by 2014 as against 1.89 million units atthe end of 2008-09. While domestic market is expected to contribute 2.75 million units to the totaltally, the remaining 1 million units would contribute towards exports. Likewise, as per estimates byCARE Research, the domestic two-wheeler sales will grow at a CAGR of 8.8 per cent by 2014 at11.3 million units vis-a-vis 7.43 million units in 2008-09. Honda Siel Cars India (HSCI), the Indiansubsidiary of the Japanese giant Honda Motor Co, said that its sales will register double digit growthin the current financial year. The company expects its total sales to be around 60,000-65,000 unitsduring the current year, up from 55,250 cars sold in 2008-09.ExportsAccording to the Society of Indian Automobile Manufacturers (SIAM), automobile sales (includingpassenger vehicles, commercial vehicles, two-wheelers and three-wheelers) in the overseas marketsincreased to 1.53 million units in 2008-09 from 1.23 million units in 2007-08. Export of passengervehicles increased from 218,401 in 2007-08 to 335,739 units in 2008-09. The growth in export wasled by Hyundai Motor India, followed by others such as MSIL, Mahindra Renault, Fiat IndiaAutomobiles, General Motors India and Honda Siel Cars India.PolicyIn order to make India a power to reckon with in the automotive sector the government launched theAutomotive Mission Plan (AMP) 2006-2016. The vision of the AMP is "to emerge as the destinationof choice in the world for design and manufacture of automobiles and auto components with outputreaching a level of US$ 145 billion accounting for more than 10 per cent of the GDP and providing 6
    • additional employment to 25 million people by 2016." As per the AMP, it is estimated that the totalturnover of the automotive industry in India would be in the order of US$ 122 billion-159 billion in2016. It is expected that in real terms, India would continue to enjoy its eminent position of being thelargest tractor and three-wheeler manufacturers in the world and the worlds second largest two-wheeler manufacturer. By 2016, India will emerge as the worlds seventh largest car producer (ascompared to the eleventh largest currently) and retain the fourth largest position in world truckmanufacturing sector. Further, by 2016, the automotive sector would double its contribution to thecountrys GDP from current levels of five per cent to 10 per cent.c)Industry AnalysisEven as recession-hit international automobile majors are struggling to maintain sustainable sales figures,carexports from India surged by a remarkable 57 per cent year-on-year in the recently-ended. Led by HyundaiMotor India Ltd and Maruti Suzuki India Ltd, India-based car makers shipped a record number of vehicles,mainly to Europe. Exports grew to 331,539 cars from 211,112 a year earlier. Exports had grown by acomparatively meagre 8.9 per cent in the previous year (2007-08), according to figures released by the theSociety of Indian Automobile Manufacturers. The countrys largest exporter, Hyundai managed an exportgrowth rate of 63 per sent at 235,345 units, compared with 144,440 units in the year-ago period. Domesticmarket leader Maruti Suzuki was a distant second, registering 32.58 per cent growth in overseas sales at68,834 units. Maruti and Hyundai launched new models in the past year, including Marutis A-Star andHyundais i20, targeted at the European market, which is cited as one reason for the robust export numbers.The weakness of the rupee, which fell more than 20 per cent against the dollar in the just-ended fiscal year,also helped by making Indian cars cheaper abroad. Export growth was also robust in the two-wheelercategory, which registered 22.50 per cent rise at 1004,174 units as against 819,713 units in the previousfinancial year.However, with the global economy slowing, demand from Europe may not hold up, analystssaid. Meanwhile, lending rates in India are at nearly five-year highs as banks, worried about bad loans, holdback from financing vehicle purchases."The main concerns are availability of finance, which includes 7
    • liquidity, and high interest rates. Domestic car sales in the year ended 31 March grew by a mere 1.3 per centfrom a year earlier to 1.21 million cars from 1.2 million in the previous year. Local car sales had climbed 12per cent in the previous fiscal year. Domestic sales of trucks and buses fell 22 per cent to 384,122 vehiclesfrom 490,494. Motorcycle sales grew 1.2 per cent to 5.83 million, while scooters gained 9.1 per cent at 1.14million. Industry executives and analysts expect measures taken by government authorities to spur lendingwhile the introduction of new models could slightly boost domestic vehicle sales this year.Passenger vehicle sales remained practically flat, recording a mere 0.13 percent growth over theprevious year. Within this segment, passenger cars and multi-purpose vehicles grew by just 1.31percent and 5.69 percent respectively during 2008-09. However, sales of utility vehicles actuallydeclined 7.94 percent. During the month of March itself, passenger vehicle sales dropped 1.15percent over the same period last year. The segment that was hardest hit by the slowdown wascommercial vehicles, with truck and bus sales dropping a massive 21.69 percent during 2008-09over the same period last year. Medium and heavy commercial vehicles declined by an even larger33.16 percent, while the decline was less severe for light commercial vehicles, which dropped 7.10percent. In March 2009, commercial vehicle sales fell a substantial 26.22 percent compared toMarch 2008, with medium and heavy CVs dropping 43.40 percent and LCVs falling just 0.17percent. Also, medium and heavy buses grew by a marginal 0.57 percent and light buses dropped6.72 percent. Three-wheeler sales fell by 4.13 percent during the previous fiscal year, whilepassenger carriers grew a solid 14.36 percent during 2008-09. Goods carriers declined a massive37.52 percent due to the slowdown in economic activity. In March this year, three-wheeler salesactually grew by 11.40 percent over the same month last year.Two-wheeler sales also came under intense pressure in the last financial year due to the suddenslowdown in lending to this segment by big private finance companies. This, coupled with weakconsumer sentiment, has seen the segment report a meagre 2.60 percent growth during 2008-09. 8
    • While mopeds and scooters grew by 4.22 percent and 9.11 percent respectively, motorcycle saleswere particularly badly hit, growing just 1.16 percent. Electric two-wheelers grew by 49.48 percent,albeit from a relatively smaller base. During March 2009, two-wheeler sales grew at a sluggish 3.65percent over the same month last year, indicating that a sustained recovery is still sometime away.Export of automobiles during 2008-09 grew strongly, showing an increase of 23.61 percent, with allsegments recording increases, except for commercial vehicles which were affected due to the globaleconomic slowdown. The export of passenger vehicles and two-wheelers grew 53.73 percent and22.50 percent respectively, while three-wheeler exports grew 4.85 percent. However, exports oftrucks and buses declined by 27.67 percent during this period. According to Tata Motors, itsdomestic sales for March 2009 were 52,686 units while total sales (including exports) were 54,485vehicles. For the entire financial year ended March 2009, total sales were 498,581, which are 14percent lower than the 582,390 units sold in the previous fiscal. The company believes that thefinancial stimulus packages announced by the government, particularly for commercial vehicles,have had a positive impact. However, it feels that the demand for trucks at the retail level would stilltake some time to reach levels from the last fiscal. As a result, its March 2009 domestic sales were13 percent lower than those of March 2008. Meanwhile, Mahindra said it sold 25,748 units in March2009 in the domestic market, its highest ever monthly sales figures. This compares with the 23,128units sold in March 2008, a solid 30 percent increase in sales for the company’s utility vehicles. Thisincludes the highest ever monthly sales for the Scorpio, Bolero and the Pik-Up models, which stoodat 19,973 units for March 2009 as against 15,366 units for the same period last year. The newlylaunched Xylo multi-purpose vehicle also sold strongly with 3,124 units finding buyers in the Indianmarket. According to Anand Mahindra, vice-chairman and managing director, Mahindra &Mahindra, “This is a clear validation of the faith reposed in our products by customers. I amespecially pleased that our new Mahindra Xylo has changed the rules of the game with impressivesales figures.” The Bolero model has also done very well for the company, selling a record 55,924 9
    • units in 2008-09. According to Mahindra, this makes the Bolero the first brand in the SUV/ UV/MPV segments to cross 50,000 units for two consecutive years.Hyundai Motor India registered a 1.8 percent decline in cumulative sales during March 2009. Whileits domestic sales dropped 15.8 percent, exports grew by 21.6 percent, thanks to higher exports ofi10 and i20 models to Europe. Total March 2009 sales were 46,160 units against 47,001 units inMarch 2008. The Indian market accounted for 24,754 units compared to 29,401 units for the samemonth last year, while the exports totaled 21,406 units in March, 2009 against 17,600 units ofMarch, 2008. According to Arvind Saxena, senior vice- president - Marketing and Sales, “As wehave stated earlier, the industry is far from seeing a turnaround at this moment. If we look at theFebruary and March 2009 sales combined and compare them to 2008 for the same period, then wehave registered a growth of 4.5 percent, whereas March 2009 sales over February 2009 have grownby 16.7 percent.” Maruti also claimed a sales record in March 2009 with its Alto model reporting itshighest ever monthly sales of 23,569 units, a jump of 20.98 percent over the corresponding periodlast year. Honda has also reported strong numbers, thanks to the overwhelming popularity of its NewCity, which sold 6,040 units during March 2009. This is a particularly remarkable feat, given thedifficult market conditions prevailing at the current time. Total sales for the Japanese carmakerduring the month grew 32 percent with 7,368 units being sold in March 2009 against 5,579 unitssold in February 2009. SIAM has projected that Indian passenger car sales during 2009-10 wouldgrow around five percent, driven by demand from rural and semi-urban markets. Commercialvehicle sales are estimated to rise by as much as seven to 10 percent during the current fiscal, whiletwo-wheelers are expected to grow by five percent in 2009-10, thanks to the growth in creditavailability. Growth in demand for passenger vehicles would, according to SIAM, be driven by theavailability of several new small cars including the Tata Nano, Maruti Ritz, Honda Jazz and VWPolo. Other positives for the sector are the upcoming vehicle repossession guidelines from theReserve Bank of India and falling interest rates. 10
    • Sales of commercial vehicles will start picking up this year, due to the extension of the 50 percentdepreciation benefit given to truck owners from March 09 to June 09. Increased infrastructurespending by the government should also give a boost to vehicle demand in 2009-10. The growth inlight commercial vehicles like the Tata Ace is also expected to continue. Some carmakers, however,disagree with these projections saying that they are overly optimistic. 11
    • 2. COMPANY STUDYa) HISTORY OF TATA MOTORS1)(Company’s profile)The Company was incorporated on 1st September 1945 at Mumbai to manufacturediesel vehicles for commercial use, excavators, industrial shunter, dumpers, heavyforgings and machine tools. The commercial diesel vehicles which were known `TataMercedes Benz (TMB) are now called `Tata vehicles after the expiry of thecollaboration agreement with Daimler-Benz AG, West Germany. The company alsoused to manufacture pulp and paper making machinery. In 1960 the companys name,which was Tata Locomotive & Engineering Company Ltd. was changed to TataEngineering & Locomotive Company Ltd. In the year 1987 the company undertook toset up a new forge shop, a high output foundry line, a new paint shop as well asaugmentation of engine and gearbox manufacturing facilities, all at JamshedpurIn 1991 During the year the company entered into a collaborative agreement with aninternationally renowned engine research and development organisation to jointlydevelop higher horsepower, fuel efficient diesel and petrol engines to meet the futurerequirements of the company. The last quarter saw the company launching two newpassenger vehicles, the SIERRA and the ESTATE totally designed and manufacturedin India. The company acquired a BIFR company, M/s Noduron Founders 12
    • Maharashtra Ltd. The total cost for Telco worked out to Rs.18 crores as against settingup of similar critical castings foundry. During the year company launched a new earthmoving equipment TWK-3036 Tata Front End Wheel Loader. Two new models in theEX series of hydraulic excavators were launched. A 10 tonne pick and carryarticulated crane, designed and developed in-house was also introducedDuring theyear company entered into an agreement with Nachi-Fujikoshi Corporation, Japan tomanufacture arc and spot welding robots suitable for automobile manufacturingapplications. During the year, company undertook to set up a joint venture with AsianGlass Co. Ltd., Japan to manufacture float glass to be used as wind shields forautomobiles. ACC along with Tata Exports Ltd., participated in the joint venture. Thejoint venture named as Floathlass India Ltd., the Company would have a stake of16.33%. Tata Cummins Ltd., Mercedes-Benz (India) Ltd., Tata Holset Ltd., TataPrecision Industires, Singapore and Nita Company Ltd., are the joint Ventures of theCompanyTaking advantage of the broad banding policy announced by the Government ofIndia, the Company entered into a collaboration agreement with Honda Motor Co.Ltd., Japan, for the manufacture of their `ACCORD model of cars in India.On 22nd April, an agreement was entered into between Daimler-Benz AG andMercedes Benz AG, Germany to setup a joint venture company Mercedez-Benz Indiato manufacture `E class paneyer cans and engines in India.During the year 1995 a new double pick-up and Army Version of various Telco 13
    • Vehicles were developed. A new petro engine and turbo diesel engine, an up-graded709 LCV, new sports utility vehicle Safari expected to be launched shortly. A 25tonne 6 X 2 truck and a bus with cummins engine were launched.Tata Engineering and Locomotive Company (TELCO), has acquired a second handpaint shop, machine line and cylinders from the Australian unit of the Japanese autogiant, Nissan. TELCO is believed to have picked up the unit for Rs. 70 crore. Thetotal cost of import duty would be Rs 100 crore. During the year a machine tooldivision was expanded so as to double its machine building capacity and significantlyreduce production times.The Company has launched "TATA SAFARI" in its Multi utility vehicle segment.Tata Holsets turbo charger plant inaugurated on November 25, 1996.In 1997, the Tata Engineering and Locomotive Company Ltd. (TELCO) has emergedas numero uno in the Review 200 survey conducted by the Far Eastern EconomicReview in association with Citi Bank. The Company introduced a 9-tonne vehiclewhich was well received in the market. A 40 tonne tractor trailer powered by a TataCummins Engineering was introduced. The Company developed a low floor buschassis to meet the specific needs of urban transport. The Company signed a newagreement with Hitachi for manufacture of upgraded versions of existing range ofexcavators.The year 1998- Tata Engineering and Locomotive Company Ltd (Telco) announced atie-up with Tata Finance Ltd and ANZ Grindlays Banks as the official financiers for 14
    • its small car "Indica" to be launched in December. Tata Engineering LocomotiveCompany Ltd (Telco) sold its construction equipment business into a new subsidiarycompany, Telco Construction Equipment Company Ltd. The Company in its small carsegment has launched "Tata Indica" which evoked an overwhelming response in theIndian market. A new range of cummins engine powered vehicle which include a 35tonne and a 40 tonne articulated truck and two variants of buses.To make substantial improvement in the quality of bus bodies available with TATAvehicles, the Company encouraged collaboration between Fuji Heavy Industries ofJapan and the Automobile Corporation of Goa. The new project undertakes productionof bodies on TATA chassis, conforming to the most exacting international standards.Concorde Motors Ltd., a Joint Venture between Tata Engineering and JardineInternational Motors (Mauritius) Ltd. was appointed as dealer for the Companyspassenger cars in several cities across the country, in Feb 1998.The year 1999-Telco became the first Indian manufacturer to offer commercialvehicles meeting euro-I emission norms, a year before they are due to be introduced inthe country. It is proposed to make TCECL a one-stop shop for constructionequipment and earthmoving machinery. In Oct 1999, the Company won the Nationalaward for R&D Efforts in Development of Indigenous Technology in the MechanicalEngineering Industries Sector instituted by Department of Scientific and IndustrialResearch, Ministry of Science and Technology for the year 1999. SKF Bearings IndiaLtd has signed an agreement with Telco to supply hub bearings for its latest model 15
    • Tata Indica.2000 saw the Company working towards introducing two new petrol-driven variantsof its small car Indica, powered by a multi-point fuel injection engine. The Companylaunched the Indica 2000, the Euro II Complaint, 75 BHP multi-point fuel injection(MPFI) version of Indica. The Company has won the National Technology Awardfor indigenous development and commercialization of the Tata Indica car. TheCompany has launched its new hi-tech Indica 2000 car with MPFI petro engine inGuwahati.Tata Engineering & Locomotive Co. is renamed as Tata Engineering Ltd. It replacedits three-shift production line with a one-shift daily schedule starting from 26th June.In the same year FICCI-SEDF- Businessworld-Compaq award for socialresponsiveness was awarded to the company. The Central Pollution Control Board forEnvironmental Technology award has been presented to Tata Engineering inrecognition of its contribution towards efforts to conserve the environment. TATAEngineering on September 10 announced the addition of MPFI petrol version to theIndica V2 range.In year 2002 Foreign Institutional Investors (FII) hike stake in the company to 13.34%Launches six new products in light, medium and heavy vehicles segments on Jan 15during Auto Expo . Announces financial restructuring . Displays its Tata Sedan car atthe Geneva Motor Show . Indica adjudged top selling B-segment car in2002.Launches two new motorsport cars (The Zero and Double Zero Pace cars). High 16
    • Court Approves Tata Engineerings Financial Restructuring. Tata Engg, BPCL tie upto market co-branded lubricants.Tata Steels investment in Tata Engineering has beenhiked to Rs 117.98 crore over the last year. Telco names Sedan as TataIndigo.Unveils EX series of medium and heavy commercial vehicles. Indica salescross two-lakh mark .Collaborates with Nippon-Arcelor for technical knowhow on CRsteel. Receives Teris (The Energy and Resources Institute) CoRE-BCSD (Corporateroundtable on development of strategies for sustainable development andenvironment-business council for sustainable development) corporate socialresponsibility (CSR) awards for 01-02. Unleashes Safaris petrol version; priced at Rs9.35 lakh.The year 2003- Tata Unveils CityRover .Tata Motors Ltd signed a bindingMemorandum of Understanding (MoU) with Deawoo Commercial Vehicle CompanyLtd (DWCV), Korea for the acquisition of this company. It introduces Tata SFC 407EX Turbo Light Commercial Vehicle (LCV). The Company changed from TELCO to TATAMOTORS w.e.f December 24, 2003. In the same year Tata Safari ranks No1 in MUV/SUV segment.2004:- The year of glory. Tata Motors launch an upgraded version Indica on January15, 2004, in a bid to shore up sales of the small car.Auto Expo: Tata unveils new version of Indica. Tata Motors unveils Indica V2. TataMotors launches new Indica V2 in Kerala. Tata Motors introduces new Indicab fortour operators. The much hyped Rs one lakh passenger car project of Tata Motors was 17
    • going ahead as planned. Tata Motors enters agreement with Ukraine bus buildingfirm. Tata Motors enters into agreement with Etalon. In a move to consolidate itspresence in the light commercial vehicles segment, Tata Motors has launched a newvariant of its 407 series with increased pay load capacity called SFC 407EX. TataMotors buys Daewoo truck unit for Rs 465 crore. Tata Motors unveils Tata SFC 407EX. Tata Motors inks agreement with Austrian, French companies. Acquires DaewooCommercial Vehicle Company Ltd (DWCV), Korea. Tata Motors launches mostanticipated new 6-tn truck in India.Tata Motors, the countrys largest commercial vehicles manufacturer unveiled the newLPT 909EX Turbo Truck in Tamil Nadu. Tata Motors and Tata Africa unveiled arange of passenger cars, utility vehicles, pick-ups, trucks and buses for the SouthAfrican market. Tata Motors has launched a face lifted version of its multiutilityvehicle, Tata Sumo. Tata mototrs rolls out Tata SFC 407EX BS II turbo lightcommercial vehicle.Tata Motors unveils Tata Safari DICOR in Kerala market on August 11, 2005. TataMotors rolls out 2 luxury variants of Indigo. Tata Motors unveiled new Indica V2Turbo with a price tag of Rs 4.10 lakh for DLG variant and Rs 4.31 lakh for DLX.Tata Motors ropes in CVTech to make parts for its small car. Tata Daewoo inks pactwith Pakistan co.Tata Motors has been presented the Golden Peacock Global Award for CorporateSocial Responsibility (CSR) in the Large Business category by the Institute of 18
    • Directors in 2007. Tata Motors buys Nissan facility in S. Africa. Tata Motors has gota prestigious order from the Delhi Transport Corporation (DTC) for 500 non-AC,CNG-propelled buses. Tata Motors Ltd has appointed Mr. P M Telang as ExecutiveDirector (Commercial Vehicles).2)Current ScenarioPERFORMANCE OF COMPANY DURING 2008-09Company Performance in Domestic CV Segment Q4 FY08- Q4 FY07- Change FY08-09 FY07-08 change 09 08M/HCVs 17,971 43,882 (59.0)% 86,704 112,440 (22.9)%LCVs 31,575 38,686 (18.4)% 108,488 102,873 5.5%Total CVs 49,546 82,568 (40.0)% 195,192 215,313 (9.3)%Impacted by severe liquidity crunch and slowing economy CV domestic salesvolumes decreased by 40% y-o-y to 49,546 units in Q4FY2008-09 as compared to82,568 units in Q4FY2007-08.CV market share increased by 420 basis point at 67.0% for the quarter; from 62.8% inQ4FY2007-08. 19
    • CV industry registered a substantial volume decline of 43.9% during Q4FY2008-09.In a challenging environment of non-availability of vehicle financing, high interestrates and, lower industrial growth and contraction of freight traffic, MHCV marketrecorded a decline of 61.3% y-o-y during the quarter and LCV’s declined by 24.3%.Truck market recorded a decline in sales in Q4FY2008-09 over corresponding periodof last year. The industry volumes in the MHCV truck segment declined by 65.2% y-o-y, while industry volumes in the LCV truck segment declined by 31.7% y-o-yduring Q4FY2008-09.TML’s volume in MHCV truck market declined by 62.8% during the quarter (Oct-Dec’08) compared to the corresponding period in the previous year. However TML’smarket share in the MHCV truck market increased from 65.6% in Q4 FY2007-08 to69.9% Q4 FY2008-09.TML performance in MHCV bus market saw a decline of 19.0% in Q3FY09;however, on the other hand LCV bus market saw growth of 44.9% in Q3FY09compared to corresponding period last year driven by the success of ACE Magic andWinger. Tata Motors’ market share increased substantially from 68.5% in Q4FY2007-08 to 86.3% in Q4FY2008-09 in LCV passenger carrier segment.During an extremely challenging quarter Tata Motors has improved its market shareposition across every CV category on the back of its product network strength as wellas the financing support of TMF and Tata Capital. 20
    • Government’s fiscal stimulus package, RBI’s easy monetary policy and the dieselprice reduction are expected to moderately help demand generationPassenger Vehicle Segment Q4 Q4 Change FY2008- FY2007- change FY2008- FY2007- 09 08 09 08Small Car 25,273 31,643 -20.1% 74,829 100,110 -25.3%Entry 9,765 5,746 69.9% 36,453 20,059 81.7%Mid-sizeCarUV 6138 11,269 -45.5% 27,821 30,967 -10.2%Fiat 1,011 626 61.5% 3,404 2,339 45.5%Total PV 42,187 49,284 -14.4% 142,507 153,475 -7.1%Passenger Vehicle Market Shares (India) Q4 FY2008-09 Q4 FY2007-08 FY2008-09 FY2007-08Small Car 12.6% 13.6% 11.8% 15.2%Entry-level 29.6% 29.9% 34.3% 30.4%Mid-size CarUV 15.8% 18.6% 17.3% 18.2%Total PV 13.2% 12.9% 13.2% 13.9%Domestic passenger vehicle sales stood at 42,187 (including 1,011 Fiat vehicles)during Q4FY2008-09; down by 14.4% y-o-y. Market share of Tata Motors vehiclesstood at 12.9% in Q4FY2008-09. The passenger vehicle industry registered a volumedecline of 16.5% during Q4FY2008-09, primarily due to, unavailability of finance,and high interest rates and high fuel prices. Utility vehicle segment declined the mostby 35.8%, Impacted by the ad-hoc duty imposed on this segment in July. In this 21
    • scenario the Company tried to arrest the decline through new products and increasedsupport of the captive financing entity. In Passenger vehicle industry, Tata Motors’(including FIAT) market share increasedfrom 12.9% in Q4 FY2007-08 to 13.2% in Q4FY2008-09 In the Small car segment,following the successful launch of Indica Vista in August FY2008-09 and increasingsales of FIAT vehicles, Tata Motors’ (including FIAT) market share improved from11.4% in H1 FY2008-09 to 12.6% in Q3. However, TML growth in this segment waslimited by the ramp up capability of production. The entry-mid size car segmentcontinued to clock a healthy growth. TML maintained its strong market position dueto continued positive response to Indigo CS and TATA INDICA VISTA.In the Utility Vehicle segment, Tata Motors market share declined from 18.6% inQ4FY2007-08 to 15.8% in Q4FY2008-09 due to competitive pressures. Fiat volumesfor FY2008-09 were 3,404 a growth of about 45.5%. Combined Tata-Fiat marketshare in the overall PV industry stood at 13.2% for the nine month period Apr-Dec’08. Tata Motors celebrated the 10th anniversary of the launch of the Indica onDecember 30, 2008. To mark this milestone, a 10th Anniversary Limited EditionIndica Vista was launched. 22
    • Porters five forces analysis is a framework for the industry analysis and businessstrategy .It uses concepts developed in Industrial Organization economics to derivefive forces, which determine the competitive intensity and therefore attractiveness of amarket.The Five Forces:1.The threat of substitute products-As we know the Indian customerschoices range from mileage, pick-up, power steering to various other thingsso substitute is very important aspect in this industry as other productavailable in the market may act as the substitute to the brands own existingproduct.2.The threat of t5he entry of new competitors-New completion from thenew entrant or from existing company is also highly potent force which acompany must have to take care of for its market share and growth.3.The intensity of competitive rivalry-The very effective way of puttingcompetitor out of track is pitching new vibrant products in the market so acompany must be aware of this tactics by its rival company so that it cancater the effect.4.The bargaining power of customers-Another important aspect for a car or 23
    • auto company where they have to manage the pricing control of theirproduct to spurt the sales in the market.5.The bargaining power of suppliers- The distribution channel is veryimportant in country like India where the demand is highly different withall across its dimension so, supply is very much required in the industry fora company. 24
    • 4) Organization StructureThe Board: No separate office is maintained for the Non-Executive Chairman. Being the GroupChairman, the Company does not reimburse expenses incurred by the Non-Executive Chairman formaintenance of a separate Chairman’s office.No specific tenure has been specified for the Independent Directors. Mr Setna and Mr S A Naik,Independent directors, have tenures, in the aggregate, exceeding a period of nine years. 25
    • Remuneration Committee: Details are given under the heading ‘Remuneration Committee’.Shareholder Rights: A half yearly declaration of financial performance, including summary ofsignificant events in the last six months, is sent to all the shareholders. The Financial Results are alsoput up on the Company’s website, besides being available on the SEBI’s website www.sebiedifar.nicAudit Qualifications: During the year under review, there was no audit qualification in theCompany’s financial statements. The Company continues to adopt best practices to ensure a regimeof unqualified financial statements.Training of Board Members: The Directors interact with the management in a very free and openmanner on information that may be required by them on orientation and factory visits. Theindependent Directors are encouraged to attend training programmes that may be of relevance andinterest to the Directors in discharging their responsibilities to the Company’s stakeholders under theemerging business environment.Mechanism for evaluation of non-executive Board members: The performance evaluation ofnon-executive members is done by the Board annually based on criteria of attendance andcontributions at Board/ Committee Meetings as also role played/ contributions other than atMeetings.Whistle Blower Mechanism: The Audit Committee had, at its Meeting held on August 9, 2004,framed a Whistle-Blower Policy and the same was reviewed and amended by the Audit Committeeon January 19,2009. The Policy provides a formal mechanism for all employees of the Company toapproach the Management of the Company (Audit Committee in case where the concern involvesthe Senior Management) and make protective disclosures to the Management about unethicalbehaviour, actual or suspected fraud or violation of the Company’s Code of Conduct or ethicspolicy. The Whistle Blower Policy is an extension of the Tata Code of Conduct, which requiresevery employee to promptly report to the Management any actual or possible violation of the Codeor an event he becomes aware of that could affect the business or reputation of the Company. 26
    • THE CODE OF CONDUCT FOR THE DIRECTORS IN TATA MOTORSThe Company expects all Directors to exercise good judgment, to ensure the interests, safety andwelfare of customers, employees, and other stakeholders and to maintain a cooperative, efficient,positive, harmonious and productive work environment and business organization. The Directorswhile discharging duties of their office must act honestly and with due diligence. They are expectedto act with that amount of utmost care and prudence, which an ordinary person is expected to take inhis/her own business. These standards need to be applied while working in the premises of theCompany, at offsite locations where the business is being conducted whether in India or abroad, atCompany-sponsored business and social events, or at any other place where they act asrepresentatives of the Company.A. adherence to the highest standards of honest and ethical conduct, including proper and ethicalprocedures in dealing with actual or apparent conflicts of interest between personal and professionalrelationships.B. full, fair, accurate, timely and meaningful disclosures in the periodic reports required to be filedby the Company with government and regulatory agencies.C. Compliance with applicable laws, rules and regulations.D. To address misuse or misapplication of the Companys assets and resources.E. The highest level of confidentiality and fair dealing within and outside the Company. 27
    • CORPORATE GOVERNANCE OF TATA WITH CERTAIN RULES:-In TATA the corporate governance is managed very well with certain rules which are given belowand there are some people assigned to address the issue, so overall the corporate governance inTATA is in very sound position as their disclosures during annual report or quarterly report and veryclear to the share-holders and investors also, provided their codes of ethics are also very strong.1. Any employee/business associate who becomes aware of a suspected wrongful conduct isencouraged to send his/her observations/concrete facts to the Direct Touch Team either throughphone or written communication complete with related evidence (to the extent possible) without fearof reprisal or retaliation of any kind.2. The information on suspected wrongful conduct is such information which theEmployees/business associates in good faith, believe, evidences:a. A violation of any law or regulation, including but not limited to corruption,bribery, theft, fraud, coercion and willful omissionb. Pass back of Commissions/benefits or conflict of interestc. Procurement fraudsd. Mismanagement, Gross wastage or misappropriation of company funds/assetse. Manipulation of Company data/recordsf. Stealing cash/company assets; leaking confidential or proprietary informationg. Unofficial use of Company’s material/human assetsh. Activities violating Company policies including Code of Ethics and Conducti. A substantial and specific danger to public health and safetyj. An abuse of authorityk. An act of discrimination or sexual harassmen 28
    • THE CODE OF ETHICS IN TATA MOTORSCommitment to ethical professional conduct is a MUST for every employee at TATA- in all of itsbusinesses/ units/ subsidiaries. The code is intended to serve as a basis for ethical decision-making inthe conduct of professional work.Contribute to society and human well-beingThis principle concerning the quality of life of all people affirms an obligation to protectfundamental human rights and to respect the diversity of all cultures. So employee in TATAattempts to ensure that the products of their efforts will be used in socially responsible ways, willmeet social needs and will avoid harmful effects to health and welfare of others.In addition to a safe social environment, human well-being includes a safe natural environment.Therefore, all who are accountable for the design, development, manufacture and promotion ofTATA products, must be alert to, and make others aware of, any potential damage to the local orglobal environment.Avoid harm to others"Harm" means injury or negative consequences, such as loss of property, property damage orunwanted health and environmental impacts. This principle prohibits use of men, material andtechnology in ways that result in harm to our consumers, employees and the general public.Well-intended actions, including those that accomplish assigned duties, may lead to harmunexpectedly. In such an event, the responsible person or persons are obligated to undo or mitigatethe negative consequences as much as possible. 29
    • Be honest and trustworthy:Honesty is an essential component of trust. Without trust an organization cannot function effectively.So they are expected not to make deliberately false or deceptive claims about their products/systems, but instead provide full disclosure of all pertinent limitations and problemsBe fair and take action not to discriminateThe values of equality, tolerance, respect for others, and the principles of equal justice govern thisimperative. Discrimination on the basis of race, sex, religion, age, disability, national origin, or othersuch factors is an explicit violation of this code.Practice integrity in our inter-personal relationshipsIn their relationships with colleagues, all should treat them with respect and in good faith; in thesame way we ourselves would expect them to treat us. The principle to be adopted to guard againstloose talk or in its worst form- character assassination- is not to say anything behind one’s back andnever utter something, which cannot be put in writing.Honor confidentialityThe principle of honesty extends to issues of confidentiality of information. The ethical concern is torespect all obligations of confidentiality to all stakeholders unless discharged from such obligationsby requirements of the law or other principles of this code.SPECIFIC PROFESSTIONAL RESPONSIBILITYOwnershipThis is our company. We accept personal responsibility and accountability to meet business needs.Passion for winning 30
    • We all are leaders in our area of responsibility with a deep commitment to deliver results. We aredetermined to be the best at doing what matters most.People developmentPeople are our most important asset. We add value through result driven training and we encourage& reward excellence.Consumer focusWe have superior understanding of consumer needs and develop products to fulfill them better.TeamworkWe work together on the principle of mutual trust and transparency in a boundary less organization.We are intellectually honest in advocating proposals, including recognizing risks.InnovationContinuous innovation in products and processes is the basis of our success.IntegrityWe are committed to the achievement of business success with integrity. We are honest withconsumers, with business partners and with eachC) Latest Auditors ReportAnnualresultsindetails Mar 09 Mar 07 Mar 06 Mar 05 Mar 04Other income 925.97 245.19 289.11 166.09 58.90Stock adjustment 238.04 -349.68 -256.91 -144.00 141.98Raw material 16,218.62 19,374.93 14,263.86 11,929.48 8,341.39Power and fuel - - - - -Employee expenses 1,551.39 1,367.83 1,143.13 1,039.34 882.49Excise - 4,349.45 3,401.92 3,063.44 2,270.30Admin and selling expenses - - - - -Research and development - - - - -expensesExpenses capitalised -916.02 - - - -Other expenses 6,867.49 3,913.46 2,946.21 2,490.34 2,027.20 31
    • Mar 09 Mar 07 Mar 06 Mar 05 Mar 04Provisions made -----Depreciation 874.54 586.29 520.94 450.16 382.60Taxation 12.50 659.72 524.50 414.95 482.00Net profit / loss 1,001.26 1,913.46 1,528.88 1,236.95 810.34Extra ordinary item -65.26 -1.35 5.65 -13.85 -52.86Prior year adjustments - - - - -Equity capital 514.05 385.41 382.87 361.79 356.83Equity dividend rate - - - - -Agg.of non-prom. shares (Lacs) 2031.75 2142.52 2539.98 2447.18 2352.40Agg.of non promotoHolding (%) 45.17 55.60 66.35 67.65 66.65OPM (%) 6.63 10.13 10.44 10.27 11.81GPM (%) 7.35 9.84 10.57 10.25 11.11NPM (%) 3.77 5.96 6.29 5.99 5.21Cashflow Mar 09 Mar 08 Mar 07 Mar 06 Mar 05Profit before tax 1,001.26 2,028.92 1,913.46 1,528.88 1,236.95Net cashflow-operating activity 1,295.02 6,174.50 2,210.13 -221.03 1,249.82Net cash used in investing activity -10,644.67 -5,721.86 -2,805.10 -1.06 -956.57Netcash used in fin. activity 8,104.70 1,132.46 303.58 -855.27 940.67Net inc/dec in cash and equivlnt -1,244.95 1,585.10 -291.39 -1,077.36 1,233.92Cash and equivalnt begin of year 2,386.77 806.21 1,118.15 2,196.79 771.12Cash and equivalnt end of year 1,141.82 2,391.31 826.76 1,119.43 2,005.04 Mar 09 Mar 08 Mar 07 Mar 06 Mar 05PershareratiosAdjusted EPS (Rs) 17.93 42.91 43.76 35.57 34.08Adjusted cash EPS (Rs) 35.94 61.50 61.18 51.10 48.38Reported EPS (Rs) 19.48 52.63 49.65 39.94 34.19Reported cash EPS (Rs) 37.49 71.22 67.07 55.47 48.49Dividend per share 12.50 15.00 15.00 13.00 12.50Operating profit per share (Rs) 33.52 78.61 67.12 56.06 55.29Book value (excl rev res) per share (Rs) 2.61 7.76 177.33 143.58 113.15Book value (incl rev res) per share (Rs.) 2.61 7.77 178.00 144.26 113.15Net operating income per share (Rs) 499.23 746.24 691.91 524.73 475.44 32
    • Mar 09 Mar 08 Mar 07 Mar 06 Mar 05Free reserves per share (Rs) 217.77182.38 157.16 123.34 93.85ProfitabilityratiosOperating margin (%) 6.71 10.53 9.70 10.68 11.62Gross profit margin (%) 3.30 8.26 7.50 8.09 9.01Net profit margin (%) 3.77 6.96 6.94 7.35 7.02Adjusted cash margin (%) 6.97 8.13 8.55 9.41 9.94Adjusted return on net worth (%) 7.45 21.18 24.67 24.77 30.12Reported return on net worth (%) 8.09 25.98 28.00 27.81 30.21Return on long term funds (%) 8.89 22.85 31.18 28.65 28.72LeverageratiosLong term debt / Equity 0.49 0.49 0.31 0.41 0.59Total debt/equity 1.06 0.80 0.58 0.53 0.60Owners fund as % of total source 48.44 55.43 63.05 65.23 62.22Fixed assets turnover ratio 1.88 2.69 3.08 2.55 2.62LiquidityratiosCurrent ratio 0.84 0.89 1.24 1.24 0.99Current ratio (inc. st loans) 0.43 0.64 0.85 1.07 0.98Quick ratio 0.58 0.66 0.91 0.96 0.76Inventory turnover ratio 13.47 14.44 13.26 12.63 14.06PayoutratiosDividend payout ratio (net profit) 34.52 32.51 35.34 37.13 41.68Dividend payout ratio (cash profit) 17.94 24.02 26.16 26.73 29.39Earning retention ratio 62.49 60.13 59.90 58.31 58.18Cash earnings retention ratio 81.29 72.18 71.32 70.98 70.54CoverageratiosAdjusted cash flow time total debt 7.13 2.65 1.70 1.50 1.43Financial charges coverage ratio 3.64 7.19 7.62 8.08 10.24Fin. charges cov.ratio (post tax) 3.73 6.82 6.67 7.06 8.49ComponentratiosMaterial cost component (% earnings) 73.26 72.62 74.55 72.84 71.19Selling cost Component 4.77 4.09 4.00 3.78 3.48Exports as percent of total sales 9.49 9.88 10.18 11.87 8.70Import comp. in raw mat. consumed 5.82 4.60 3.88 4.64 2.30 33
    • THE FINANCIAL ANANALYSIS OF TATA MOTORSIn the October-December quarter of the Financial Year 2008-09, the automotive sectorin India suffered severe contraction in demand, arising from major financial and othermarket upheavals. This exacerbated the lack of liquidity and unavailability ofconsumer finance. This, along with contraction in freight movement in manysegments of the industry, led to a massive drop in the M&HCV segment demand.High interest rates and peak commodity prices also affected the industry and thesupply chain. The overall CV industry declined by 43.9% while TML’s Commercialvehicle business declined by 40.0% supported by a diversified product portfolio.Consequently Tata Motors gained substantial market share both in MHCV and LCVsegments. While the passenger vehicle industry declined by 16.5% affected by highinterest rate and restricted credit availability, TML’s Passenger vehicle businessdeclined by a lower 14.4%. The rate of decline was arrested due to encouragingresponse to new products introduced – Indigo CS and Indica Vista. Going aheadramping up of the capacity of Indica Vista would help the company to arrest declinein small car market share. The export volumes of the Company registered a decline of44.9%% during FY09, due to global economic slowdown and credit crunch, especiallyin prime markets which witnessed adverse impact on automotive demand.Tata Motors celebrated the 10th anniversary of the launch of the Indica on December30, 2008. To mark this milestone, a 10th Anniversary Limited Edition Indica Vista 34
    • was launched. In the first decade, close to 940,000 Indicas had been produced and theplatform has spawned off close to 1.2 million vehicles. The Indica has remained abestseller throughout in the industry figuring in the top 3 selling list of cars for mostof the years. It achieved a peak sale of 144,690 in 2006-07 and the new generationIndica Vista was launched in August this year to a continuing pull even in today’sdepressed market conditions. 35
    • 3) SWOT ANALYSISSTRENGTH:1.Strong Presence in the Marketplace:-Tata Motors is the only company in India witha broadbased presence across the industry, in all segments of the commercial vehicles market –heavy and medium commercial vehicles, light commercial vehicles, pick-ups, sub one-tonnemini-trucks - and key segments - compact, midsize car and utility vehicle segments - of thepassenger vehicles market.2.Unique Understanding of Customer Need:- With 50 years’ presence in the automotivebusiness,Tata Motors understands customer needs and develops products that meet their needs.Toconsider a few examples, as early as 1980s, the company launched Light Commercial Vehicles,amidst Japanese competition, in which it today strongly leads. In the 1990s, anticipating the need foran affordable family car, it launched the now famous Tata Indica, which occupies a leading positionamong compact cars.3.Skill Base Developed Over the Last 40 Years:-Tata Motors is also very well-placed ontechnology capability.The company had set up its Engineering Research Centre as early as1966.With 1400 scientists and engineers and state-of-the-art development, testing and validationfacilities, it is this technology capability which has, allowed Tata Motors, over the decades, to offerindigenouslydeveloped products.This strength has been accentuated, with the inclusion ofTMETC,TDCV and Hispano Carrocera in the R&D network, besides several other specialistexternal agencies.The company no longer needs to develop every necessity itself.Today it just has to 36
    • manage the process of product creation, drawing upon already available R&D and skills fromdifferent sources.4.People Strength:- The company’s key strength is its people.The over22,000 employees comprise a very broad talent base, with the required skills in every aspect of theindustry.With increasing international initiatives by the company, this talent base is now gettingenriched with the necessary competencies to respond to meet world-class standards ofquality and cost. The company will achieve this by developing and marketing relevant products,on its existing platforms and new ones, which delight consumers in every market they areintroduced in.5.Tata Motors’ linkages in Europe through Subsidiary Companies:- In October 2005,TataTechnologies Ltd, a 100 per cent subsidiary of Tata Motors, acquired a 94.3 per cent stake in INCATInternational Limited. INCAT is a supplier of engineering & design,product lifecycle management and product-centric IT services to the automotive, aerospace anddurable goods industries.6.Tata Motors R&D in Europe:- Deepening its engagement with the EuropeanR&D space, in September 2005,Tata Motors set up the Tata Motors European Technical Centre,a 100 per cent subsidiary, in the UK. It is engaged in design engineering and developmentof products for the automotive industry.Working synergistically,TMETC provides the company withdesign engineering support and development services, complementing and strengthening thecompany’s skill sets and providing European standards of delivery to the company’s passengervehicles.7. Engineering:-The Tata group has a robust presence in engineering, with operations inautomobiles and auto components and a variety of other engineering products and services.8.Materials:- The Tata group is among the global leaders in this business sector, with operations insteel and composites. 37
    • 9.Services: The Tata group has widespread interests in the hospitality business, as also in insurance,realty and financial and other services.10. Energy: The Tata group is a significant player in power generation and is also involved in the oiland gas segment.11.Chemicals: The Tata group is one of the largest producers of soda ash in the world. Additionally,it has interests in fertilisers and in the pharmaceuticals business.OPPURTUNITIES: 1. India’s huge geographic spread-This is one aspect where the company is looking for and its diversified range of cars suits very much this area of car or say auto industry in country. 2. Easier finance schemes- The current fiscal stimulus and easy loan will surely guide the company to post good sales as the current trend shows the cars sales has been boosted by easy loan norms in the country. 3. Replacement of aging four wheelers-One of very important reason where the car industry and commercial vehicle can take advantage in coming days. 4. Increasing Road Development, Golden Quadrilateral-as we all know the infrastructure will surely boost the auto industry as it is directly related to the this industry and the government policy in spending the money ion infrastructure will create good demand. 5. Increasing dispensable income of rural agri sector-Some how this year the rural demand was very enthusiastic than the urban market which drive the auto industry so, the development of rural infrastructure and condition will create handsome demand from the rural area. 6. Higher GDP growth-With standing tall during the slowdown our economy has shown the industry that demands will gain momentum in near future very soon. 38
    • 7. Increasing disposable income with the service sector-As the consumers have money in their hand definitely there will be demand from their side so, this is also very good opportunity for this sector.8. Graduating from Two wheeler to Four wheeler-The dream of “NANO” will boost demand for four wheeler in the auto industry.THREAT:1. Indian is lacking in proper infrastructure this is slowing the pace of growth of auto industry2. Global crisis- this really hurts the Indian growing industry and not only the auto but tyre industry went for toss.3. High competition from foreign players-As the giants like GM, Audi, MERC etc are trying to capture the high segment market it is one of the very effective threat to the company. WEAKNESS: 1.The current financial situation of its recently acquired firms like “Corus” and “Land Rover-Jaguar” is very big headache for the company and it should be back to the track in the near future. 2. The high ratio of debt equity ratio is also weakness of the company. 3. The small car segment is still not good for the company due to “maruti-suzuki” so, it need to tap this section also. 4.The CV segment is becoming highly competitive by new player like Volvo,and rival M &M are coming with new products to cater the TATA in the market as the rural area has given thumps up to M&M during this year. 39
    • 4) LEARNING EXPERIENCE The training has helped me a lot in understanding the realities of the outsideworld. I also came to know the real meaning of the word marketing. There are both positiveand negative experiences of the training, some of which are :  Real experience of the corporate world which helped me a lot in understanding how really a corporate world functions.  Learned how to deal with the customers.  It helped me in improving my communication skill, presentation skill and how to behave in front of corporate executives.  I can relate the theories, which I learned in college with practical experience.  Learning different things like how to coordinate with team members and management.  Learning many things regarding marketing strategies.  Learning how to maintain balance in personal and professional life. 40
    • PROBLEM AND RESEARCH METHODOLOGYSTATEMENT OF THE PROBLEMIn the event of a company does not adopt a fair measure of the potential market ,It willhave a direct impact on the sales of the product, and the company may have to payheavy price in maintenance of the business .If the critical markets are not accordedadequate attention, it may be the determinant of an unsuccessful product.PURPOSE OF THIS RESEARCH IN TO “ STUDY OF BUYING BEHAVIOUR OFCUSTOMERS FOR TATA INDICA VISTA” OBJECTIVE: The objective is to study those factors which can accelerate the marketability of the TATA VISTA compared to its competitors.  To understand the market potentiality for VISTA.  To determine the acceptable price of the product.  To determine the requirements and needs of the potential customers. STUDY POPULATION: Sample size- 30AREA CONSIDERED FOR THIS STUDY ARE:  Automobile history  Industry investment  Industry growth  Vehicle production  Auto export  Auto companies 41
    • LIMITATIONS OF THE STUDY  Study is restricted to Allahabad and naini industrial areas only.  Continuous and reliable information was not available.  Some of the information was confidential so much information was not revealed.  The time span of the survey was short and hence only major aspects were considered.  Information provided by the respondent in terms of their fuel usage and their expense could not be very accurate.  Availability of the respondents amidst their busy schedule did not permit detailed study.METHODOLOGY OF THE STUDYMethod of Analysis:An analytical research was carried out to gain insight and proper understanding of themarket. This was done through the questionnaire and personal interaction with the 42
    • managers and supervisors of industries. This was followed by comparative studyanalysis. Several graph and tables were prepared for better analysis of the market.Research Instruments:The research was based on the collection of primary data. Since product is new to theAllahabad market secondary data is not advised.Primary Data:  Primary data was collected through a structured questionnaire.  Personal interaction with the company managers and supervisors.  Interaction with industry experts in Allahabad. 43
    • 5.Analysis of dataa) Sale according to survey VISTA AQUA 9 30% VISTA AURA 8 26.67% VISTA TERRA 6 20% 7 23.33% OTHERS 30 100% TOTALb) Sample of 30 customers, according to their income. Salary No. of people >1lakh 5 1lakh-3lakh 17 3-lakh-5lakh 6 < 5lakh 2 44
    • c) Car customers No. of peopleFirst time user 13More than once 17 45
    • d) customer satisfacton from tata cars. Customer No. of people satisfaction Satisfied 11 Not satisfied 19 46
    • e) Tele media creates a brand appeal. T.V. ads appeal No. of people Yes 7 No 23 47
    • f) Tata Passenger Cars, Creating brand value. Brand value NO. OF PEOPLE Yes 15 No 5 48
    • g) Factors affecting buying of customersFeatures No. of peoplePower steering 4Mileage 9Price 15Others 2 49
    • 6) FINDINGS & SUGESSTIONSFINDINGS 1) TATA MOTORS, is number three in passenger car market after maruti-suzuki & hyundai. 1) Majority of the customers see TATA MOTORS with savings. 2) Most of the customers spend large sum of money 3) Out of the samples, people are highly convinced that TATA MOTORS will yield them better results 4) As the sales of Maruti grows as well as Hundai’s santro is still doing well in mid size and small size segment so the INDICA VISTA may be a good options for the company in this term for sustaining sales in long run as well as in the current situations. 5) Product will have a gradual progress. Because most industries would wait for the response about the product from other Company. 6) Customers were educated by me, about fuel efficient cars by TATA MOTORS 50
    • SUGGESTIONSBased on the findings from the analysis the following suggestions could be made:  Demo of the product should be made available to Customers, since most of the purchase decisions are based on it.  Technical details should be made available to the customers in the most accurate numerical form.  The Indica has remained a bestseller throughout in the industry figuring in the top 3 selling list of cars for most of the years.  The distribution channel should be more efficient to cater the demand during peak seasons like during dassraa, diwali etc .The city like Allahabad is mostly dominated by the working class like peopleemployed in high court, AG office( accountant general office) and government schoolemployees who this year are getting more pay due to the recommendations made bythe sixth pay commission so , the sales for mid size car can be enhanced in thisscenario. 51
    • 7) CONCLUSIONThe study was conducted to measure,” THE CUSTOMER BEHAVIOR in purchasingINDICA VISTA. The study was conducted on 30 Customers. A questionnaire wasdesigned to understand the market and create awareness about TATA MOTORS.Based on the questionnaire, data was collected and analyzed and it was found that thecustomers are willing to buy the Cars. However they are also skeptic about it.Suggestions are provided based on customer requirements and market situation. Anearnest attempt has been made to make the study realistic and suggestive, but it is notclaimed that the findings and suggestions in the report are perfect. 52
    • 8) ANNEXUREQUESTIONNAIRE1. WHAT IS YOUR SALARY? < 1 LAC1 LAKH -3 LAKH 3LAKH-5LAKH < 5LAKH2. WHICH VEHICLE DO YOU OWN? __________________________3. DID YOU RIDE SOME OTHER VEHICLE BEFORE THIS? YESNO4. WHAT IS YOUR EXPERIENCE FROM THE PREVOIUS VEHICLE? SATISFIED NOT SATISFIED5. WHICH IS THE MOST ESSENTIAL THING YOU PREFER WHILE BYING VEHICLE? PRICE MILEAGEPOWER STEERINGOTHERS6. DOES TV AD APPEAL YOU? YESNO7. DO YOU LIKE TV PROGRAMMES ON CAR? YESNO8. DOES BRAND VALUE AFFECT YOUR DECISION ON BUYING VEHICLE? YESNO 53
    • 9) BIBLIOGRAPHYBOOKS: KOTLER PHILIP AND ARMSTRONG, GARY MARKETING MANAGEMENT MARKETING RESEARCH by R Nandagopal & K Arul RajanMAGAZINES: MONEY TODAY BUSSINESS WORLD OUTLOOK PROFIT INDIA TODAYWEBSITES:Tatamotors.comYahoofinance.comValuereseacrhonline.com 54