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Tata motors cross border acquisition of jaguar
 

Tata motors cross border acquisition of jaguar

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tata motors aquisition of land rover and jaguar

tata motors aquisition of land rover and jaguar

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    Tata motors cross border acquisition of jaguar Tata motors cross border acquisition of jaguar Presentation Transcript

    • INTRODUCTION  India based TataMotors acquired the ownership of luxury brands - Jaguar and Land Rover on June 2, 2008  The deal included the purchase of JLR's manufacturing plants, two advanced design centers in the UK, national sales companies spanning across the world and also licenses of all necessary intellectual property rights.
    • THE DEAL PROCESS  12/06/2007- Announcement from Ford that it plans to sell Land Rover and Jaguar  August 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 bidders  26/03/2008 - Ford agreed to sell their Jaguar Land Rover operations to Tata Motors.(2.3b)  02/06/2008– The acquisition was complete
    • MOTIVES OF TAKEOVER  Provide significant potential for revenue synergy including giving TATA greater international distribution broader product range and better customer service skills  Tata gains access to world class engineering capability  Strengthens relationship b/w Tata steel and motoring business
    • POST MERGER IMPACTS Following Cost Rationalisation initiatives were taken to improve cash flows:  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 by £133 million from 38 to 27 days.  Inventory reduced by £217m between June 2008 and March 2009 from 70 to 50 days .
    •  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.  Agreement with Unions to implement pay freeze and longer working hours (equivalent to approximately 20% reduction in labor costs.)
    • SHARE PRICE MOVEMENT IN 2008
    • SHARE PRICE MOVEMENT IN 2010
    • Problems  Share prices declined  Rights issue failed  Sales decreased by 35.2%  Bad industry timing
    •  Depressed state of the global premium car market  Jaguar/Land Rover lost 306 million pounds ($504 million) for the fiscal year ending March 2009  Tata Motors reported a net loss of Rs3.29bn ($67 million) for the quarter to end-June  Tata’s core commercial vehicles market in India is also suffering from slower sales  Extremely high manufacturing costs in BritainEliminated more than 2,200 jobs
    • 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.  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  At the price staring from 63 lakh and going upto 93 lakh, it seems Tata has just got the right place to compete with the current market leaders – BMW, Audi, Mercedes  Publicity on an international scale  Access to large distribution network  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
    • CONCLUSION  The merger seemed poorly timed  Demand for luxury cars collapsed as a result of financial crisis  Refinancing from CITI group and JP MORGAN  Started making profits in 2010 upto 41 %  Now an example of a successful merger  Entered CHINA in march 2012 with a joint venture with Chery automobiles
    • THANK YOU Submitted to : Submitted by : Dr. Taminder Kaur Shifali Rajat Sharma