Tata Motors (Futuristik Group 5 A)

A
PROJECT REPORT ON
TATA MOTOR’S: GLOBAL FOOTPRINT
COMPANY:
LOGO
MENTOR’S NAME:- PROF. MEGHNA SHARMA
TEAM MEMBER’S NAME:-

 DEEPAK KUMAR THAKUR
 PREETI SHARMA
 HARMEET KAUR
 MONA
 HONEY DOGRA
TATA MOTOR’S:GLOBAL FOOTPRINT
TABLE OF CONTENT
 ExecutiveSummary..................................................................................................3
 Indian Automobile Industry.....................................................................................4
 Introduction..............................................................................................................9
 Objectives................................................................................................................11
 Findings...................................................................................................................12
 TATA Motors- Making Waves Internationally......................................................14
 Impact of Global Slowdown on TATA-JLR Deal.................................................19
 Conclusion...............................................................................................................21
 Bibliography............................................................................................................23
Submitted By:- Deepak Thakur, Preeti Sharma, Harmeet Kaur, Mona, Page 2
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EXECUTIVE SUMMARY
The report talks about the Indian automobile industry in general and Indian automobile giant
TATA Motors in particular. We have analyzed Indian automobile industry using Porter’s 5
forces model & its performance in the recent past.
Particularly we have tried to track the path of TATA Motor’s expansion of international
business in the recent past, at present as well as its future plans. We have also discussed the
impact of current financial meltdown on the recent international ventures of the company.
The company is rapidly increasing its global footprint and is aiming to match the standards
of international automobile manufacturers in next 3 to 5 years. This rise to the level of a
world-class automotive manufacturer would involve a large quantifiable increase in revenues
from outside India with a focus on certain foreign markets. Currently international business
contributes 18.4% to company’s revenues. Company is aiming to increase it by 200% in near
future to reduce its dependence on one single economy and one single business cycle. This
ambition of the company has led to numerous joint ventures and increased activity in
countries like the U.K., South Africa, South Korea, Thailand, Brazil and Spain, as well as the
company is listing on the NYSE.
With the recent acquisition of Jaguar Land Rover (JLR) from the Ford Motor company in
early 2008, the company has entered into the world of high-end luxury brands. Customers of
high-end luxury brands value image and exclusivity factors, while image and exclusivity
conflict with the proposition of TML’s other recent venture, the inexpensive Nano. In this
manner, the decision to compete in both the high-end luxury and low-end economy markets
certainly creates a big and audacious task ahead for TML. If proven successful, this strategy
would provide the company with high margin (JLR) as well as high volume (Nano)
revenues. These two revenue streams, if proven compatible, could mitigate each other’s
risks.
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INDIAN AUTOMOBILE INDUSTRY

Hailed as ‘the industry of industries’ by Peter Drucker, the founding father of the study of
management, in 1946, the automobile industry had evolved continuously with changing
times from craft production in 1890s to mass production in 1910s to lean production
techniques in the 1970s.
The automotive industry in India grew at a computed annual growth rate (CAGR) of 11.5
percent over the past five years, the Economic Survey 2008-09 tabled in parliament on 2nd
July’09 said.
The industry has a strong multiplier effect on the economy due to its deep forward and
backward linkages with several key segments of the economy, a finance ministry statement
said.
The automobile industry, which was plagued by the economic downturn amidst a credit
crisis, managed a growth of 0.7 percent in 2008-09 with passenger car sales registering 1.31
percent growth while the commercial vehicles segment slumped 21.7 percent.
Indian automobile industry has come a long way to from the era of the Ambassador car to
Maruti 800 to latest M&M Xylo. The industry is highly competitive with a number of global
and Indian companies present today. It is projected to be the third largest auto industry by
2030 and just behind to US & China, according to a report. The industry is estimated to be a
US$ 34 billion industry.
Indian Automobile industry can be divided into three segments i.e. two wheeler, three
wheeler & four wheeler segment. The domestic two-wheeler market is dominated by Indian
as well as foreign players such as Hero Honda, Bajaj Auto, Honda Motors, TVS Motors, and
Suzuki etc. Maruti Udyog and Tata Motors are the leading passenger car manufacturers in
the country. And India is considered as strategic market by Suzuki, Yamaha, etc. Commercial
Vehicle market is catered by players like Tata Motors, Ashok Leyland, Volvo, Force Motors,
Eicher Motors etc.
The major players have not left any stone unturned to be global. Major of the players have
got into the merger activities with their foreign counterparts. Like Maruti with Suzuki, Hero
with Honda, Tata with Fiat, Mahindra with Renault, Force Motors with Mann.
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Key Facts:
• India ranks 12th in the list of the world's top 15 automakers.

• Entry of more international players.
• Contributes 5% to the GDP.
• Production of four wheelers in India has increased from 9.3 lakh units in 2002-03 to
23 lakh units in 2007-08
• Targeted to be of $ 145 Billion by 2016
• Exports increased from 84,000 units in 2002-03 to 280,000 units in 2007-08.
Porter’s Five Forces Analysis of Indian Automobile Sector :-

1. Industry Rivalry:-
• Industry Concentration:
The Concentration Ratio (CR) indicates the percent of market share held by a company. A
high concentration ratio indicates that a high concentration of market share is held by the
largest firms - the industry is concentrated. With only a few firms holding a large market
share, the market is less competitive (closer to a monopoly). A low concentration ratio
indicates that the industry is characterized by many rivals, none of which has a significant
market share. These fragmented markets are said to be competitive. If rivalry among firms in
an industry is low, the industry is considered to be disciplined
• High Fixed costs:
When total costs are mostly fixed costs, the firm must produce capacity to attain the lowest
unit costs. Since the firm must sell this large quantity of product, high levels of production
lead to a fight for market share and results in increased rivalry. The industry is typically
capital intensive and thus involves high fixed costs.
• Slow market growth:
In growing market, firms can improve their economies. Though the market growth has been
impressive in the last few years (about 8 to 15%), it takes a beat in even slight economic
disturbances as it involves a luxury good. Aggressive pricing is needed to sustain growth in
such situations.
• Diversity of rivals:
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Industry becomes unstable as the diversification increases. In this case the diversity of rivals
is moderate as most offer products which are close to standard versions and the competitors
are also mostly similar in strength Industry, Rivalry Bargaining Power
of Customers, Bargaining Power of Suppliers, Threat of New Entrants ,Threat of
Substitutes.
• Highly competitive industry:
The presence of many players of about the same size little differentiation between
competitors, and a very mature industry with very little growth were the features of a highly
competitive industry. Higher the competition in the industry lower would be the profit
margin. To remain ahead in competition, auto-makers were tempted to offer value added
services to the customers incurring more costs.
2. Threat of New Entrants :-
These are the characteristics that inhibit the entrance of new rivals into the market and in turn
protect the profits of the existing firms. Based on the present profit levels in the market, one
can expect the entrance of new firms into the market or not. The entrance is however also
affected by the start-up costs.
• Economies of scale:
The Minimum Efficient Scale (MES) is the point at which unit costs are minimized. The
greater the difference between the MES and the entry unit cost, greater is the barrier.
Economies of scale are becoming increasingly important as competition is driving the profit
margins to lower levels. Also being a capital intensive industry economies of scale have
important consequence.
• Government policies:-
 Automobile Industry was delicensed in July 1991 with the announcement of the
New Industrial Policy.
 The passenger car industry was delicensed in 1993. No industrial licence is required
for setting up of any unit for manufacture of automobiles except in some special
cases
 The norms for Foreign Investment and import of technology have been progressively
liberalized over the years for manufacture of vehicles including passenger cars in
order to make this sector globally competitive
 At present 100% Foreign Direct Investment (FDI) is permissible under automatic
route in this sector including passenger car segment. The import of
technology/technological upgradation on the royalty payment of 5% without any
duration limit and lump sum payment of USD 2 million is allowed under automatic
route in this sector
 The automotive industry comprising of the automobile and the auto component
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sectors has made rapid strides since delicensing and opening up of the sector to FDI
in 1991
 The industry had an investment of about Rs. 50,000 crore in 2002-03 which has gone
up to Rs. 80,000 crore by the year 2007. The automotive industry has already attained
a turnover of Rs. 1,65,000 crore (34 billion USD).
 The industry provides direct and indirect employment to 1.31 crore people. The
contribution of the automotive industry to GDP has risen from 2.77% in 1992-93 to
5% in 2006-07. The industry is making a contribution of 17% to the kitty of indirect
taxes of the Government. With all the policies regarding the FDI and Tariff barriers as
mentioned above, it has become easier for the foreign players to enter the Indian
automobile industry.
3. Threat of Substitutes:-
• The replacement market is characterized by the presence of several small-scale suppliers

who score over the organized players in terms of excise duty exemptions and lower
overheads.
• A product’s price elasticity is affected by the presence of substitutes as its demand is

affected by the change in the substitute’s prices.
• The cost of the automobiles along with their operating costs was driving customers to look
for alternative transportation options.
• The new technologies available also affect the demand of the product
e.g.: In case of Maruti’s products, the threat of substitutes is high. The competition is intense
as several players have products in the categories given by Maruti. However, in the 800cc
range it is the market leader and the threat of substitute products is low. Price performance
comparison favors heavily towards Maruti in most product categories. Also the high
availability and quality of services offered by Maruti gives the customer a better trade-off .
4. Bargaining Power of Suppliers:-
• Suppliers can influence the industry by deciding on the price at which the raw
materials can be sold. This is done in order to capture profits from the market.
• Steel is a major input in this industry and so steel prices have a sharp and immediate
impact on the product price.
• The industry being capital intensive switching costs of suppliers is high, other than steel as
raw material which is highly price sensitive and the firm may easily move towards a supplier
with lower cost .
5. Bargaining Power of Buyers:-
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• It specifies the impact of customers on the product.
• When buyer power is strong, the buyer is the one who sets the price in the market.
Here there is purchases of large volumes.
• There is prevalence of alternative options.
• Price sensitive customers were some of the factors that determined the extent of
influence of the buyers in this industry e.g.: In the case of Maruti, the sales volumes have
shown increasing trend over past so many years. The customers are more or less
concentrated in metros or other tier two cities. The industry is also concentrated in these
regions mostly. Most of them are have good amount of knowledge about the product. Except
the 800cc range in other categories brand loyalty is only moderate. Also it is difficult to
measure since repurchases are rare. Product differentiation is high as there are many
categories in the passenger vehicle segment. Buyers get incentives in the form of cost
discounts and better after sales services.
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INTRODUCTION
TATA GROUP
TATA Group is more than 150 years old. In terms of market capitalization and revenues, Tata
Group is the largest private corporate group in India and has been recognized as one of the
most respected groups in the world. It has interests in steel, automobiles, information
technology, communication, power, tea and hospitality. The Tata Group has operations in
more than 85 countries across six continents and its companies export products and services
to 80 nations. In the past few years, the TATA group has led the growing appetite among
Indian companies to acquire businesses overseas in Europe, the United States, Australia and
Africa - some even several times larger - in a bid to consolidate operations and emerge as the
new age multinationals.
The TATA group is 11th most reputable company in the world according to Forbes.
At home in the world Anchored in India and committed to its traditional values of leadership
with trust, the Tata group is spreading its footprint globally through excellence and
innovation
The Tata group’s revenues for 2007-08 from its international operations were $38.3 billion,
which constitutes 61 per cent of its total revenues.
Each operating company in the group develops its international business as an integral
element in an overall strategy, depending on the competitive dynamics of the industry in
which it operates. Exports from India remain the cornerstone of the Tata group’s
international business, but different Tata companies are increasingly investing in assets
overseas through greenfield projects (such as in South Africa, Bangladesh and Iran), joint
ventures (in South Africa, Morocco and China) and acquisitions.
Acquisitions are a crucial component of the global expansion of Tata enterprises. Over the
past eight years the group has made overseas acquisitions of $18 billion. Among the bigger
deals on this front have been Tetley, Brunner Mond, Corus, Jaguar and Land Rover in the
UK, Daewoo Commercial Vehicles in South Korea, NatSteel in Singapore, and Tyco Global
Network and General Chemical in the US.
Priority markets While individual Tata companies have differing geographical imperatives,
the Tata group is focusing on a clutch of priority countries, which are expected to be of
strategic importance in the years ahead. The regions are North America, UK, China, the
Netherlands, Germany, SouthAfrica, members of the Gulf Cooperation Council, Brazil,
Vietnam, Thailand and Sri Lanka. Ratan Tata, Chairman, Tata Sons, sums up the Tata group’s
efforts to internationalize its operations thus: “I hope that a hundred years from now we will
spread our wings far beyond India, that we become a global group, operating in many
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countries, an Indian business conglomerate that is at home in the world, carrying the same
sense of trust that we do today.”
TATA MOTORS
TATA Motors is the flagship company of the TATA group & is India's largest automobile
player, with revenues of $7.2 billion in 2006-07. With over 4 million TATA vehicles plying in
India, it is the leader in commercial vehicles and the second largest in passenger vehicles.
Previously TATA Engineering and Locomotive Company (Telco), TATA Motors is listed on
the New York Stock Exchange in 2004.
Competition at Home
• TATA Motors is vulnerable to greater competition at home. Foreign vehicle makers

including Daimler, Nissan Motor, Volvo and MAN AG have struck local alliances for a
bigger presence.
• 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. Making Waves Internationally.
• NANO will mark the advent of India as a global centre for small-car production.
• International praise came from Standard & Poor’s, which in December 2006 expressed the
view that the “policy to support its companies and the improved financial profile of its
entities also enhances the overall financial flexibility of TATA Motors.”
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OBJECTIVES
 TATA Motor’s expansion of international business in the recent past, at present, as well as
its future plans.
 The impact of current financial meltdown on the recent international ventures of the
company.
 Analysis on to increase company’s revenue by 200% in near future through various Joint-
ventures & Mergers internationally.
 Analysis on TML’s decision to compete in both the high-end luxury and low-end economy
markets.
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FINDINGS
SWOT Analysis
STRENGTHS
Strong domestic player
Steady revenue growth
R&D Activities
WEAKNESSES
Decline in vehicle sales
Employee Productivity
Image of low quality makers
OPPORTUNITIES
International Growth
New Product Lines
Acquisition of JLR brands
THREATS
Competition from Global players
Global Economic Factors
Environmental Regulations
Strengths:
Strong domestic player: Tata Motors is India’s largest automobile manufacturer by revenue.
The company’s market share in the Indian four-wheeler automotive vehicle market (i.e.
automobile vehicles other than two and three wheeler categories) stood at 26.1% in FY2008.
The company is also the leader in the Indian commercial vehicles with a market share of
62.7% and is the second largest player in the Indian passenger vehicles market with a share
of 14.2% in FY2008.
Steady revenue growth: The company recorded strong revenue growth during 2004-08.
During this time, the revenues of the company grew at a CAGR of 27.1% to reach
INR365,230.6 million (approximately $9,072.3 million) in FY2008 from INR139,696
million (approximately $3,096 million) in 2004. The strong revenue growth of the company
has contributed to its market dominance.
Research and development activities: Tata Motor has strong research and development
(R&D) capability. The company incurred large expenditure for its R&D activities. The
company’s R&D activities focus on product development, environmental technologies and
vehicle safety through its Engineering Research Centre (ERC). The ERC is one of the few
government recognized in- house automotive R&D centers in India. In the recent period, the
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ERC developed the Tata Nano, an affordable family car. The strong R&D capability enables
the company to build a broad range of vehicle portfolio and improves its competitive
strength in the automotive industry.
Weaknesses
Decline in vehicle sales:
Tata Motors recorded decline or marginal growth in its vehicle sales in the last financial year.
The company recorded a sale of 585,649 vehicles, a growth of 0.9% over last year. During
the same time, the automotive industry in India recorded a growth of 10.4% to reach the total
vehicle sales to 2,309,324 units. The overall market share of the company stood at 25.4% in
2008 as compared to a market share of 27.8% in 2007. The decline in sales would further
affect the company’s market share, and erode investors’ confidence.
Employee productivity:
Tata Motors posted weak revenues in proportion to the total number of its employees. The
revenue per employee of the group stood at INR10 million (approximately $0.24 million),
significantly lower when compared to its global competitors such as Toyota Motor ($.73
million), and Nissan Motor ($.53 million). The weak revenue per employee of the company
compared to the global auto majors indicates its weaker productivity and operational
inefficiency.
Opportunities:
Product launches: Tata Motors has launched various new products during the last two year
period (2007–08). For instance in December 2007, Tata Motors introduced its new range of
Medium and Heavy Commercial Vehicles. In March 2008, Tata Motors (Thailand) launched
the Tata Xenon 1-ton pickup truck at the annual Bangkok International Motor Show. In
FY2008, the company launched the Indigo sedan and Indica with the Direct Injection
Common Rail (DICOR) and Sumo Grande. Furthermore, the launch of its small car, ‘NANO’
in January 2008 would further fuel its presence in the passenger vehicle market.
Acquisition of Jaguar and Land Rover brands: These brands had sales operations in more
than 100 countries with over 2,200 dealers. Acquisition of JLR provides the company with a
strategic opportunity to acquire iconic brands, and increase the company’s business diversity
across markets and product segments.
Threats Increasing competition: Tata Motors face intense competition from its domestic as
well as foreign competitors including General Motors, Honda Motor, Maruti Udyog,
Mitsubishi Motors, Fiat, Ford and so on. Competition is expected to intensify further as
Indian automotive manufacturers obtain greater access to debt and equity financing in the
international capital markets or gain access to more advanced technology through alliances.
Additionally, in recent years, the government of India has permitted automatic approvals for
foreign equity ownership of up to 100% in entities manufacturing vehicles and components
in India.
Environmental regulations: The company is subjected to extensive governmental
regulations regarding vehicle emission levels, noise, safety and levels of pollutants generated
by its production facilities. These regulations are likely to become more stringent in the near
future.
In addition, Jaguar Land Rover has significant operations in the US and Europe which have
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stringent regulations relating to vehicular emissions. The proposed tightening of vehicle

emissions regulations will require significant costs for the company.
TATA Motors- Making Waves Internationally :-

Major international ventures of TATA Motors in recent past are discussed below:-
1. TATA Daewoo Commercial Vehicle- In 2004, TATA Motors acquired the Daewoo
Commercial Vehicle Company of South Korea. TATA remains India's largest heavy
commercial vehicle manufacturer and TATA Daewoo is the 2nd largest heavy commercial
vehicle manufacturer in South Korea.
The reasons behind the acquisition were:-
 Company's global plans to reduce domestic exposure. The domestic commercial

vehiclemarket is highly cyclical in nature and prone to fluctuations in the domestic
economy. TATA Motors has a high domestic exposure of ~94% in the MHCV
segment and ~84% in the light commercial vehicle (LCV) segment. Since the
domestic commercial vehicle sales of the company are at the mercy of the structural
econo mic factors, it is increasingly looking at the international markets. The
company plans to diversify into various markets across the world in both MHCV as
well as LCV segments.
 To expand the product portfolio TATA Motors introduced the 25MT GVW TATA
Novus from Daewoo’s (South Korea) (TDCV) platform. TATA plans to leverage on
the strong presence of TDCV in the heavy-tonnage range and introduce products in
India at an appropriate time. This was mainly to cater to the international market and
also to cater to the domestic market where a major improvement in the Road
infrastructure was done through the National Highway Development Project. TATA
Motors has jointly worked with TATA Daewoo to develop trucks such as Novus and
World Truck.
2. Hispano Carrocera- In 2005, sensing the hugeopportunity in the fully built bus segment,
TATA Motors acquired 21% stake in Hispano Carrocera SA, Aragonese bus manufacturing
company with an option to acquire 100% holding. Hispano Carrocera is an established and
reputed bus and coach manufacturer in Spain enjoying excellent reputation for developing
high quality vehicles. It operates in two manufacturing locations namely, Zaragoza in Spain
and Casablanca in Morocco, North Africa. Hispano has proven competence in
development of buses and coaches. With this deal Tata Motors acquired the license for
technology and brand rights from Hispano. The total deal consisting of equity, debt and
technology licensing amounted to about Rs 70 crore to Tatas. This partnership gives both
companies an opportunity to use their complementary strengths to create high-class transport
solutions for intra-city and intercity mass transportation in Spain, India and many other
countries around the world. Besides Tata Motors is also seeing this deal as a gateway into the
highly competitive and matured European markets considering the success Hispano's bus
range enjoys in these markets.
Hispano enjoys a market share of 25 per cent in the bus market in Spain and sells
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considerable numbers in Europe in addition to other countries outside Europe as well.

Further, the Hispano deal will help the Indian commercial vehicle giant grow in the bus and
coach segment as the Daewoo acquisition helped it in trucks. This strategic alliance with
Hispano Carrocera gave TATA Motors access to its design and technological capabilities to
fully tap the growing potential of this segment in India and other export markets, besides
providing it with a foothold in developed European markets.
3. TATA Marcopolo (TMML) - TATA Motors has formed a 51:49 joint venture in bus body
building with Marcopolo of Brazil. This joint venture is to manufacture and assemble fully-
built buses and coaches targeted at developing mass r apid transportation systems. The joint
venture will absorb technology and expertise in chassis and aggregates from TATA Motors,
and Marcopolo will provide know-how in processes and systems for bodybuilding and bus
body design. TATA and Marcopolo have launched a low-floor city bus which is widely used
by Delhi, Mumbai and Bangalore Transport Corporations. TMML JV’s first assignment in
India was to supply 500 premium class low floor buses for Delhi Transport Corporation.
Joint venture has started its operations at Dharwad, Karnataka & Lucknow, U.P.
Future Plans:
TMML has plans to set up the world’s biggest bus plant at Dharwad. It is aiming to cater to
the fully built bus requirements of Indian mass as well as luxury markets. To compete in high
volume, low cost market a vendor park has been established in Dharwad itself. The company
plans to make 20,000 buses a year at its full capacity.
4. TATA Xenon- TATA Xenon was released in late 2007. It was first displayed at the 2006
Bologna Motor Show. The car is assembled in Thailand by Tata-Thonburi JV and in
Argentina by Tata-Fiat JV. The Xenon has been well received in Europe especially in Spain
and Italy. SPRINT was the code name of the Project for development of Tata's World Pick-up
(truck). World Pick-up market (other than USA) is dominated by Japanese Auto majors like
Toyota, Isuzu, Mitsubishi, Nissan. As per the study conducted by Tata Motors, there is a big
opportunity for TML to grab substantial market share of world Pick-up market. Tata initiated
an in-depth market study in various countries in Europe, Middle East, S Africa, Thailand,
Australia, Latin America etc to understand needs of target segments for a new Pick-up.
While a new product development timeline takes between 36 to 50 months, it is said that so
far only Toyota has achieved the Timeline of 18 months. Hence, the name SPRINT which
signifies and continuously reminded project team about the Speed of the project. The team
worked round the clock relentlessly, applied principles of "Concurrent Engineering",
distributed work load in 9 different countries in order to crash timeline by overlapping
maximum possible key activities. The team delivered project in 17 months—from styling
freeze in Dec 05 to SOP ( Start of Production) in May 7. Bologna Motor Show 2006 (Dec)
was the occasion when Xenon was unveiled for public display and later in March 2007, it
was also displayed at Geneva Motor Show 2007. Till date Xenon has been launched in 14
countries in Europe, Middle East, Africa and SE Asia. Tata Motors signed a joint venture
with Thonburi Automotive Assembly Plant Co. (Thonburi), the Thailand-based independent
assembler of automobiles to manufacture, assemble and market pickup trucks in Dec’06. The
joint venture, in which Tata Motors holds 70% of the equity and Thonburi 30%, gets vehicles
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manufactured in Thonburi’s manufacturing facility. The joint venture facilitated Tata Motors
address the Thailand market, the second largest pickup market in the world after the US.
Both partners jointly manage the operations.
5. TATA Fiat- The TATAs and Italian car giant Fiat kicked off their partnership with the
former marketing Fiat cars since Mar’06. Fiat branded cars are distributed by Tata through
the Tata-Fiat dealer network. The partnership took off to the next level in Dec’06 with both
the sides announcing the formation of a joint venture with aggregate investments of over Rs
4000 crore (over euro 665 million) in a phased manner to manufacture vehicles for the
Indian and overseas markets. The 50:50 joint venture enabled Fiat plant at Ranjangaon, Pune
with capacities to produce in excess of 200,000 cars and 300,000 engines and transmissions
yearly, at steady state. The JV may be expanded to produce trucks as well.
This strategic alliance with Fiat enables the two companies jointly to present a wider range
of product offerings to the Indian market. It enables Tata Motors to access world-class
powertrains from Fiat for its next generation car offerings while enhancing the model line at
its dealerships. Fiat’s Ranjangaon manufacturing facility is benchmarked against the global
car manufacturer’s units in Turkey and Brazil. It compares well as the lowest-cost
manufacturer, and Fiat will eventually source right-hand drive Linea cars from here for the
UK and Australia. Fiat has a cost advantage of 14-17% over Brazil and Turkey due to
localisation of parts and labour costs.
Fiat had almost decided to quit the Indian market but for Fiat chief executive officer Sergio
Marchionne and Tata group chairman Ratan Tata coming together in 2005. Such was the
level of confidence among both the partners that investments began at least two years before
even a formal agreement was
signed. JV is already producing the Fiat Palio, Stile and Linea models and select Tata Indica
models.
Future Plans:
The company is readying to launch Tata Motors’ new three-box offering, code-named X1.
Planned launch of the Fiat Bravo is being delayed because of the economic slowdown. Fiat
manufactures Tata Motors’ 1-tonne pick-up truck at its plant in Argentina for Latin American
and overseas markets. The JV is expected to break even by 2011-12.
6. City Rover- The City Rover was a hatchback car model offered by MG Rover Group in
the UK market. Launched in the Autumn of 2003, the car was a rebadged version of the Tata
Indica. MG Rover group used to import TATA Indica from India and sold as City Rover in
UK market. The City Rover's running costs were rather high, and its asking price was high
compared with newer, better built and better specified rivals such as the Fiat Panda. MG
Rover was reported to be paying Tata £3,000 for each car and, despite each model featuring a
Rover corporate nose and revised suspension settings, the buying public was not impressed
by the £7,000 starting price. Along with the rest of the MG Rover range, production of the
City Rover ended in April 2005 when the company went into receivership, the last vehicles
brought into the UK being purchased and sold on by a non-franchised discount dealer group.
Although MG Rover was bought by Nanjing Automobile of China in July 2005, the
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company's new owners did not include the City Rover or indeed any direct successor in their
plans for a new model range. This was one of the unsuccessful attempts of Tata Motors to go
global. Fiat Linea- Distributed by TATA Motors in India.
7. Exports Market (CV)- TATAs export its commercial vehicles to neighboring Asian
countries like Nepal, Sri Lanka, Bangladesh, Afghanistan apart from South Africa and
Middle East markets. It competes with the likes of Mercedes, Volvo, Hyundai etc in Middle
East markets.
8. World Truck- TATA Motors unveiled its ‘World Truck’ range, developed jointly with
TATA Daewoo Commercial Vehicles of South Korea in May’09. The developing
infrastructure in India makes it possible for transporters to reap the benefit of trucks with
higher power, speed and carrying capacity. The new range from Tata Motors will meet those
needs. It will also help it penetrate international markets more effectively and competitively.
Future Plans:
The commercial launch of these trucks in India is scheduled during July-September’09. They
will debut in South Korea, South Africa, the
SAARC countries and the Middle-East by the end of the fiscal. The trucks will be made at
the Jamshedpur facility and at Gunsan in South Korea. The company expects international
volumes to be at par with numbers in India.
9. TATA Nano- Conceived in 2003, Tata Motors had launched the much- hyped 'cheapest'
car in India in Mar’09. The car has cost over Rs 2,000 crore to the company. The car is
expected to boost the Indian economy, create entrepreneurial-opportunities across India, as
well as expand the Indian car market by 65%. The car was envisioned by Ratan Tata,
Chairman of the Tata Group and Tata Motors, who has described it as an eco-friendly
"people's car". For the first time, thanks to Tata's Nano, India has been established as an
R&D leader, and not just a low-cost hub known for cheap labor. It has shown to the world
that India can be a technology leader. It is a great innovation, because innovation is all about
thinking of the next decade and not the next quarter.
The Tata Nano will certainly find big takers in India. However, it can have a market in
theUS, as well. If the car is enriched with high technology functions to make it an intelligent
car, many in the US will look forward to own it. An intelligent car at $3000 would be a
good .A Promise is a Promise bargain after all, for many Americans. Tata's Nano shows that
there is a huge opportunity for Indian companies to build profitable low-cost products and
then take them to the US.
Future Plans:
Tata Motors will be launching it in Nigeria within the next year and a half. In Nigeria, the
Nano will cost 357,480 NGN (Rs 1.16 lakh), almost the same as its cost in India, making it
cheaper than even used cars in the country. According to TATA Motors officials, Nano will
greatly benefit Nigerians as there is no proper public transport system in the country.
Company is yet to decide whether the car would be assembled in Nigeria itself or if it would
be made available as a Completely Built Unit (CBU). The company is planning to market
Nano in other countries, but timelines, modes and countries are yet to be finalized. Earlier
Honey Dogra.
this year, the Tata Nano Europa (the European version of the Nano) was unveiled at the
Geneva Auto Show. The Nano Europa will be launched in 2011.
10. TATA-JLR: TATA Motors bought the iconic Jaguar and Land Rover operations from
Ford for 1.15 billion pounds in Mar- Apr’08. Tata gained the rights to the Daimler,
Lanchester, and Rover brand names. In addition to the brands, Tata Motors also gained
access to 2 design centers and 3 plants in UK. The key acquisition would be of the
intellectual property rights related to the technologies.
With the acquisition of Jaguar and Land Rover (JLR), Tata Motors killed several birds with
one stroke. The acquisition paves the way for the company’s entry into the European car
market and gives the company a comprehensive range of models ranging from the
luxuryJaguar to the $2,500 Nano. It provides an entry point into India’s growing luxury car
market which gives new impetus to the company’s development program as well and
provides a captive customer base for the component companies of the Tatas. In the long-run
TATA Group and TATA Motors’ footprint in South-East Asia should help Jaguar/Land Rover
diversify their geographic dependence from US (30% of volumes) and Western Europe (55%
of volume). Analysts believe that TATAs’ ownership of JLR will open doors for outsourcing
of parts from India, particularly from the current pool of suppliers who service TATA Motors
in India.
Present and Future Plans:
A year after Tata group purchased Jaguar and Land Rover, it launched the British iconic
luxury brands in the Indian market. The India foray comes at a time when worldwide sales of
luxury cars are falling. The global meltdown dragged JLR into huge losses as consumers
halted purchases. Sales, after the $2.5 billion takeover by Tata Motors last June, dropped a
third to 1.67 lakh vehicles.
The bridge from the Nano to Jaguar XF is probably the biggest that exists in the industry. A
$2,500 car and a $100,000 car: no other company in the world has a portfolio that wide.
Why JLR?
• Long term strategic commitment to automotive sector
• Opportunity to participate in two fast growing auto segments
•Increased business diversity across markets and products
• Land rover provides a natural fit for TML’s SUV segment
• Jaguar offers a range of “performance/luxury” vehicles to broaden the brand portfolio
• Benefits from component sourcing, design services and low cost engineering.
Honey Dogra.
Impact of Global Slowdown on TATA-

JLR Deal
“We went too far with JLR”: Ratan Tata & Tata Sons Chairman Ratan Tata recently said he
may have overstretched himself in paying 1.15 billion pounds for Jaguar Land Rover just as
a recession loomed.
A year after the Tata group took over the two of Britain’s most iconic automobile brands,
Jaguar and Land Rover, it is faced with newer and bigger challenges than it would have
expected when it paid $2.3 billion to Ford for the acquisitions on March 26, 2008.
In FY 2008-09, Tata Motors Ltd posted its first annual loss in at least eight years after sales
at the luxury units, Jaguar and Land Rover plunged amid the global recession. The
consolidated net loss was Rs 2,500 crore in the year ended 31 March, 2009 compared with a
net income of Rs 2,200 crore billion a year ago. Ratan Tata is slashing investments by as
much as 38% in the year to March on slow economic growth.
At the time of acquisition of JLR by TATA Motors, there were some who called for caution.
They pointed out that buying into an automobile major when the market for automobiles was
set for a downturn might not reflect good business sense. Moreover, post acquisition, debt at
the level of both parent and the United Kingdom subsidiaries in the TATA group was slated
to rise sharply.
Unfortunately for Tatas, the worst fear of the skeptics has come to pass. Within months of the
acquisition, the world witnessed the onset of a financial crisis that triggered a credit crunch
and precipitated a real economy recession. Industries such as steel and automobiles were
among the worst affected. This had two implications. First, the sales and revenues of JLR
were far short of expectations, making it difficult for Tatas to meet commitment on their debt
and reduce the degree of leverage. Second, with much of this debt being of a bridge loan
kind, loans that mature and cannot be repaid have to be refinanced and rolled over to prevent
default. Given the current circumstances, this is difficult, as Tatas discovered this May, when
the $3 bn it had borrowed to finance acquisition of JLR was due for refinancing.
After the Tatas acquired the company, business challenges were mostly a result of adverse
market conditions. In the first half of 2008, Jaguar’s sales volume was 11.2 % more than in
the same period in 2007 while Land Rover’s was 0.6 % ahead of 2007. At the end of 2008,
Jaguar was 8.2 % ahead of 2007 for the year, while Land Rover had felt the impact of the
downturn and its full-year sales were 17.6 % less than in 2007. In the first two months of
2009, Jaguar was 6.9 % ahead of 2008 and Land Rover 45 % down when compared with the
same period last year. There have been a series of non-production days at all three of its UK
assembly plants — Castle Bromwich and Solihull in the West Midlands and Halewood on
Merseyside. Each plant lost an average of 25 days’ production, which equated to a volume
reduction of approximately 25 per cent month on month. A worsening economic situation
could lead to further job losses and even plant closures at Jaguar Land Rover (JLR) in
Britain. Tata’s bankers are seeking to secure short-term finance of between £500 million and
Honey Dogra.
£1 billion to allow Jaguar Land Rover to pay off supplier payments due by the end of the
summer and stop it running out of cash. The Tatas are trying to persuade the British
government to stand guarantee for loans that they plan to seek from the UK banks to bail out
JLR. The British government has been reluctant to provide these loan guarantees so far. If the
UK government’s help does not come soon, Tata Motors will have to cut down its investment
plans for Jaguar Land Rover (JLR) with possible job losses and plant closures.
While Tata looks to sustain JLR through the downturn, the UK government's support is
crucial as JLR wants it to guarantee a pound 340 million European Investment Bank loan
sanctioned in April. Although JLR has the option of getting guarantees from private banks, it
may work out to be an expensive proposition. To get the government's help, Tata may have
part with some equity interest in JLR, besides giving board representation. According to a
recent report in The Economic Times, the company is negotiating at the moment and if there
was a large financial package from the UK government to the company then there would be
a commensurate level of representation on the board.
Despite the challenges, there have been some good news, the company’s 14,000-odd workers
agreed to a two-year pay freeze on condition of no compulsory layoffs. This is expected to
save the company up to £68 million a year. The company also bagged a significant order
from China for supplying 13,000 cars worth £600 million over the next three years. More
recently, the UK government approved a grant of £27 million (Rs 192 crore) to JLR for
producing a new eco- friendly car based on Land Rover’s LRX Concept. Luxembourg-based
European Investment Bank is also considering giving a loan of £275 million (Rs 2,100 crore)
for research to reduce the CO2 emissions from JLR’s future products.
What is remarkable is that the Tata group has been able to ride the waves and come ashore
safely this time as well. Tata Motors returned $1.11 bn of its original bridge loan by
mobilizing funds through a rights issue, launching a fixed deposit scheme and by selling the
shares of Tata Steel it held. Second, the Tata group has mobilized the support of the Indian
government. Even when the group embarked on its ambitious overseas acquisition strategy,
there was evidence that it had the backing of the Indian government, which too was seeking
to build India itself as a global brand. Tatas mobilized Rs 42 bn through bond markets with
the help of government-owned State Bank of India. Tatas are also in talks with defense
establishment to obtain secure orders for the Land Rover. Finally, the Tatas have used
innovation to obtain support from the Indian public for its UK operations. Tatas launched
Nano in Apr’09 and received 203,000 advance orders & raised Rs 25 bn from Indian public.
This money was in essence a loan from public at large & Tatas will pay interest rate on the
same. This money is also crucial to the Tatas’ survival strategy.
In sum, despite its grievous errors in the form of the crisis-eve, debt-financed acquisition
JLR, the Tata group has escaped a group-wide crisis by leveraging its brand, the Indian
government and the Indian public. That is indeed remarkable, even if fortuitous to some
degree.
Honey Dogra.
CONCLUSION
With the above study we conclude following few important deeds
which surely helped TATA Motors to inflate their business globally:-
TATA Motors has a high domestic exposure of ~94% in the MHCV segment and ~84% in the
light commercial vehicle (LCV) segment. To expand the product portfolio TATA Motors
introduced the 25MT GVW TATA Novus from Daewoo’s (South Korea) (TDCV) platform.
In 2005, sensing the hugeopportunity in the fully built bus segment, TATA Motors acquired
21% stake in Hispano Carrocera SA, Aragonese bus manufacturing company with an option
to acquire 100% holding. TATA Motors has formed a 51:49 joint venture in bus body
building with Marcopolo of Brazil. This joint venture is to manufacture and assemble fully-
built buses and coaches targeted at developing mass rapid transportation systems.
In 2006, Tata Motors signed a joint venture with Thonburi Automotive Assembly Plant Co.
(Thonburi), the Thailand-based independent assembler of automobiles to manufacture,
assemble and market pickup trucks. The joint venture, in which Tata Motors holds 70% of
the equity and Thonburi 30%, gets vehicles manufactured in Thonburi’s manufacturing
facility. The joint venture facilitated Tata Motors address the Thailand market, the second
largest pickup market in the world after the US.
The TATAs and Italian car giant Fiat kicked off their partnership as 50:50 capacities to
produce in excess of 200,000 cars and 300,000 engines and transmissions yearly, at steady
state . Fiat branded cars are distributed by Tata through the Tata-Fiat dealer network.
Formation of a joint venture with aggregate investments of over Rs 4000 crore (over euro
665 million) in a phased manner to manufacture vehicles for the Indian and overseas market.
The JV may be expanded to produce trucks as well.This strategic alliance with Fiat enables
the two companies jointly to present a wider range of product offerings to the Indian market.
It enables Tata Motors to access world-class powertrains from Fiat for its next generation car
offerings while enhancing the model line at its dealerships.
In March 2009, Tata Motors had launched the much- hyped 'cheapest' eco-friendly car in
India. The car has cost over Rs 2,000 crore to the company. The car is expected to boost the
Indian economy, create entrepreneurial-opportunities across India, as well as expand the
Indian car market by 65%. has shown to the world that India can be a technology leader.
TATA Motors bought the iconic Jaguar and Land Rover operations from Ford for 1.15 billion
pounds. With the acquisition of Jaguar and Land Rover (JLR), Tata Motors killed several
birds with one stroke. The acquisition paves the way for the company’s entry into the
European car market and gives the company a comprehensive range of models ranging from
the luxuryJaguar to the $2,500 Nano. It provides an entry point into India’s growing luxury
car market which gives new impetus to the company’s development program as well and
Honey Dogra.
provides a captive customer base for the component companies of the Tatas. In the long-run
TATA Group and TATA Motors’ footprint in South-East Asia should help Jaguar/Land Rover
diversify their geographic dependence from US (30% of volumes) and Western Europe (55%
of volume). Analysts believe that TATAs’ ownership of JLR will open doors for outsourcing
of parts from India, particularly from the current pool of suppliers who service TATA Motors
in India.
Lastly, to outrival in international market and to satisfy & attract the customer’s expectations
and needs, company needs to focus on these 3 aspects of the high-end market products:
1. Brand Appeal and Endorsement

2. Performance Characteristics &
3. Quality .
TML can greatly enhance customers’ perceptions of these three criteria with targeted
increased investments. Brand appeal, performance and quality are all functions of the
investments made in product development and marketing. As competitors such as Volvo,
Saab, Hummer and others fail to maintain investments in either development or marketing,
this leaves the door open for TML to capitalize and gain both market share and momentum.
TML is in a unique position to invest given the company's strong balance sheet and overall
financial health.
The two ways firms compete are by either a differentiation strategy or a low cost strategy.
However, as we've seen the route TML has taken involves competing on both strategies.
While the Nano targets the price conscious common man, the Jaguar Land Rover deal shows
us that TML is now targeting brand conscious, high-end consumers. TML needs to have a
similar differentiated strategies focusing separately on these brands.
TML’s vision is to be “best in the manner in which we operate, best in the products we
deliver and best in our value systems and ethics”. TML has come to be known as an
innovator in the passenger car segment not just in manufacturing but along multiple areas
along the value chain.
The Tata Indica and Tata Nano are prime examples of the company’s innovation capabilities
and bear testimony to the strength of the company’s R&D efforts. This innovation fuelled
growth coupled with strategic acquisitions is expected to catapult the company to a
preeminent position internationally.
Honey Dogra.
BIBLIOGRAPHY
References:-
 www.tata.com
 www.tatamotors.com
 http://en.wikipedia.org/wiki/Tata_motors
 http://en.wikipedia.org/wiki/Tata_group
 http://en.wikipedia.org/wiki/Indian_automobile_industry
 http://en.wikipedia.org/wiki/Tata_Xenon
 www.rediff.com
 www.msn.com
 www.ndtv.com
 Kelly School of Business Report on Tata Motors Limited Comprehensive
Strategic Analysis
 IHS Global Insight Report: India (Automotive)- July’09
 The Economic Times
 Business World
Honey Dogra.

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MENTOR’S NAME:- PROF. MEGHNA SHARMA

TEAM MEMBER’S NAME:-

 Indian Automobile Industry.....................................................................................4

 TATA Motors- Making Waves Internationally......................................................14

 Impact of Global Slowdown on TATA-JLR Deal.................................................19

INDIAN AUTOMOBILE INDUSTRY

• India ranks 12th in the list of the world's top 15 automakers.

Porter’s Five Forces Analysis of Indian Automobile Sector :-

• High Fixed costs:

• Slow market growth:

• Highly competitive industry:

2. Threat of New Entrants :-

• The replacement market is characterized by the presence of several small-scale suppliers

• A product’s price elasticity is affected by the presence of substitutes as its demand is

4. Bargaining Power of Suppliers:-

5. Bargaining Power of Buyers:-

• It specifies the impact of customers on the product.

• TATA Motors is vulnerable to greater competition at home. Foreign vehicle makers

stringent regulations relating to vehicular emissions. The proposed tightening of vehicle

TATA Motors- Making Waves Internationally :-

The reasons behind the acquisition were:-

 Company's global plans to reduce domestic exposure. The domestic commercial

considerable numbers in Europe in addition to other countries outside Europe as well.

Present and Future Plans:

Impact of Global Slowdown on TATA-

1. Brand Appeal and Endorsement

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