4. To finance the deal Tata motors raised a bridge loan of 3 billion through consortium of banks by the end of 2009.Tata motors had yet to pay 2 billion towards the bridge loan5. The profits for the first quarter for the year 2008-09 were at 3.26 billionQ3 the sales of passenger vehicles went down to 41,287 units a drop of 14.14% Tata Motors cut production across different categories.
No other brands with so good research and development facilities was available for tata motors to get hold of at such a reasonable price
Tata n jaguar n land rover2
Tata-jaguar–and-land rover deal<br />1<br />
introduction<br /><ul><li>In 2008, India-based Tata Motors Ltd. acquired two iconic British brands- JAGUAR and LAND ROVER for US $2.3 billion.
The sale of Jaguar and Land Rover was initiated by their former owner US FORD.</li></ul>19-09-2011<br />2<br />
TATA MOTORS – A SNAPSHOT<br /><ul><li>Tata group is 150 years old, previously Tata Engineering and Locomotive Company, TELCO.
India’s largest passenger automobile and commercial vehicle.
Ford acquired Jaguar for $2.5 billion in 1989.</li></ul>4<br />
About Land rover<br /><ul><li> Founded in 1948 as a marquee of the Rover Company.
In 1994 Rover Group was taken over by BMW & sold to FORD MOTORS for $2.75 billion in 2000.</li></ul>5<br />
Why was Ford Selling?.....<br /><ul><li> Ford made losses of 12.6 billion in the year 2006,the biggest ever in its 103 year history.
Most of the loss was the result of bad performance of Jaguar, Land Rover however was performing steadily, Land Rover was driven by a record sale of 2.26 lakh vehicles in the year 2007.
Ford announced for a combined sale of both Jaguar and Land Rover.</li></ul>6<br />
Reasons for acquisition <br /><ul><li>Decrease in sales of Jaguar and Land Rover in the U.S. markets .
Tata Motors had desired to have diversified line up.
Good research and development facilities at a reasonable price.</li></ul>7<br />
Contd….<br /><ul><li>Acquiring JLR would help TATA for Component sourcing , design services and low cost engineering.
Corus being the major supplier of automotive steel to JLR and other automobile industries in USA and Europe, acquiring JLR would result in a cost synergy for TATA motors.</li></ul>8<br />
THE DEAL PROCESS<br />12/06/2007- Announcement from Ford that it plans to <br /> sell Land Rover and Jaguar.<br /> August 2007 - Major bidders are identified <br />Likely buyers: Tata Motors, M&M, Ceribrus capital Management, TPG Capital, Apollo Management <br />India’s Tata Motors and M&M arrive as top bidders ($ 2.05b & $ 1.9b) <br />03/01/2008 – Ford announces Tatas as the preferred bidders <br />26/03/2008 - Ford agreed to sell their Jaguar Land Rover operations to Tata Motors. <br />02/06/2008 – The acquisition is complete <br />
The Real Picture..<br /><ul><li>Consumer demand dropped
Automotive sector in India suffered contraction in demand
Problems in the Domestic Market</li></li></ul><li>Launch of World’s Cheapest Car..<br /><ul><li> The Nano was touted to be the least expensive car in the world
Tata Motors spent approximately US $430 million on developing the Nano
The company had invested more than Rs 20 million on the Singur plant </li></li></ul><li>Analysis <br />
Strategic logic<br /><ul><li> Long term strategic commitment to automotive sector.
Opportunity to participate in two fast growing auto segments- Luxury cars and all terrain vehicles.
Increased business diversity across markets and products.
Sharing of best practices in manufacturing and quality assurance systems and processes
Benefits from component sourcing, design services and low cost engineering </li></li></ul><li>COMPETITIVE ADVANTAGE <br /><ul><li>Tata Motors was helpless due to greater competition at home. (Daimler, Nissan Motor, Volvo and MAN AG)
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. </li></li></ul><li>COST SYNERGIES<br />
Contd..<br /><ul><li>Tata motors raised a bridge loan of US $ 3 billion through syndicate of banks.
Additional amount of US $ 0.7 billion was for engine and component supply, contingencies and working capital.
Rs 1.92 billion Underwriting agreement with JM financial consultants
Rs 1.75 billion was raised through a deposit scheme from the public
Additional subscriptions by promoter companies- Tata sons, Tata capital and Tata Investment Ltd.</li></li></ul><li>Post acquisition<br />
Cost Rationalization <br /><ul><li>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.
Inventory reduced by £217m between June 2008 and March 2009 from 70 to 50 days .</li></li></ul><li>Contd..<br /><ul><li>Labor actions – </li></ul> - Voluntary retirement to 600 employees.<br /> - Agency staff reduced by 800.<br /> -Offered leaves to 300 workers of Bromwhich and solihull plant.<br /> -Additional 450 job cuts including 300 managers.<br /><ul><li> Agreement with Unions to implement a longer working hours (equivalent to approximately 20% reduction in labor costs.)
Fixed marketing and selling costs reduced in line with sales volume.
Reduction in all other non-personnel related overhead costs. </li></li></ul><li>Problems<br /><ul><li>FALL IN SHARE PRICE
CURRENT STATUS<br />Jaguar land rover sales continued their upward trend since launch in June 2009.<br />During the quarter ended June 2010 JLR generated a profit of Rs 1613 crore. Tata motors had never ventured into luxury car segment before acquiring JLR, hence the inefficiency in handling such segment hampered Tata motors’ operational efficiency for quite some time.<br />19-09-2011<br />24<br />
Jaguar Land Rover is now a strong, profitable and innovative competitor in the premium car industry.<br />26% Delivery Growth.<br />JAGUAR LANDROVER global sales in July 2010 were 19,386 vehicles, higher by 30%. Jaguar sales for the month were 5,676, higher by 26%, while Land Rover sales were 13,710, higher by 31%.<br />25<br />
<ul><li> Recently TATA MOTORS drove past Reliance Industries to top the 2010edition of India’s Most Valuable Brands survey with a valuation of $8.45billion. A major part of this success can be attributed to the JAGUAR AND LANDROVER.</li></ul>19-09-2011<br />26<br />