SUMMER TRAINING PROJECT REPORT

ON
“RETAIL AND CHANNEL FINANCE OF
COMMERCIAL VEHICLE INDUSTRY”
WITH REFERENCE TO TATA MOTORS
SUBMITTED IN THE PARTIAL FULFILLMENT OF THE REQUIREMENT OF
MASTERS IN BUSINESS ADMINISTRATION (2009-11))

SUBMITTED TO: UNDER THE GUIDENCE OF:

PROF. SAIRA BANOO SHARAD SHUKLA
“SUMMER TRAINING
COORDINATOR”

SUBMITTED BY
RAHUL TEWARI
MBA -SEM-III

NORTHERN INDIA ENGINEERING COLLEGE LUCKNOW

UTTAR PRADESH

PREFACE

1
Education becomes more meaningful when its theoretical aspects are combined with
practical experience. This provides an opportunity to the students to improve their
understanding of the studies.

MBA is a course, which combines both its theory and application as its content of study
in the field of management as a part of this course, every aspirant has to undergo at least
six to eight weeks “Summer Training” in an organization . The purpose of this training is
to expose the students or management sciences to real business situation and to provide
insight into the various functions carried out within the organization.

In order to use the theoretical knowledge I get the opportunity of “Summer Training” in
TATA MOTORS Limited Lucknow.

As complementary to training, I have prepared and submitted a project report on Channel

Finance & Market Potential of TATA MOTORS . It is an attempt to present on account
of practical knowledge and observations gathered during the vocational training.

RAHUL TEWARI

MBA

TO WHOM IT MAY CONCERN

2
This is to certify that MR. RAHUL TEWARI, a regular student of Northern India
Engeneering College Lucknow has completed the Summer Training project entitled
“RETAIL AND CHANNEL FINANCE OF COMMERCIAL VEHICLE
INDUSTRY” in the Organization TATA MOTORS LTD. During 10th June 10 to 10th
August 10 as a part fulfillment for the award of MBA Degree.

We wish him all success in his future endeavor.

Date: Project Guide:

Mr.Chandrashekhar
Area Manager
Commercial Vehicle
Retail & Channel Finance (UP & UK)

ACKNOWLEDGEMENT

3
No job or task can be completed without the co-operation and support of people around
us. I being no exception had to seek the help of others to make this project successful.
I would like to thanks TATA MOTORS Ltd. for providing me with an opportunity to
undertake Summer Training, which has been a learning experience for me.

A lot of individuals have contributed in the preparation of this project. I am thankful to

all of them for their timely help encouragement, support, valuable comments, suggestions
and many innovative ideas in carrying out these projects. It is my proud privilege and
pleasure to express deep sense of gratitude to these people.

Sir Mr. Chandrashekhar Manager, Area office LUCKNOW. I thank my parents for their
love, encouragement and comfort in my career.

My project would not have been completed without the guidance of staff members of the
TATA MOTORS Ltd.

. RAHUL TEWARI

TABLE OF CONTENT:

4
CHAPTER: I

INTRODUCTION OF COMMERCIAL VEHICLE (CV) INDUSTRY

Commercial vehicle

Light commercial vehicle

Commercial vehicles in India

Companies under respective categories

Indian c v industry - a perspective

The share of road transport in overall movement

Historical development

Industry structure

Vehicle classification

Technology and usage of commercial vehicles

Government policies

Demand & supply

Outlook for CV industry

CHAPTER: II
COMPANY OVERVIEW (TATA MOTORS)

5
History

Introduction of Tata Group

Tata Group Companies

About Tata Motors

Defense solution

Why Tata motors?

CHAPTER: III
A BRIEF INTRODUCTION OF TATA MOTOR’S COMMERCIAL VEHILES
AND ITS FINANCING SCHEMES

CHAPTER: IV
RESEARCH METHODOLOGY

CHAPTER: V
DATA ANALYSIS

CHAPTER: VI
FINDINGS AND RECOMMENDATION

BIBLIOGRAPHY

6
 CHAPTER: I

INTRODUCTION

OF COMMERCIAL

VEHICLE (CV) INDUSTRY

COMMERCIAL VEHICLE
A commercial vehicle is a type of motor vehicle that may be used for transporting goods
or passengers. The European Union defines "commercial motor vehicle" as any

7
motorised road vehicle, which by its type of construction and equipment is designed for,
and capable of transporting, whether for payment or not: (1) not more than nine persons,
including the driver; (2) goods and "standard fuel tanks". This means the tanks
permanently fixed by the manufacturer to all motor vehicles of the same type as the
vehicle in question and whose permanent fitting enables fuel to be used directly, both for
the purposes of propulsion and, where appropriate, for the operation of a refrigeration
system. Gas tanks fitted to motor vehicles designed for the direct use of gas as a fuel are
considered to be standard fuel tanks.

Examples of commercial vehicles

• Truck
• Semi truck (articulated lorry)
• Van
• Coach
• Bus
• Taxicab
• Box truck
• Truck-lorry
• Trailers

LIGHT COMMERCIAL VEHICLE

8
Light commercial vehicles (LCV) or category N1 is the formal term in the European
Union for commercial carrier vehicles with a Gross vehicle weight (GVW) of up to 3.5
tonnes.

Vehicles which qualify in this category are pickup trucks, vans and 3 wheelers all
commercially based goods or passenger carrier.

In fact, the LCV concept was created as a compact truck. It is usually optimised to be
ruggedly built, have low operating costs and powerful yet fuel efficient engines, ant to be
utilised in intra city operations.

COMMERCIAL VEHICLES IN INDIA

Commercial vehicles influence the trade, commerce and industry of a country in a major
way. Vehicles falling under this category are buses, trucks, ambulance, jeeps and many
others.

It comes in various uses such as transportation of goods, shipping and handling of

various commodities and so on. The future of companies manufacturing these vehicles is
very bright due to India's growing commercial sector. The export of commercial vehicles
has gone up to 72% breaking all previous records.

COMPANIES UNDER RESPECTIVE CATEGORIES:

9
 Ambulance
Force Motors Hindustan Motors Ltd. Mahindra & Mahindra Ltd.
Maruti Suzuki India Ltd. Swaraj Mazda Tata Motors

Buses
Ashok Leyland Eicher Force Motors
Hindustan Motors Ltd. Mahindra & Mahindra Ltd. Swaraj Enterprise
Tata Motors Volvo

Trucks

Ashok Leyland Eicher Force Motors

Hindustan Motors Ltd. Mahindra & Mahindra Ltd. Swaraj Mazda

Tata Motors Volvo

Tractors
Escorts ltd. Force Motors Swaraj Enterprise
Sonalika Tractors Mahindra Kisanmitra HMT Tractors
Tafe Tractors Indofarm Tractors

Defence Vehicles
Ashok Leyland Mahindra & Mahindra Ltd. Tata Motors

INDIAN C V INDUSTRY - A PERSPECTIVE

THE SHARE OF ROAD TRANSPORT IN OVERALL MOVEMENT

10
Although India has a well-developed rail network and a reasonably good inland water
transport network, road transport still accounts for a major share in the overall movement
of goods and people.

As of 1996, the country had an estimated road network of 2.88mn kilometres, of which
only about 1.4mn kilometers were surfaced. The national highway network of 34,100
kilometers, which carries almost 40% of total road traffic, accounts for less than 2% of
the total road network.

Freight movement in Billion Ton KMs

Rail Road Total % moved

____ _____ _____by road

1950-51 34 6 40 15%
1990-91 250 306 556 55%
1999-00 302 545 847 64%

Total Goods movement over the last decade has gone up by 291 Billion Ton KMs, an
increase of 52%.

Freight handled by road has increased by 239 Billion Ton KMs, an increase of 78% and
that handled by Rail has increased by 52 Billion Ton KMs or an increase of only 21%.

In passenger traffic, its share has improved from 26% of total passenger traffic in
passenger-km in 1951 to 85% in 1998. By 2000, the share of road transport in passenger
traffic increased to roughly 87%.
HISTORICAL DEVELOPMENT

The Indian commercial vehicles (CV) industry has a long history, possibly dating back to
the passenger vehicles industry. Telco, the first entrant in the segment, continues to be

11
the largest one to-date, with a market reach unrivalled by its competitors. Telco
pioneered production of commercial vehicles in the country with technical collaboration
of Mercedez Benz of Germany in 1954.

The industry has made a significant contribution to the country's industrialization and
progress. In fact, India achieved self-sufficiency in commercial vehicles, except in the
high-tonnage classes, where the demand has nonetheless been limited. The entry of
Ashok Leyland, with technology from British Leyland, marked the beginning of
competition in the truck and bus segment.

The substantial rise in petrol prices in 1976 lead to conversion of almost all CV to diesel
engines. The continuous increase in petrol prices since then and the subsidy provided to
diesel increased flavor for diesel commercial vehicles continued till date.

The next major change in the industry came about in late eighties, when the superior
Japanese Light Commercial Vehicles (LCV) made their debut in India. The Government
of India allowed large concessions on foreign investment and import of technology to
boost fuel conservation. This led to the entry of Japanese manufacturers forming joint
ventures with Indian companies, viz.,

 DCM / Toyota
 Swaraja / Mazda
 Allwyn / Nissan
 Eicher / Mitsubishi
 Bajaj Tempo / Daimler Benz

Perhaps the only player who did not seek the collaboration of a foreign manufacturer for
manufacturing LCVs was Mahindra & Mahindra.

Indian manufacturers of Medium and Heavy Commercial vehicles also went in for
collobaration with foreign companies, viz.,

12
 Ashok Leyland / Hino
 Hindustan Motors / Isuzu
 Simpsons / Ford

The Japanese invasion, however, fizzled out very soon as the new entrants ran into losses
as a result of the rising yen. This brought to the fore the critical role of indigenisation as a
means of ensuring steady growth and survival during difficult times. The exception to
this was Eicher Motors, who have collaborated with Mitsubishi of Japan, and Swaraj
with Mazda Motor Corporation.

However, Telco was the biggest beneficiary of the fiasco. Telco soon upgraded its
products to match the Japanese in style and finish, nonetheless with much the same
aggregates, with the result that it emerged as the main contender by cornering more than
50% of the LCV market.

The marginal players in the commercial vehicle industry like Hindustan Motors, Premier
Automobiles Ltd and Standard Motors Pvt Ltd withdrew from LCV market in late
eighties due to stiff competition in passenger car market and their inability to compete in
the CV market.

During the decade, 1980-90, the commercial vehicle (HCV and LCV combined) sales
has increased from 68,392 to 141,098, at a CAGR of 7.5%.

The industry witnessed a drop in sales in 1986 because of economy slowdown and again
in 1991 and 1992 as a result of severe credit crunch and recession in the economy. But
with the revival in economy it zoomed back in 1993 and witnessed an above average
growth till 1997.

Than a slow down in demand was against seen, in 1998 and 1999, later followed by a
robust growth in 2000. But this growth seems difficult to be sustained in the current

13
fiscal, as drought like conditions are persistent in Gujarat, Rajasthan and Madhya
Pradesh, resulting in the fall in freight rates. Moreover the drive against diesel vehicles,
also seems to have made some impact. However a good harvest, supported by increased
freight rates may cause some demand revival during the year.

INDUSTRY STRUCTURE

VEHICLE CLASSIFICATION:

14
The Motor Vehicle Act classifies commercial vehicles, based on Gross Vehicle Weight,
(GVW) as

Light Commercial Vehicles (LCV) - Upto 7.5 Tonnes

Medium Commercial Vehicles (MCV) - 7.5 - 12.0 Tonnes
Heavy Commercial Vehicles (HCV) - More than 12.0 Tonees

As indicated in the table below, sales of LCVs kept pace with HCVs from FY94 to
FY96. But thereafter the gap between M&HCVs and LCVs has widened. The former
now contributes 65% of the total commercial sales against 35% of LCVs.

Sales FY94 FY95 FY96 FY97 FY98 FY99 FY2000 CAGR

LCVs 74,462 93,703 128,779 84,109 62,925 56,344 60,124 (3.5%)
M&
77,108 104,809 128,094 151,475 93,628 83,645 111,195 6.3%
HCVs
Source: SIAM

M&HCVs can also be classified into two categories depending on their usage as trucks
and buses. Buses are passenger carriers. Trucks include goods carriers along with
specialized vehicles like tippers, dumpers, tractor-trailers etc.

The composition of truck sales as a total of HCV sales fluctuated between 67% and 80%
in the nineties. This wide variation in composition of HCV sales is due to the cyclical
nature of truck sales compared to steady sales witnessed by buses. Therefore, during a
downturn in truck demand, the contribution from buses, though steady in volumes,
increases in terms of percentage of total HCV sales.

The contribution by bus sales to total M&HCV sales has increased from 18.5% in FY97
to 22% in FY2000. In terms of truck sales, Telco commands a leadership by cornering
67% of the total truck sales with the rest taken up by Ashok Leyland.. In the bus

15
segment, Ashok Leyland had a market share of 45% in FY2000 with the rest being taken
by Telco.

INSTALLED CAPACITY

The total installed capacity is estimated at nearly 330,000 units per annum in FY2000.
The present and expected capacities of major players in CV segment is as given below.
Though, Telco has announced major expansion plans, taking into account the present
financial situation of the company it is very difficult to materialize. No new capacity
addition is expected to take place for the next two years and capacity to remain constant
at 330,000 in FY01.

Company/year FY97 FY98 FY99 FY2000 FY01(P)

Telco* 202,000 220,000 225,000 225,000 225,000
ALL 50,000 50,000 50,000 50,000 50,000
M&M* 10,000 10,000 10,000 10,000 10,000
Eicher Motors 12,000 12,000 12,000 12,000 15,000
Bajaj Tempo* 25,000 25,000 25,000 25,000 25,000
Swaraj Mazda 5,000 5,000 5,000 5,000 5,000
Others 15,000 15,000 15,000 15,000 15,000
Total 319,000 325,000 330,000 330,000 333,000
*These companies have flexibility in using capacities of other 4-wheelers to produce
CVs.

Source : SIAM & Probity Research

The production of M&HCVs has increased from 48,652 in FY80 to 112,308 vehicles in
FY2000 at a CAGR of 4.3%. The production of trucks has increased from 34,174
vehicles in FY80 to 85,139 vehicles in FY2000 at a CAGR of 4.7%. The production of
buses has increased from 14,478 in FY80 to 27,169 in FY2000 at a CAGR of 3.2%. The
contribution of buses to total M&HCV production remained range bound between 22 to
30% in the last 15 years.

TECHNOLOGY AND USAGE OF COMMERCIAL VEHICLES

16
 LOAD PROVIDERS

Transport sector consists mainly of rail and road segments. Railways carry long distance
heavy cargo such as fertilizer, steel, grain, salt etc. HCVs complement and compete with
railways for such cargo.

M&HCVs are used for transport of heavy commodities such as steel cement, fertilizers
etc. LCVs are preferred for high volume low bulk cargo such as consumer goods,
textiles, for short distance haulage.

The payload determines the earning capacity of the vehicle, since freight rates are
charged on the basis of ton/ km transported. The payloads in the Indian market range
from 0.675 ton to 40 ton.

LOADING PATTERN

In India, overloading ie., loading the vehicle with weight in excess of its rated payload is
the norm, although it is a punishable offence. For overloading, the size of platform and
power of engine play a major role.

The important factor for evaluating production or demand will be vehicle ton produced/
sold, rather than number of vehicles. For example: for a requirement of 6 ton payload the
transporter can purchase either 3 vehicles with 2 ton payload or 2 vehicles with 3 ton
payload.

The CVs are compared, based on price per payload vice-versa operating cost of the
vehicle.

TECHNOLOGY INFUSION

17
In India, trucks and buses have the same chassis and other features, with only the body
being different. Elsewhere in the world these two differ in terms of suspension, steering
systems, number of axles etc.

As India lacked expertise in vehicle manufacture, technology had to come from outside
the country. Telco had a collaboration with Mercedes-Benz for some time, however it
was discontinued later.

Oligopolistic conditions in the commercial vehicles segment prevented technology

advancement. The truck segment is still dominated by single or twin axle vehicles. Very
low prices and low labor costs favored small fuel-inefficient units.

Further, the over loading possibility with single axle trucks in comparison to multi axle
vehicles (MAV) nullifies the financial advantages resulting in subdued demand for
MAVs in the country. To make matters worse for MAVs, congestion at truck terminals in
urban centers virtually rule out the entry for them.

Commercial vehicles business is characterized by strong entry barriers of high initial

cost, requirement of strong distribution/ after sales service network, vendor/ ancillary
network, long gestation period and technological adaptations to peculiar Indian
conditions etc. Due to these barriers, commercial vehicle sector, unlike passenger cars,
does not face any significant immediate threat from new MNC ventures.

Product life-cycle for CV has become shorter as players have accelerated new product
launches to retain market shares. New products that cater to niche consumer segments
have also increased the market segmentation.

High ancillarisation is an integral feature of the industry. Typically 60-70% of the

components are sourced from third party vendors. Development and upkeep of an
ancillary network is one of the most crucial tasks.

18
On the face of balance sheet, material cost accounts for about 70-75% of total cost for
CVs. This however should be interpreted keeping in mind that typically, about 60-70%
of components are sourced from outside. These components, treated as material cost have
in-built overheads (which are fixed cost) of the vendors.

EMISSION NORMS:

India is implementing emission norms in two phases. The Euro I norms were
implemented in April 2000. However, in the national capital region, Euro II norms have
become applicable wef 1 April, 2000 and these norms are to be progressively
implemented in other major cities, starting 1st January 2001.

Ashok Leyland has taken the route of improving the existing engines viz., AL, Hino and
IVECO thro' appropriate technologies whereas Telco has gone in collaboration with
Cummins of UK and launched engines conforming to Euro 1 emission norms. Both AL
and Telco working for Euro 2 norms to meet the stipulated date by the Government.

GOVERNMENT POLICIES

The Commercial Vehicle sector is controlled by GOI policies on depreciation norms,

Motor Vehicles Act, and diesel pricing.

The automobile industry is a major contributor to the GOI exchequer in the form of
excise duty, customs and other levies. But the government expenditure for development
of roads is just 25% of the total contribution to the GOI exchequer. For example in FY95,

19
the GOI spent just Rs3.5bn on roads compared to automobile industry's contribution to
GOI exchequer of Rs16.62bn.

The liberal foreign technology policy, lead to substantial improvement in technology of

commercial vehicles. But at the same time the import bill jumped at a rapid pace as these
vehicles were having high import content.

The broad banding introduced in 1984, has helped producers to optimize installed
capacity and adjust the product mix to market demand. This in turn helped in obtaining
economies of scale for larger players like Telco and M&M.

DEPRECIATION NORMS

The change in depreciation norms for CV in the finance bill affects the demand for
vehicles, as they are purchased by companies to obtain tax shelter along with utility.

In the past, the GOI changed the depreciation norms to control the tax collection from
corporations. For example: The decrease in depreciation rates from 33% in 1989-90 to
20% in 1990-91 lead to drop in MUVs and CVs.

MOTOR VEHICLES ACT

Until 1986, trucking was a regulated activity with truck operations restricted to short-haul
intra-state transport. Multi-state trucking permits were issued by states, subject to certain
ceilings. The ceiling on national permits was removed in 1986, resulting in adequate
availability of trucking capacity in the economy.

20
The Motor Vehicle Act came into effect from July 1989. It was intended to streamline
laws related to emission norms, maximum age of vehicles, restriction on payloads and
other safety measures.

But the law was never implemented with full heart, leading to laxity of norms in all
aspects of automobile industry. For example: over loading of vehicle by three times,
usage of very old vehicles to carry lower loads for shorter hauls etc.

The cut-off life of vehicles and overloading are governed by Motor Vehicles Act.
Therefore any change in cut-off age fixed for scrapping of old vehicles affects the
number of vehicles available to carry the load in the country. For example: The recent
Supreme Court order to scrap more than 15 year old commercial vehicles in the capital,
will lead to reduction of 15,000 vehicles. This will lead to increased demand for new
commercial vehicles as the transport tonnage drops substantially.

DIESEL PRICE

The availability and prices of diesel is controlled by the GOI. In the past, the diesel prices
had been controlled by cross subsidies from high petrol prices. But as a result of phased
dismantling of Administered Price Mechanism (APM), the diesel prices in the country
have been linked to international crude prices. Thus with fluctuations in international oil
prices the operational cost of commercial vehicles will fluctuate.

The availability of diesel is controlled by the GOI through restriction on distribution and
imports. The road transport was paralyzed during Gulf war due to shortage in diesel in
the country, as is heavily dependent on imports of oil.

From 1998, the prices of diesel are linked to international oil prices. This will lead to
fluctuation in diesel prices which affects the operating cost of the vehicle.

21
In 1999-2000 budget, one rupee cess was imposed on per liter diesel, which will be used
for funding the National Highway project. This has nullified the drop in prices over the
last six months due to drop in international oil prices to the decade's lowest. Presently
due to decline in diesel subsidies by the GOI, diesel prices have shot up.

The final price of the vehicle is influenced by excise duty charged by the GOI on ex-
factory price. Currently the excise duty for commercial vehicles rules at 16%.

The 1999-2000 budget increased duties on MUV's from 30% to 32%. Any change in
excise duty for MUV affects the demand for the same. For example: the differential in
duty structure between 8 seater and 10 seater changed the demand for respective
segments.

Over and above state governments charge sales tax and octroi to effect the final price to
customer. In the current year, uniform sales tax to the tune of 12% has been levied in all
the states across India. This has in turn affected significant increase in the final prices of
commercial vehicles, northern states being the main casualty.

KEY EARNING DRIVERS

Macro Economic Trends &

Government Policies

Level of Multi Motorisation

22
Vehicle Price
-2 -1Sensitivity
0 1 2 -2 least favourable
Availability
Traffic &infrastructure
ofReplacement
Finance 2 most favourable
Demand
 CV Market
Key Demand
Drivers

From To

ECONOMIC TRENDS:

The availability of freight depends on the macro economic trends in the country.
Therefore, an improvement in economic trends broadly represented by growth in GDP
helps in increasing the freight availability.

GOVERNMENT POLICY:

The GOI policy towards depreciation norms, excise duty sales tax etc will have a bearing
on the demand for MUVs and CVs. The levy of 12% uniform sales tax already has and
may in the near future play a role in the performance of the industry. The GOI plans to
increasing the depreciation benefit available for purchase of CVs. If the policy is
implemented it will give boost in demand for CVs.

23
Movement in diesel prices:

The diesel prices are controlled by the GOI notifications. As a measure of phased
dismantling of APM, diesel prices have been linked to international oil prices. This along
with drop in oil prices to a decade low, lead to drop in diesel prices. This has helped in
improving operating margins for operators. But the imposition of one rupee cess, to be
used for building road infrastructure, has nullified the effect. Therefore, changes in the
GOI policy have to be traced as it has a strong bearing on operating margins of operators.
The recent hike in diesel prices have imposed immense pressure on the transport
companies and fleet operators, as they are also suffering from lower freight rates.

Policy on scrapping of old vehicles:

The recent notification by judicial body to ban commercial vehicles above 20 years in
age in New Delhi will lead to a demand for at least 15,000 vehicles to be satisfied in
short period of time. If similar measures are implemented in other parts of the country
will boost demand for new vehicles.

Multi-motorisation:

The concept of multi-modal transportation has not been progressed much in India. The
Railways, totally state-owned, and goods movement by road, wholly with the private
sector, have been developing quite independently. With the entry of MNC Logistics
companies, development of multi-modal transportation has just begun. A recent
example is the introduction of the 'Roll On Roll Off' (RO-RO) by the Konkan Railway
Corporation. The success of this experiment has led the Railways to believe that this can
be extended in other areas also.

The effect of multi-modal transportation will be felt by the road industry only when
containerisation of cargo takes place in a larger way.

24
Price Sensitivity:

Although the cost of trucks as well as operating costs have been increasing steadily over
the years, the freight rates have not been commensurate. Added to this, there is a large
population of old vehicles in the market which compete in the market offering lower
freight rates. The net result has been that truck owners have been very reluctant to pay
higher prices. However, there is a hint of change in some segments like earthmoving
operations and ODC transportation, where truckers are now willing to pay a higher price,
with the better returns on investment.

Availability of Finance:

Until two decades ago, financing was almost entirely done by private financiers.
Despite the very high interest rates charged by them, they were preferred due to credit
being extended by them without delay or long-drawn procedural formalities. Now the
Non Banking Finance Companies have now become the principal source of finance and
nationalised banks have also been extending credit to truckers. Today there is a good
credit line available in the form of NBFCs and Banks.

Another development has been leasing arrangements entered enabled by vehicle

manufacturers themselves.

Traffic & Infrastructure:

The implementation of infrastructure projects will have a positive impact on demand for
CVs & UVs as they are extensively used in transportation of material and people
requirement of the projects. Therefore the starting of mega projects like National
Highway project, Dhabol power project-II will trigger the demand for segment.

Replacement Demand:

25
The freight rates determine the revenue component of fleet operators. The improvement
in freight rates consistently, over a period of time will improve operating profits and
build confidence measure for operators. The increasing operating margins combined with
improvement in fleet capacity utilization will help in boosting the demand for
commercial vehicles. Presently, where on one end, the diesel prices have shot up
considerably, on the other end, frieght rates have come down substantially due to lack of
business. This has in turn affected the operating margins of the fleet operators.If this
continues, the fleet operators will not be in a position to extend their operations, thus
ultimately pulling down the commercial vehicle sales.

DEMAND & SUPPLY

DEMAND

Both passenger carrier (bus) and goods carrier segments have a predominant customer
segment each. The passenger segment derives its major portion of sales from STUs
(approximately 80%) and private bus operators. But for goods carrier major portion of
sales is from fleet operators and transport companies (approximately 80%) and the rest
from government institution and private bodies.

Since 80% of CV's are purchased on credit, the availability of credit is a major factor
influencing demand. The credit squeeze affects the demand negatively. For example, the
demand dropped in 1983, 1991 and 1998 mainly for this reason. The cost of credit affects
the operating margins of transport operators, by way of raising the break-even point of
fleet operations. The other important factors influencing demand of CV are depreciation
norms, diesel prices and changes in the Motor Vehicle Act.

Most of the CVs are purchased by corporate entities (institutions, companies,

partnerships etc) the depreciation norms provide tax shelter and affect the purchase of
CVs.

26
The availability and price of diesel plays a key role in operating profits of the vehicle as
about 45% of the cost goes towards buying the fuel. An increase in diesel prices causes
imbalance in economics of fleet operators as they will not be able to pass on the increase
in cost to end-users.

Market expansion for freight availability for trucks is largely a function of economic
growth and shortfall in railway's haulage capacity. The increase in economic activity
helps in increased freight availability and hence has a positive impact on demand for
CVs. Over and above the shortage in competent mode of transport, railways help the road
traffic to increase freight movement through CVs and in turn increase demand for new
trucks.

Demand for buses is largely dependent on allocation of state budgets as almost 90% of
the buses are purchased by the state transport undertakings. Thus, the State budget
allocation for purchase of new buses by state transport plays a key role in demand for
buses.

The sales of CVs has increased from 131,668 in FY91 to 171,319 vehicles in FY2000 at
a CAGR of 3%.

Trend In CV Sales

CVs FY91 FY93 FY94 FY95 FY97 FY98 FY99 FY2000

Volume 131,668 121,541 150,779 198,645 235,743 157,410 139,930 171,319
Growth 6.5 (11.8) 24.1 31.8 (8.3) (33.2) (11.1) 22.4
(%)
Source : SIAM

27
As indicated in the table above, the industry has seen a wide fluctuation in sales volumes
over the past decade. After posting a positive growth in FY91 and FY92, the segment
witnessed a downturn in FY93 mainly due to a credit squeeze, but bounced back in late
FY94 to record a yoy growth of 32% in FY95. After high double digit growths in the
years FY94, FY95 and FY96, cyclicality again raised its head and from H2 FY97
onwards, the sales of CVs started dwindling, leading to a drop of 33%yoy in FY98. This
downtrend continued well into FY99. However, things bounced back in FY2000 with
sales recording a growth of 22.4%yoy. This in turn seems to be short lived as in the first
quarter of FY01, demand has slowed down to just 0.3%yoy.

Trend In M & HCV Sales

M&HCV FY91 FY93 FY94 FY95 FY96 FY97 FY98 FY99 FY2000
s
Volume 75,661 67,981 76,245 103,733 128,362 151,117 92,657 83,668 111,195
Growth (0.2) (20.2) 12.2 36.1 23.7 17.7 (38.7) (9.7) 32.9
(%)
Source : SIAM

It is interesting to note why sales of HCVs have shown a trend as they have in the last
nine to ten years. The so-called boom period from FY94 to FY96 was due to the fact that
incremental freight movement passed on to the roads as the railways hardly added any
tonnage during those years. This bias towards road traffic was also due to lower diesel
prices, which constitutes around 45% of total operating costs of a truck. Opposed to this
had been the rise in railway freight rates by around 8% annually.

This growth trend started reversing in late FY97 when commodities like coal and steel
started being imported from abroad in a liberalized economic environment. Imported coal
costed 8 to 25% less than local coal and many coal based industrial consumers switched
to imported coal resulting in reduced intra-country movement of these commodities.
Secondly, relocation of industries close to the market also caused lesser movement in
freight traffic. Thirdly, the downtrend was a result of demand-supply mismatch in freight

28
(tonnage-km) in the country. An excess freight capacity was built up in the economy due
to heavy addition of vehicles from FY93 to FY97. But with a drop in freight availability
in the country, due to a slow-down in domestic production and exports, it lead to lower
utilization of existing vehicles by fleet operators. But with an intention to improve fleet
usage, operators started quoting lower freight rates, which reached its bottom in mid
1998.

As fleet operators were unable to use the existing fleet optimally, there were no plans to
add new vehicles to the fleet. Even an attempt made by CV manufacturers to provide
heavy discount and low financing rates didn't induce operators to opt for addition of
vehicles.

But with improvement in freight rates by 20% since the bottoming out in mid 1998, the
operating margins of fleet operators improved. The freight availability improved as a
result of an increase in agricultural production in the country. Conditions improved
during FY99 as the government undertook steps, to increase investment in infrastructure
projects. This has affected an increase in freight availability in the country, which in turn
improved usage of fleet by operators and boosted the confidence to go for new CVs.
Also, the lower interest rates and easy credit availability assisted an increase in demand
for CVs.

In FY2000, with a strong revival in the economy, which grew at 8%, sales of CVs posted
a rise of 22.4%yoy in volumes.

In the last budget, the focus has been on highway development projects, which includes
the National Highway Project. This in turn is expected to have a positive effect on
commercial vehicle sales for 2001. But as of now, the sales recorded have not been so
encouraging. The first quarter sales have in fact declined over last year.

29
During FY2000, the M&HCV segment recorded a 33%yoy growth. In FY01, this growth
is expected to slow down due to the above mentioned factors. The M&HCV demand in
the long-term will increase at a CAGR of 9 to 10% till FY2005.

New Entrants
.
In June 1998, Volvo introduced a 40 ton GVW tractor-trailer FH-12 in India. The
company has set up production base for 4,000 vehicles at Rs3bn near Hoskote, Bangalore
with initial indigenisation level of 40%. Recently a 40 ton, FM-7 tractor-trailer was also
launched.

Daewoo Motors plans to enter the bus segment in FY2000 by offering 6 ton GVW
vehicle fitted with four cylinder turbo-charged diesel engine. The initial capacity will be
about 15,000 vehicles. The diesel engines will be imported from Daewoo Avia plant in
Czechoslovakia as volumes are not big enough to set up production base for engine
assembly. It also intends to set up a parallel dealership chain to sell its buses in the
country.

Tatra Udyog has entered the higher GVW segment in 1998 in collaboration with Venus
Udhyog Limited, U.K. and formed a JV named Tatra India Limited. It supplies to niche
markets like tippers and special vehicles used in large infrastructure projects and defence
supply.

The entry of new players will improve the technology of vehicles and force the existing
players to introduce technologically superior vehicles. Though the new technology is at
hefty premium, the manufacturers claim that it reduces the operating cost of the vehicle
ie Rupees per km running of vehicle.

Trend In LCV Sales

LCVs FY94 FY95 FY96 FY97 FY98 FY99 FY2000

30
Volume 74,462 93,703 128,779 84,109 64,753 56,262 60,124
Growth 40.0 25.8 37.4 (34.7) (23.0) (13.1) (6.9)
(%)
Source : SIAM

LCV sales also seem to follow that of M&HCVs albeit with a time lag. They rose from
FY94 and reached a peak in FY96 when HCV sales had started decelerating. The last
four years have been bad. In FY2000, too, when the M&HCV segment witnessed
growth, LCV sales came down. The trend continuous in the first quarter of FY01 also.
During this period, sales of LCVs have risen by 6.8% as compared to a fall of x%yoy in
the M&HCV segment. It is expected that the LCV segment will be able to garner higher
sales growth in the future, as short distance transport will grow at a higher rate than long
distance haul.

SUPPLY

Market Share For M&HCVs

Company FY2000 FY99

Ashok Leyland 33.6% 34.9%
Telco 66.2% 64.7%
Hindustan Motors 0.2% 0.4%
Source : SIAM

The M&HCV sector is an oligopoly with the control resting with Telco and Ashok
Leyland. Hindustan Motors is a marginal third player with a market share of 0.2%. Telco
commands a market share of 67% of the total M&HCV sales in the country.

Ashok Leyland has seen a slight decline in its market share in FY2000 to 33.6% as
compared to 35% last year. The company has attributed this to the fact that it has gone in
for restructuring of its dealer network in the north and eastern regions of the country.

31
Market Share In LCV Segment

Company FY2000 FY99

Ashok Leyland 0.8% 1.0%
Bajaj Tempo 7.5% 6.5%
Eicher 11.5% 9.4%
M&M 10.8% 9.0%
Swaraj 6.6% 5.3%
Telco 62.8% 68.7%
Source : SIAM

The LCV segment is populated with six players with Telco being the traditional market
leader by a wide margin. Telco launched its fully indigenous Tata 407 (GVW-4T,70HP)
in 1986 followed by Tata 608, 207, 609, 709E,909 and 1009, Telco has been
continuously introducing new models in the LCV segment in the last seven years. Its
LCVs have a wide range of applications as minibuses, trucks, vans and ambulances.
However, since the last four years, Telco is continuously been losing its share of the
market as more aggressive players like M & M, Swaraj Mazda, Eicher Motors and Bajaj
Tempo have come to cater to the market with their new models. Eicher Motors, for eg,
has come to occupy the intermediate range CV segment and has suceeded to create a
niche for itself by rolling out ambulances, egg/broiler carriers, school buses etc, which
cater to specific customers. Swaraj Mazda, too, has improved its market share to 6.6% in
FY2000, against 5.3% in the previous year.

Exports

India is still a player of no consequence in the world auto market. This is because the
world auto market is dominated by cars where India lags behind compounded by
limitation on transnational shipment of CVs. The major destinations of Indian exports
were the sub-continental neighbors and the African states to a limited extent.

The exports of CV from the country have dropped from 12,353 in FY94 to 9,912
vehicles in FY2000. Exports have been dropping in the last three years due to the drop in

32
demand in Asian countries. But with an improvement in the Asian economy we expect
the exports to improve at 5% in the next three years. The increasing presence of
multinational players like Volvo with an intention to make India as a production base for
Indian sub-continent will help in increasing exports in the near future.

DEMAND - SUPPLY

Given the performance in the first three months of FY01, it is expected that the domestic
demand for commercial vehicles, will increase by 7.3%yoy during the year. As a result,
domestic demand will increase from 171,319 in FY2000 to 183,827 units. The over
capacity in the CV segment will be decreasing from the peak level of 190,435 vehicles in
FY99 to 149,173 units in FY01.

FY99 FY2000 FY01(P)

Demand
M&HCV 79,124 106,106 111,411
LCV 50,698 55,301 61,820
Domestic demand 129,822 161,407 173,231
Exports 10,108 9,912 10,596
Total demand 139,930 171,319 183,827
Supply
Capacity 330,000 330,000 333,000
Over capacity
Volume 190,070 158,681 149,173
As % of capacity 57.6 48.1 44.8
yoy Growth %
M&HCV (10.8) 34.1 5.0
LCV (8.6) 9.1 12.0
Domestic demand (11.6) 24.3 7.3

33
 Exports (28.2) (1.9) 6.9
Source : SIAM & Probity Research

REGION WISE SALES BREAKUP

If we compare region wise sales data for two years (CY99 and CY98), we find some
interesting changes. In 1998, sales was maximum in the western region with Maharashtra
leading the pack. However, in 1999, the northern region just managed to inch ahead of
the western region with Uttar Pradesh beating others to the post. The southern region
came in third in both the years. The industrialized states in the west have traditionally
seen higher truck sales.

Truck Sales Break-up

Region Sales (1999) %age of total Sales (1998) %age of total
sales sales
North 24,839 29.3 14,168 27.7
East 14,686 17.4 9,041 17.6
West 24,160 28.5 16,453 32.1
South 16,701 19.7 8,049 15.7
Exports 4,296 5.1 3,516 6.9
Total 84,682 100 51,227 100
Source : SIAM

Interestingly, Southern India leads in sales of buses. This has largely been due to the
policy initiatives of the State Governments and better development of roads in the
Southern States.

Bus Sales Break-up By Region

Region Sales (1999) %age of total Sales (1998) %age of total
sales sales
North 4,962 20.3 5,515 21.4
East 2,579 10.5 3,066 11.9

34
 West 6,971 28.5 5,408 21.0
South 7,057 28.9 9,219 35.8
Exports 2,889 11.8 2,561 9.9
Total 24,458 100.0 25,769 100.0
Source : SIAM

East zone lags behind the others, mainly because the transport requirements of the region
are met by railways. The region is also trailing in terms of road infrastructure.

LCV Sales Break-up By Region

Region Sales (1999) %age of total Sales (1998) %age of total
sales sales
North 15,746 19.5 13,668 18.2
East 7,118 8.8 7,588 10.1
West 27,207 33.8 27,622 36.9
South 24,606 30.5 18,240 24.3
Government 5,876 7.3 7,816 10.4
& Exports
Total 80,553 100.0 74,914 100.0
Source : SIAM

There is also one more segment, called the intermediate commercial vehicle market,
which falls between the HCV and LCV segments. Here the vehicles are in the load
category of 8 to 10 ton GVW. Manufacturers viz Telco, Ashok Leyland, Eicher Motors
and Swaraj Mazda operate in this segment. Vehicles in these segment often substitute for
medium or heavy commercial vehicles in trunk routes and cities.

35
 OUTLOOK FOR CV THE INDUSTRY

The rationalization process in the sales tax regime and the cost increases effected by the
implementation of the Euro emission norms has seen to it that sales of M&HCVs in the
first quarter of FY2000 has fallen as compared to Q1 FY2000. Going into the future, any
hike in diesel prices will once again hurt sentiments. Similar is the story in the LCV
segment too. Domestic sales of LCVs have inched up marginally by 1.8%yoy in the first
three months of FY01. However, higher exports, mainly by Telco, has saved the day for
the segment.

In the long term, the market will slowly shift towards multi-axle vehicles at one end and
LCVs at the other end, as is the worldwide trend at present.

Mature market tonnage profile

Indian CV tonnage pro

M
O

U
V

E
L

M/H CVs (8-16 t) High tonnage CVs

LCVs (< 8 t ) 36

Tonnage
 Already, vehicles made by Volvo are being recognized for their better performance in
terms of lower turnaround time and lower driver fatigue. This would require large
investments in highways which is expected as the government of India continues with its
reform agenda. The entry of high tonnage vehicles will contribute towards changing the
structure of CV segment in the long run. This will also improve the technology of
vehicles available in the country.

Increased public awareness on the conservation of the environment and prevention of

pollution and the proactive approach of the judiciary has compelled successive
Governments to introduce more stringent emission laws. To meet these emission
standards, it would become necessary to mandate the age of vehicles as well as restrict
overloading, which is currently very widely prevalent. In terms of technology, this will
also induce use of alternate fuels like CNG.

The likely age profile of commercial vehicles in 2003 is compared with the present
position.

3500 Years
0to5 5to10 10to15 15to20 >20
3000

2500

2000
in ‘000s
Parc

1500

1000

500 1998 2003

37
 Source: SIAM
In the long run, ie five to eight years, CV sales will be able to witness a growth of 8 to
9% CAGR leading to substantial improvement in financials of CV manufacturers. The
total value of the CV Industry as per S&P DRI will be approx US$10 billion by 2010.

250 1000

900

200 800 Mult

i
4X4
700
Utili
Other LCV
150 600 ty
Truc ks
500
Bus es
100 400
Cars
300

50 200

100

0 0
1998 1 9 99 2 00 0 2004 2005

Source: S&P DRI

38
 CHAPTER: II

COMPANY OVERVIEW
(TATA MOTORS)

39
 HISTORY

The beginnings of the Tata Group can be traced back to 1868, when Jamsetji
Nusserwanji Tata established a trading company dealing in Opium in Bombay. This was
followed by the installation of Empress Mills in Nagpur in 1877. Taj Mahal Hotel in
Bombay was opened for business in 1903. Sir Dorab Tata, the eldest son of Jamsetji
became the chairman of the group after his fathers death in 1904. Under him, the group
ventured into steel production (1905) and hydroelectric power generation(1910). After
the death of Dorab Tata in 1934, Nowroji Saklatwala headed the group till 1938. He was
succeeded by JRD Tata. The group expanded significantly under him with the
establishment of Tata Chemicals (1939), Tata Motors and Tata Industries (both 1945),
Voltas (1954), Tata Tea (1962), Tata Consultancy Services (1968) and Titan Industries
(1984). Ratan Tata, the incumbent chairman of the group succeeded JRD Tata in 1991.

INTRODUCTION OF TATA GROUP

The Tata Group companies operate in seven business sectors: Communications and
Information Technology, Engineering, Materials, Services, Energy, Consumer Products
and Chemicals. The Group was founded by Jamsetji Tata in the mid 19th century, a
period when India had just set out on the road to gaining independence from British rule.
Consequently, Jamsetji Tata and those who followed him aligned business opportunities
with the objective of nation building. This approach remains enshrined in the Group's
ethos to this day.

40
The Tata Group is one of India's largest and most respected business conglomerates, with
revenues in 2007-08 of $ 62.5 billion (Rs. 251,543 crore). Tata companies together
employ some 350,000 people. The Group's 27 publicly listed enterprises have a
combined market capitalization of some $ 60 billion and a shareholder base of 3.2
million. The major Tata Companies are Tata Steel, Tata Consultancy Services, Tata
Motors, Tata Chemicals, Tata Communications, Tata Power, Indian Hotels and Tata Tea.
The Tata Group has operations in more than 85 countries across six continents, and its
companies export products and services to 80 countries.

The Tata family of companies shares a set of five core values: integrity, understanding,
excellence, unity and responsibility. These values, which have been part of the Group's
beliefs and convictions from its earliest days, continue to guide and drive the business
decisions of Tata companies. The Group and its enterprises have been steadfast and
distinctive in their adherence to business ethics and their commitment to corporate social
responsibility. This is a legacy that has earned the Group the trust of many millions of
stakeholders in a measure few business houses anywhere in the world can match.

They are, by and large, based in India and have significant international operations. The
total revenue of Tata companies, taken together, was $70.8 billion (around Rs325,334
crore) in 2008-09, with 64.7 per cent of this coming from business outside India, and
they employ around 357,000 people worldwide. The Tata name has been respected in
India for 140 years for its adherence to strong values and business ethics.

Every Tata company or enterprise operates independently. Each of these companies has
its own board of directors and shareholders, to whom it is answerable. There are 27
publicly listed Tata enterprises and they have a combined market capitalisation of some
$60 billion, and a shareholder base of 3.5 million. The major Tata companies are Tata
Steel, Tata Motors, Tata Consultancy Services (TCS), Tata Power, Tata Chemicals, Tata
Tea, Indian Hotels and Tata Communications.

Tata Steel became the sixth largest steel maker in the world after it acquired Corus. Tata
Motors is among the top five commercial vehicle manufacturers in the world and has

41
recently acquired Jaguar and Land Rover. TCS is a leading global software company,
with delivery centres in the US, UK, Hungary, Brazil, Uruguay and China, besides India.
Tata Tea is the second largest branded tea company in the world, through its UK-based
subsidiary Tetley. Tata Chemicals is the world’s second largest manufacturer of soda ash
and Tata Communications is one of the world’s largest wholesale voice carriers.

In tandem with the increasing international footprint of Tata companies, the Tata brand is
also gaining international recognition. Brand Finance, a UK-based consultancy firm,
recently valued the Tata brand at $9.92 billion and ranked it 51st among the world's Top
100 brands. Businessweek magazine ranked Tata 13th among the '25 Most Innovative
Companies' list and the Reputation Institute, USA, recently rated it 11th on its list of
world's most reputable companies.

Founded by Jamsetji Tata in 1868, Tata’s early years were inspired by the spirit of
nationalism. It pioneered several industries of national importance in India: steel, power,
hospitality and airlines. In more recent times, its pioneering spirit has been showcased by
companies such as TCS, India’s first software company, and Tata Motors, which made
India’s first indigenously developed car, the Indica, in 1998 and recently unveiled the
world’s lowest-cost car, the Tata Nano.

Tata companies have always believed in returning wealth to the society they serve. Two-
thirds of the equity of Tata Sons, the Tata promoter company, is held by philanthropic
trusts that have created national institutions for science and technology, medical research,
social studies and the performing arts. The trusts also provide aid and assistance to non-
government organisations working in the areas of education, healthcare and livelihoods.
Tata companies also extend social welfare activities to communities around their
industrial units. The combined development-related expenditure of the trusts and the
companies amounts to around 4 per cent of the net profits of all the Tata companies taken
together.

Going forward, Tata is focusing on new technologies and innovation to drive its business
in India and internationally. The Nano car is one example, as is the Eka supercomputer

42
(developed by another Tata company), which in 2008 was ranked the world’s fourth
fastest. Anchored in India and wedded to traditional values and strong ethics, Tata
companies are building multinational businesses that will achieve growth through
excellence and innovation, while balancing the interests of shareholders, employees and
civil society.

Tata Group is one of India's largest and most respected business groups. Tata Group's
name is synonymous with India's industrialisation. The Group gave India her first steel
plant, hydro-electric plant, inorganic chemistry plant and created a reservoir of scientific
and technological manpower for the country. Its Trusts have instituted the Tata Institute
of Social Sciences in 1936; India's first cancer hospital, the Tata Memorial in 1941, and
in 1945, the Tata Institute of Fundamental Research, which became the cradle of India's
Atomic energy program. Today, Tata Group comprises 96 operating companies in seven
business sectors: information systems and communications; engineering; materials;
services; energy; consumer products; and chemicals. The Group has operations in more
than 54 countries across six continents, and its companies export products and services to
120 nations.

Jamsetji Nusserwanji Tata laid the foundations of Tata Group when he started a private
trading firm in 1868. In 1874, he set up the Central India Spinning Weaving and
Manufacturing Company Limited and thus marked the Group's entry into textiles. In
1887, Jamsetji Tata formed a partnership firm, Tata & Sons, with his elder son Sir
Dorabji Tata and his cousin Ratanji Dadabhoy Tata. His younger son Sir Ratan Tata
joined the firm in 1896. In 1902, the Indian Hotels Company was incorporated to set up
the Taj Mahal Palace and Tower, India's first luxury hotel, which opened in 1903. The
Tata Iron and Steel Company (now known as Tata Steel) was established to set up India's
first iron and steel plant in Jamshedpur. The plant started production in 1912. In 1910,
Tata Hydro-Electric Power Supply Company, (now Tata Power) was set up. In 1917,
Tata Oil Mills Company was established to make soaps, detergents and cooking oils. In
1932, Tatas entered aviation sector with the establishment of Tata Airlines. In 1939, Tata
Chemicals, presently, the largest producer of soda ash in India, was established. In 1945,
Tata Engineering and Locomotive Company (renamed Tata Motors in 2003) was

43
established to manufacture locomotive and engineering products. In 1954, India's major
marketing, engineering and manufacturing organisation, Voltas, was established. In
1962, Tata Finlay (now Tata Tea), one of the largest tea producers, was established. In
1968, Tata Consultancy Services (TCS), India's first software services company, was
established as a division of Tata Sons. In 1970, Tata McGraw-Hill Publishing Company
was created to publish educational and technical books. In 1984, Titan Industries, a joint
venture between the Tata Group and the Tamil Nadu Industrial Development Corporation
(TIDCO), was set up to manufacture watches. In 1996, Tata Teleservices (TTSL) was
established to lead the Group's foray into the telecom sector. In 1998, Tata Indica, India's
first indigenously designed and manufactured car, was launched by Tata Motors. In 2000,
Tata Tea acquired the Tetley Group, UK. This was the first major acquisition of an
international brand by an Indian business group. In 2001, Tata entered into insurance
business in joint venture with Tata AIG. In 2007, Tata Steel acquired Corus the fifth
largest steel company in the world.

TATA GROUP COMPANIES

Tata Motors Ltd.

Tata Communications Ltd.
Tata Power Company Ltd.
Tata Steel Ltd.
Tata Consultancy Services Ltd.
Tata Elxsi Ltd.
Tata Tea Ltd.
Tata Chemicals Ltd.
Tata Sponge Iron Ltd.
Tata Investment Corporation Ltd.
Tata Metaliks Ltd.
Tata Teleservices (Maharashtra) Ltd.
Tata Advanced Materials Ltd.
Tata Construction and Projects Ltd.

44
Tata Finance Ltd.
Tata SSL Ltd.
Tata Hydro-Electric Power Supply Company Ltd.
Tata Aig General Insurance
Tata Aig Life Insurance

ABOUT TATA MOTORS

Tata Motors Limited is India's largest automobile company, with consolidated revenues
of Rs.70,938.85 crores (USD 14 billion) in 2008-09. It is the leader in commercial
vehicles in each segment, and among the top three in passenger vehicles with winning
products in the compact, midsize car and utility vehicle segments. The company is the
world's fourth largest truck manufacturer, and the world's second largest bus
manufacturer.

The company's 23,000 employees are guided by the vision to be "best in the manner in
which we operate, best in the products we deliver, and best in our value system and
ethics."

Established in 1945, Tata Motors' presence indeed cuts across the length and breadth of
India. Over 4 million Tata vehicles ply on Indian roads, since the first rolled out in 1954.
The company's manufacturing base in India is spread across Jamshedpur (Jharkhand),
Pune (Maharashtra), Lucknow (Uttar Pradesh), Pantnagar (Uttarakhand) and Dharwad
(Karnataka). Following a strategic alliance with Fiat in 2005, it has set up an industrial
joint venture with Fiat Group Automobiles at Ranjangaon (Maharashtra) to produce both
Fiat and Tata cars and Fiat powertrains.

The company is establishing a new plant at Sanand (Gujarat). The company’s dealership,
sales, services and spare parts network comprises over 3500 touch points; Tata Motors
also distributes and markets Fiat branded cars in India.

45
Tata Motors, the first company from India's engineering sector to be listed in the New
York Stock Exchange (September 2004), has also emerged as an international
automobile company. Through subsidiaries and associate companies, Tata Motors has
operations in the UK, South Korea, Thailand and Spain. Among them is Jaguar Land
Rover, a business comprising the two iconic British brands that was acquired in 2008. In
2004, it acquired the Daewoo Commercial Vehicles Company, South Korea's second
largest truck maker. The rechristened Tata Daewoo Commercial Vehicles Company has
launched several new products in the Korean market, while also exporting these products
to several international markets. Today two-thirds of heavy commercial vehicle exports
out of South Korea are from Tata Daewoo. In 2005, Tata Motors acquired a 21% stake in
Hispano Carrocera, a reputed Spanish bus and coach manufacturer, with an option to
acquire the remaining stake as well. Hispano’s presence is being expanded in other
markets. In 2006, it formed a joint venture with the Brazil-based Marcopolo, a global
leader in body-building for buses and coaches to manufacture fully-built buses and
coaches for India and select international markets. In 2006, Tata Motors entered into joint
venture with Thonburi Automotive Assembly Plant Company of Thailand to manufacture
and market the company's pickup vehicles in Thailand. The new plant of Tata Motors
(Thailand) has begun production of the Xenon pickup truck, with the Xenon having been
launched in Thailand in 2008.

Tata Motors is also expanding its international footprint, established through exports
since 1961. The company's commercial and passenger vehicles are already being
marketed in several countries in Europe, Africa, the Middle East, South East Asia, South
Asia and South America. It has franchisee/joint venture assembly operations in Kenya,
Bangladesh, Ukraine, Russia and Senegal.

The foundation of the company's growth over the last 50 years is a deep understanding of
economic stimuli and customer needs, and the ability to translate them into customer-
desired offerings through leading edge R&D. With over 2,000 engineers and scientists,
the company’s Engineering Research Centre, established in 1966, has enabled pioneering
technologies and products. The company today has R&D centres in Pune, Jamshedpur,

46
Lucknow, in India, and in South Korea, Spain, and the UK. It was Tata Motors, which
developed the first indigenously developed Light Commercial Vehicle, India’s first
Sports Utility Vehicle and, in 1998, the Tata Indica, India's first fully indigenous
passenger car. Within two years of launch, Tata Indica became India's largest selling car
in its segment. In 2005, Tata Motors created a new segment by launching the Tata Ace,
India’s first indigenously developed mini-truck.

In January 2008, Tata Motors unveiled its People's Car, the Tata Nano, which India and
the world have been looking forward to. The Tata Nano has been subsequently launched,
as planned, in India in March 2009. A development, which signifies a first for the global
automobile industry, the Nano brings the comfort and safety of a car within the reach of
thousands of families. The standard version has been priced at Rs.100,000 (excluding
VAT and transportation cost).

Designed with a family in mind, it has a roomy passenger compartment with generous
leg space and head room. It can comfortably seat four persons. Its mono-volume design
will set a new benchmark among small cars. Its safety performance exceeds regulatory
requirements in India. Its tailpipe emission performance too exceeds regulatory
requirements. In terms of overall pollutants, it has a lower pollution level than two-
wheelers being manufactured in India today. The lean design strategy has helped
minimise weight, which helps maximise performance per unit of energy consumed and
delivers high fuel efficiency. The high fuel efficiency also ensures that the car has low
carbon dioxide emissions, thereby providing the twin benefits of an affordable
transportation solution with a low carbon footprint.

In May 2009, Tata Motors introduced ushered in a new era in the Indian automobile
industry, in keeping with its pioneering tradition, by unveiling its new range of world
standard trucks. In their power, speed, carrying capacity, operating economy and trims,
they will introduce new benchmarks in India and match the best in the world in
performance at a lower life-cycle cost.

47
In June 2009, the exciting new range of premium luxury vehicles from Jaguar and Land
Rover were introduced for the Indian market. These include the Jaguar XF, XFR and
XKR and Land Rover Discovery 3, Range Rover Sport and Range Rover.

The years to come will see the introduction of several other innovative vehicles, all
rooted in emerging customer needs. Besides product development, R&D is also focussing
on environment-friendly technologies in emissions and alternative fuels.

Through its subsidiaries, the company is engaged in engineering and automotive

solutions, construction equipment manufacturing, automotive vehicle components
manufacturing and supply chain activities, machine tools and factory automation
solutions, high-precision tooling and plastic and electronic components for automotive
and computer applications, and automotive retailing and service operations.

True to the tradition of the Tata Group, Tata Motors is committed in letter and spirit to
Corporate Social Responsibility. It is a signatory to the United Nations Global Compact,
and is engaged in community and social initiatives on labour and environment standards
in compliance with the principles of the Global Compact. In accordance with this, it
plays an active role in community development, serving rural communities adjacent to its
manufacturing locations.

With the foundation of its rich heritage, Tata Motors today is etching a refulgent future.

Tata Motors is India's largest and among the world's top five medium and heavy
commercial vehicle manufacturers.
Tata Motors provides a wide variety of commercial transportation solution and covers the
entire gamut, right from Tippers to Special Purpose Vehicles, to 6x4 and 4x4 off-road
vehicles.

The range of commercial vehicles includes multi-axle and heavy-duty trucks, tractor-
trailers & tippers and fully built solutions like tipper-trailers & load bodies. The

48
comprehensive product range has enhanced the company’s image as a value-added
M&HCV manufacturer. The company ranks as the world’s fourth largest truck
manufacturer in the combined category of Light, Medium and Heavy Commercial
Vehicle.
Rigid trucks from Tata Motors range from 8 ton GVW to 40-ton GVW and transport
heavy loads efficiently. These heavy commercial vehicles offer superior fuel efficiency,
faster turnaround time, improved tyre life and better drivability.

DEFENCE SOLUTION

Today is a different story. We live in the era of nuclear warfare where cruise missiles and
ICBMs rub shoulders with submarines, satellites and supercomputers. An era where the
technology of warfare changes rapidly, leaving room only for those with the vision to
see, and the resilience to arm themselves for the future.

To help the armed forces keep pace with change, the TATA Group, India's best known
industrial group, has brought the advantage of constant mobility to the defence sector.
For nearly five decades, it has been providing the wheels and a wide range of defence
solutions that help make the nation's borders impregnable. Moreover, TATA vehicles
have been supporting the police and paramilitary forces in maintaining law and order,
besides providing reliable protection for VVIP security.

WHY TATA MOTORS?

TATA Motors Defence Vehicles: Trusted for 100% reliability.

In this era of futuristic warfare, TATA Motors - a TATA Group company - has stayed
ahead at every step. India's largest integrated automobile company, it provides defence
solutions that cover the complete range of tactical and transportation vehicles.

49
Not just carriers, these defence vehicles are lethal weapons with 100% reliability.
Choosing them is a strategic decision that will help you arm your nation for future
warfare. They also offer the advantages of cost-effective inventory and annual
maintenance contracts (AMCs).
What’s more, TATA Motors is uniquely placed to leverage the strengths of other TATA
Group companies. This enables it to provide the seamless interface through which an
integrated defence solution is achievable.

From one-on-one combat with swords to cannons and cavalry, weapons have helped
build empires, create new nations and, indeed, change the very course of history

MILESTONES

Many eras have passed and they leave many milestones which show how TATA
MOTORS has achieved this present position by passing of time.

1945

• Tata Engineering & locomotive Co. Ltd. Was established to manufacture

locomotives and other engineering products.

1948

• Steam road roller introduced in collaborations with Marshal Sons (UK).

1954

• Collaboration with Daimler Benz AG, West Germany for manufacturing of

Medium Commercial Vehicles.
• The vehicle rolled out within 6month of the contract.

1959

50
 • Research and Development centre set up at Jamshedpur.

1961

• Exports begin with the first truck being shipped to Ceylon, now Srilanka.

1966

• Setting up of the Engineering Research Centre at Pune to provide impetus to

Automobile Research and Development.

1971

• Introduction of DI engines.

1977

• First commercial vehicle manufacture in Pune.

1983

• Manufacture of Heavy Commercial Vehicle commences.

1985

• First hydraulic excavator produced with Hitachi collaboration.

1986

• Production of first light commercial vehicle, Tata407 indigenously followed by

Tata608.

1989

• Introduction of the Tatamobiles 206 & Third LCV model.

51
1991

• Launch of The First indigeneous Passenger Car Tata Sierra.

• TAC 20 crane Produced.
• One millionth vehicle rolled out.

1992

• Launch of The Tata Estate.

1993

• Joint venture agreement signed with Cummins Engine Co. Inc. for the
manufacture of high horsepower and emission friendly diesel engines.

1994

• Launch of Tata Sumo- The multi utility vehicle.

• Launch of LPT709- a full forward control, light commercial vehicle.
• Joint venture agreement signed with M/s Daimler- Benz /Mercedes-Benz for
manufacture of Mercedes Benz Passenger car in india.
• Joint venture agreement signed with Tata Holset Ltd., UK for manufacturing
turbochargers to be used on Cummins engines.

1995

• Mercedes Benz car E220 Launched.

1996

• Tata Sumo deluxe Launched.

1997

52
 • Tata sierra Turbo launched.
• 100,000 Tata Sumo rolled out.

1998

• Tata Safari- India’s first sports utility vehicle launched.

• 2 millionth vehicle rolled out.
• Indica’ India’s first fully indigenous passenger car launched.

1999

• 115,000 bookings for indica registered against full payment within a week.
• Commercial production of indica commences in full swing.

2000

• First consignment of 160 indicas shipped to Maltas.

• Indica with Bharat stage2 compliant diesel engine launched.
• Utility vehicles with Bharat2 compliant engine launched.
• Indica 2000 with multi point fuel injection petrol engine launched.
• Launnch of CNG buses.
• Launch of 1109 vehicle- Intermediate Commercial Vehicle.

2001

• Indica V2 launched- 2nd generation indica.

• 100,000th indica wheeled out.
• Launch of CNG indica.
• Launch of the Tata Safari EX
• Indica V2 becomes india’s number one car in its segment.
• Exits joint venture with Daimler Chrysler.

53
2002

• Unveiling of the Tata Sedan at Auto expo 2002.

• Petrol version of indica V2 launch.
• Launch of the EX series in commercial vehicles.
• Launch of the Tata207 DI.
• 2,00,000th Indica rolled out.
• 5,00,000th passenger vehicle rolled out.
• Launch of the Tata sumo ‘+’ series.
• Launch of the Tata indigo.
• Tata Engineering signed a product agreement with MG Rover of the UK.

2003

• Launch of the Tata Safari Limited edition.

• The Tata Indigo station wagon unveiled at the Geneva Motor Show.
• On 29th july, J.R.D Tata’s birth anniversary, Tata engineering becomes Tata
Motors Limmited.
• 3millionth vehicle produced.
• First city Rover rolled out.
• Tata safari Exi Petrol launched.
• Tata SFC407 EX turbo launched.

2004

• Tata motors unveils new product range at auto expo ’04.

• New Tata Indica V2 launched.
• Tata Motors and Daewoo Commercial Vehicle co. ltd. Sign investment
agreement.
• Indigo advent unveiled at Geneva motor show.
• Tata motors completes acquisition of Daewoo commercial vehicle Company.

54
 • Tata LPT 909 EX launched.
• Tata Daewoo commercial Vehicle co. ltd. Launches the heavy duty truck
‘NOVUS’ in Korea.
• Sumo Victa launched.
• Indigo Marina launched.
• Tata motors list on the NYSE.

2005

• Tata motors rolls out its 500,000 passenger vehicle

• The Tata Xover unveiled at the 75th Geneva motor Show.
• Branded Buses and Coaches Starbus and Globus Launched.
• Tata motors acquires 21% stake in Hispano Carocerra SA, Spanish Bus
manufacture Company.
• Tata Ace India’s first mini truck launched.
• Tata motors wins JRD QV award for Business excellence.
• The power packed Safari Dicor is launched
• Introduction of Indigo SX series luxury variant of Tata indigo
• Tata motors launches Indica V2 Turbo Diesel one millionth passenger car
produced and sold.
• Inaugration of new factory at Jamshedpur for Novus.
• Launch of Novus trucks.

2006

• Tata motors vehicle sales in India cross four million mark.

• Indica V2 Xeta launched.
• Passenger vehicle sales in India cross one million mark.
• Tata motors first plant for small car to come uo in West Bengal.

55
 • Tata motors extends CNG options on its batchback and estate range
• Tata motors and Fiat group announce three additional cooperation agreements.
• Tata motors introduce new Indigo range.

2007

• Construction of small car plant at Singur, West Bengal, begins on January 21

• New 2007 Indica V2 range is launched.
• Tata motors launches the longwheel base indigo
• Tata motors and Thonburi automotive assembly Plant Co. announce formation of a joint
venture company in Thailand to manufacture assemble and market Pickups trucks.
• Fiat group and Tata motors announce establishment of joint
venture in India

2008

• Tata motors unveils its people’s car Nano at the Ninth auto expo.
• Tata motors purchase Jaguar and Land Rover.
• Tata motors introduce new super Milo range of buses.

2009

• Tatat Marcopolo Motors’ Dharwad plant begin production

• Tata motors launches Nano- The people car
• Introduction of new world standard truck range
• Ravi Kant to become Non-executive Vice chairman of Tata Motors on retirement,
P.M. Telang to become Managing Director – India operations.
• Tata Nano draws over 2.03 lakh bookings

2010

• Tata Ace becomes India’s first 1-Lakh brand in goods commercial vehicle.

56
 • Appointment of Mr. Carl-Peter Forster as Managing Director of Tata Motors
• Tata Motors declared as the Commercial Vehicle Maker of the Year
• Chief Minister of Punjab inaugurates Tata motors supported institute of
Automotive and Driving Skills.

CHAPTER: III

A BRIEF INTRODUCTION OF TATA

MOTOR’S COMMERCIAL VEHILES AND
ITS FINANCING SCHEMES

57
TATA MOTORS PRESENCE IN COMMERCIAL VEHICLE
MARKET:

Set up in 1945, Tata Motors is India's largest automobile company. With close to 4
million Tata vehicles plying in India, since the first roll out in 1954, it is the leader in
commercial vehicles and the second largest in passenger vehicles. It is also the world's
fifth largest medium and heavy truck manufacturer and the second largest heavy bus
manufacturer. In India, the company has manufacturing facilities in Pune (Maharashtra –
western India), Jamshedpur (Jharkhand – eastern India) and Lucknow (Uttar Pradesh –
northern India), and a nation-wide dealership, sales, services and spare parts network
comprising over 2,000 touchpoints.

FACTORS OF SUCCESS

STRONG PRESENCE IN THE MARKETPLACE

Tata Motors is the only company in India with a 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-tonne mini-trucks Tata Ace.

58
UNIQUE UNDERSTANDING OF CUSTOMER NEED

With 50 years’ presence in the automotive business, Tata Motors understands customer
needs and develops products that meet their needs. To consider 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 for an
affordable family car, it launched the now famous Tata Indica, which occupies a leading
position among compact cars. This keen sense of the customer pulse led the company to
launch in 2005, the Tata Ace, India’s first sub one tonne mini-truck, as a last-mile
distribution vehicle once again creating a new market. Going forward, Tata Motors has
anticipated that non-car owning families, at the bottom of the pyramid, will look for an
extremely affordable vehicle, providing exceptional value and this small car Nano
launched recently.
In the Current year, Company has launched a new global range of Trucks, Tractors-
trailers and Tippers “Prima” in the market.

MARKET SHARE:

UP+Uttarakhand 2008 - 09 2009 - 10

Sr Total Total
No. Product Line Industry MS Industry MS
1 M&HCV 10165 86% 13434 87%
2 BUSES 2467 69% 2653 74%
3 SCV 12617 65% 12721 70%
4 LCV-ICV 3825 56% 4748 60%
5 SCV-Pax 14705 40% 19302 48%
TOTAL 43779 61% 52859 66%

59
MARKET POTENTIAL:

Commercial vehicle industy last year 09-10 fig for UP and Uttarakhand:

Sales in
Vehicle Annual Loading Average Rs
segment nos. Capacity Price (Crores)
M&HCV 13434 9 T to 40 T 14 L 1881
LCV&ICV 4748 2.5 T to 7 T 6.5 L 309
Buses 2653 14 to 55 Seaters 8L 212
SCV 12721 0.75 to 1.25 T 3.5 L 445
SCV- Pax 19302 6 to 10 Seaters 3.25 L 627
Total 52859 3474

FUNDING PATTERNS:

Majority of the financers have differentiated the customers in to 3 categories:

1. FTU:
LTV offered: 100% (in case of chassis) or 85% (in case of fully built vehicles)
2. Asset Based funding:
LTV offered: 100% (in case of chassis) or 90% (in case of fully built vehicles)
3. Captive users:

60
LTV offered: 100% (in case of chassis) or 95% (in case of fully built vehicles)

OVERALL MARKET SHARE:

Financier % Share
TATA MOTORS FINANCE
49%
LTD
SELF 12%
INDUSIND BANK LTD 10%
SHRIRAM TRANSPORT
8%
FINANCE
STATE BANK OF INDIA 4%
MAGMA FINCORP LIMITED 3%
HDFC BANK LTD 3%
INDIA BULLS FINANCIAL 2%
PURVANCHAL GRAMIN
2%
BANK
KOTAK MAHINDRA 2%
UNION BANK OF INDIA 1%
CHOLAMANDALAM 1%
PUNJAB NATIONAL BANK 1%
BANK OF BARODA 1%
ICICI BANK LTD 1%
OTHERS 15%
Total 100%

61
 SCV-PAX SHARE:

Financier % Share
TATA MOTORS FINANCE LTD 51.13%
SELF 14.81%
SHRIRAM TRANSPORT
10.30%
FINANCE CO
INDUSIND BANK LTD 4.57%
PURVANCHAL GRAMIN BANK 3.52%
STATE BANK OF INDIA 2.21%

SHRIRAM TRANS
UNION BANK OF INDIA 1.32%
MAHINDRA & MAHINDRA
1.21%
FINANCIAL SERVICES LTD
CHOLAMANDALAM DBS
FINANCE LTD.
1.07% 7%
BANK OF BARODA 0.96%
ALLAHABAD BANK 0.84%
BANK OF INDIA
PUNJAB NATIONAL BANK
PUNJAB NATI
0.76%
0.65%
MAHINDRA & MAHINDRA
FINANCIAL SERVICE LTD.
0.51%
1%
CHOLA
62
ARYAVART GRAMIN BANK 0.45%
Others 5.70%
Total

SCV SCENARIO:

Financier % Share
TATA MOTORS FINANCE LTD 46%
SELF 14%
SHRI RAM TRANSPORT 12%

63
FINANCE COMPANY
INDUSIND BANK LTD 6%
STATE BANK OF INDIA 3%
PURVANCHAL GRAMIN BANK 2%
CHOLAMANDALAM. 2%
UNION BANK OF INDIA 1%
ALLAHABAD BANK 1%
CANARA BANK 1%
PUNJAB NATIONAL BANK 1%
BANK OF BARODA 1%
BANK OF INDIA 1%
MAGMA FINCORP LIMITED 1%
OTHERS 9%
Total

64
NETWORK:

Tata Motors has established best dealers’ network in commercial vehicle industry.
3S: Sales, Service and Spares Facilities, 1S: Sales Outlet

Sno. Dealer Name District

1 M G S Ltd Lucknow
2 Prayag Udyog Faizabad
3 M B Wheeler Ltd Gorakhpur
4 Unique Motors Pratapgarh
5 Commercial Auto Sales Allahabad
6 Yash Automotive Mirzapur
7 Puneet Auto Varanasi
8 Varanasi Auto Sales Varanasi
9 Singhal Motors Azamgarh
10 Kailash Motors Kanpur
11 Shunty Bunty Motors Kanpur
12 GRS Motors Jhansi
13 Commercial Motors Bareilly
14 R A Motors Etah
15 Amit Auto Wheels Haldwani
16 Oberai Motors Dehradun
17 Commercial Motors Dehradun
18 Ashok Auto Sales Agra
19 Auto Sterling Noida
20 Bahadur Motors Meerut
21 S J S Motors Meerut

65
SUPPORT FROM OUR SIDE

• TML and Bank will work in close coordination for generating vehicle loan
business using each other’s customer database and premises for sales promotion
activities.
• TML will publish the name of bank as its preferred financier in all advertisements
released for finance schemes of TML.
• TML may offer subvention scheme or special discount to the customers availing
commercial loan facilities from your bank across all product lines. This special
support is in addition to prevailing schemes.

EXPECTATION FROM OUR SIDE

• The Bank would offer financing facilities to eligible customers for TML
commercial vehicles and the financing of vehicles will be as per the norms of the
bank.
• We would like Bank to evaluate the needs of the customers for Commercial
vehicle, develop appropriate financing packages including down payment, tenure
and effective rate of interest. The financing package offered to the purchasers
shall be best in class and shall be lesser than or equal to rates offered by Bank to
any other transport vehicle purchase.
• TML and Bank will jointly do the sales promotional activities like Advertisement,
loan mela etc on sharing basis to enhance the sale of commercial loan.
• Bank will identify a person at the identified branches as the resource person, who
will be responsible for:
o Coordination and close interaction with the dealers concerned.

66
 o Communication of status on processing of loan applications for the said
vehicles

TATA MOTORS- COMMERCIAL VEHICLE FINANCE

Over five decades of expertise in vehicle financing, Tata Motors Finance Ltd, is a
subsidiary company of Tata Motors Ltd. Established in 1957, we are engaged in
financing entire range of passenger cars & commercial vehicles manufactured by Tata
Motors Ltd.

With a core purpose to reach out & help customers realize the dream of owning a TATA
vehicle easily, we are present across 150+ locations and at all Tata Motors Ltd authorized
dealerships.

Driven by the trust of more than 2 million customers, we are the largest financiers of
vehicles manufactured by Tata Motors Ltd. Schemes designed to suit every customer
requirement, flexible repayment options, hassle-free eligibility criteria, simple
documentation and fast sanctioning process makes us the preferred choice of any
customer desirous of owning a Tata Car or Commercial vehicle.

CHANNEL FINANCE

Channel Financing is an innovative option for extending working capital finance

to dealers who have business relationships with large companies.
Channel Financing is the mechanism through which a Bank / Financial Institution
meets the various funds related requirements along the Supply Chain at the
suppliers end. This thereby helps the supplier in sustaining a seamless business
flow and avoiding Working Capital related difficulties.

67
Channel Financing could cover: -

1) Discounting of Trade Bills drawn by a company and accepted by its Dealers /

Distributors / Channel Partners.

2) Providing Overdraft facility to the dealers / distributors who have business dealings
with large Corporate.

Benefits Of Channel Finance / Channel Financing: -

A) Advantages to Corporate: -

- Assured availability of Working Capital finance to their channel partners at lower than
current cost of credit

- Corporate can use Channel Finance as a marketing tool and strengthen their relationship
/ reward loyalty of their Channel Partners

- Release of funds from the Balance Sheet resulting in improvement in financial Ratios
- Conversion of Balance Sheet into an Off Balance Sheet liability

- Greater efficiencies in the Corporates’ receivable management and cash management

process

- Ability to introduce payment discipline with their Channel Partners

B) Advantages to Dealers/Distributors, i.e. the Channel Partners: -

- Steady and cheaper source of Working Capital financing

68
- Channel partners can increase Sales through higher purchasing power

- Clean facility up to certain limits

- Simplicity of documentation and approval procedures
- High service and delivery standards compared to current neighborhood Banker /
Moneylender

- Channel partners may be able to increase profitability by availing of cash discounts

from Corporate

RETAIL FINANCING

Retail banking means mobilizing deposit form individuals and providing loan facilities to
them in the form of home loans, auto loans, credit cards, etc, is becoming popular. This used
to be considered by the banks as a tough proposition because of the volume of operations
involved. But during the last couple of years or so, banks seem to have realized that the only
sustainable way to increase deposits is to look at small and middle class consumer retail
deposit and not the price sensitive corporate depositors. With financial sector reforms
gathering momentum, the banking system is facing increasing companies from non-banks
and the capital market. More and more companies are tapping the capital market directly for
finance. This is one of the main reasons for the banks to focus vigourously on the much
ignored retail deposits. Another reason is the current liquidity the margins are 1 to 2 percent
above the prime rate; in retail market they are 3to4 percent.

It is reported that Indian retail market has the potential to be second only to the USA.
National Readership Survey 5puts Indian households with monthly of over Rs. 5000 at 4.5
million. According to the survey, the category of households with annual income of Rs. 2
lakhs and above is growing at the rate of 30 per cent per annum. No winder, banks with
vision and insight are trying to woo this market through a series of innovative additions to
their products, services, technology and marketing methods. Fixed and unfixed Deposits,

69
(cluster deposits which can be broken into smaller units to help meet depositors’ overdraft
without breaking up entirely), centralised database for ‘any branch banking’ (whereby the
customer can access his account in any of the branches irrespective of where the account is
maintained), room services (whereby the customers are visited at their residences offices to
enable them to open their accounts), automatic teller machines, tele banking network,
extended banking time, courier pickup for cheques and documents, etc are some of the
privileges extended to the customers by the banks in are eagerness to cultivate the retail
market. In short, in the bold new world of retail banking the customer is crowned as king.

CV FINANCE

 Get the best financial scheme on your new Tata CV from TMF.

 TMF, the in-house financing arm of Tata Motors, specialises in providing

customised financing options to all its esteemed customers.

 Get the best suited financing scheme and let TMF be a partner of choice in
owning your dream CV.

 Use our EMI Calculator to see how easily you can drive home your CV

FEATURES

Pioneering the vehicle finance business since 1957, we are driven by trust and Tata ethos.
At Tata Motors Finance, we understand customer needs and strive to reach out and help
them realize the dream of owning a Tata vehicle, easily. We are the largest financier of
vehicles manufactured by Tata Motors Ltd and you can reach us anywhere at 400+
outlets of the Tata Motors dealers.

70
FEATURES OF LOAN PRODUCTS

 Personalized service at your doorstep

 Transparent & fair deal
 Simple & easy documentation
 Quick processing & sanctioning
 Competitive rates
 No hidden charges
 Flexible repayment options ranging from 12 to 60 months

ELIGIBILITY & DOCUMENTATION

We extend finance for entire range of commercial vehicles of Tata Motors Ltd which
includes passenger carriers as well as Goods Carriers

ELIGIBLE CUSTOMERS

 Individuals
 Proprietorship Firms
 Partnership firms
 Private & Public Limited companies

Minimum Age of applicant : 21 years

Maximum age of applicant: 65 years at the end of the loan tenor
Minimum Loan amount : Rs.100000

71
DOCUMENTS REQUIRED

 Age, ID, Address & Signature proof documents

 Experience Proof, Driving License, Fleet list, Property Documents, ITR for the
last 2 years
 Bank Statements for last 6 months
 Repayment track / Statement of account for earlier finance availed.
 Letter of authority signed by all partners & copy of Partnership Deed (in case of
partnership firm)
 Board resolution & Copy of Memorandum & Articles of Association (in case of
Private & Public Ltd Co)

All loan approvals are at the sole discretion of Tata Motors Finance Ltd. Schemes,
Offers, terms & conditions apply and are subject to change without any prior notice.

FREQUENTLY ASKED QUESTIONS

1. Who can apply for a loan?

 Individuals
 Proprietorship Firms
 Partnership firms
 Private & Public Limited companies

2. What are the make & type of vehicles financed?

72
Entire range of commercial vehicles manufactured and sold by Tata Motors are financed
by us. Finance is extended for both Passenger as well as Goods Carriers.

3. What are the repayment options available?

We offer flexible repayment tenors ranging from 12 to 60 months. You can pay your
monthly EMI through Auto Debit / ECS / PDC's.

4. What are the interest rates?

The lending rates are dependent on various factors like Cost of funds, Risk inherent to
Financing Business, Cost of Operations, Loan to value ratio, Repayment Tenor,
Geographies, and Usage of Vehicle. Tata Motors Finance ensures that you get a
transparent and the best deal at the time of availing the loan.

5. How to apply for a loan?

 Apply online. Click here.

 SMS 'TMF' to 54646
 Call us on 1800-209-0188
 Email us on custqueries@tmf.co.in
 Visit your nearest branch. To locate click here.

6. What is the loan processing time?

For an application completed with all requisite documents, it generally takes 48 hours for
sanctioning.
7. What is the loan sanctioning process?

 Application

73
 Pre Documentation
 Processing
 Sanctioning
 Post Documentation
 Issue of Delivery Order to Dealer & Disbursement

8. Who can be a co-applicant for the loan?

Any member of your family who is your blood relative & residing with you in the same
address as you can be a co-applicant.

9. Is it mandatory to get a Guarantor?

No. However, in case you do not meet the eligibility criteria and conditions, a guarantor
may be required. Guarantor thereby need to meet the eligibility criteria and conditions
with necessary documentation.

10. Can a loan contract be pre-closed?

A loan can be pre-closed in full. Part payments are not accepted. Pre-closure charges will
be applicable. Please read Fees & Charges (Link to lead user to fees & charges)
applicable.

LATEST SCHEMES

207 On Road Funding Scheme

74
Best News for property based customers. Avail easy funding on 207 DI with minimal
Documentation. Conditions Apply.

ACE Special Dhamaka funding Scheme

Avail funding upto 90% on invoice with minimum documents. Very fast approval
process. Scheme valid for limited period Pre-Conditions apply.

MAGIC Special Dhamaka funding Scheme

Avail funding upto 90% on invoice with minimum documents. Very fast approval
process. Scheme valid for limited period . Pre-Conditions apply.

All loan approvals are at the sole discretion of Tata Motors Finance Ltd. Schemes,
Offers, terms & conditions apply and are subject to change without any prior notice.

ELIGIBILITY

TMF offers Commercial vehicle finance in the following customer categories:

Eligibility Criteria :

Customer should own a truck or bus (free of liability) , which is not more than 8 or 10
years old or any other immovable asset equivalent to the finance amount being
requested or fixed deposit or any other security of equivalent amount.

OR

Customer should be an existing / past PPR customer of Tata Motor Finance (TMF).

75
OR

If the customer does not have any assets, he needs to have a direct family member with
assets and has to produce a guarantor (not a direct family member). The guarantor is not
insisted upon for a LCV if the customer has a suitable driving license and wants to
become a self driven owner.

OR
Customer or any member of direct family should own assets in the form of land and
buildings.

Documentation Required :

Copy of the vehicle's registration certificate and / or immovable property document or

fixed deposit / security.

Notarised photograph of the customer and the guarantor.

Address proof in the form of ration card / voter's card / passport / electricity bill /
telephone bill.

Contract numbers, in cases where the customer is an existing / past customer of TMF.

Land and building ownership documents certified by the appropriate government

authority like search report / NEC.

For further details on vehicle finance or financing options, please contact your nearest
Tata Motors office, the dealer or write to us at : svv@tatamotors.com

Fleet Operators

Eligibility Criteria :

76
Customer could be a first time customer or customer could be an existing / past customer
of Tata Motor Finance (TMF).

Documentation Required :

Copy of the (free of liability) vehicle's registration certificate.

Contract numbers, in cases where the customer is an existing / past customer of TMF.

For further details on vehicle finance or financing options, please contact your nearest
Tata Motors office, the dealer or write to us at: ( svv@tatamotors.com )

Company / Partnership Firm

Documentation Required :

Memorandum of Association / Partnership Deed. Board Resolution.

Audited balance sheet for last 3 years with good profits and a debt / equity ratio below
2:1.

Maximum period 4 years.

Personal guarantee of MD or Chairman is sufficient; no outside guarantor is required.

For further details on vehicle finance or financing options, please contact your nearest
Tata Motors office, the dealer or write to us at: svv@tatamotors.com

77
 BENEFITS

Benefits of BHPC to Hirer

Minimum documentation
Attractive rates
Quick response
Transparency of dealing
Prompt after sales service
Remittance of installments at any dealership point
Internet connectivity by which statement of accounts and other details may be
availed at dealer-point.
Single Window Service through dealers

Interest Rates

TMF offers finance for vehicles at very attractive rates of interest. Rates are structured
depending upon the following criteria:

Customer's past track record with TMF.

Existing asset details.
Geographical location of the customer.
Vehicle under finance.

78
The rates are subject to change without notice. These are indicative rates for reference
only.

SCHEMES

TMF offers finance schemes for tenures ranging from 1 year to 4 years in multiples of 6
months. The schemes are:

Standard Equated Monthly Installment (EMI) Scheme

This is TMF's most popular scheme. Under this scheme, the value of the contract (which
comprises of Finance Amount + Finance Charges which is applicable for the scheme) is
divided by the tenure of the contract (in months) to arrive at an Equated Monthly
Installment (EMI), which is then to be repaid on a monthly basis by the customer.
For further details on vehicle finance or financing options, please contact your nearest
Tata Motors office, the dealer or write to us at: ( svv@tatamotors.com )

Staggered Scheme

This scheme offers customers the flexibility to plan the repayment schedule based on
their Annual Cash Flow.

For further details on vehicle finance or financing options, please contact your nearest
Tata Motors office, the dealer or write to us at: ( svv@tatamotors.com )

Advance EMI Scheme

This scheme is an extension of the basic EMI scheme where installment(s) is/are paid in

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advance. Under this scheme the customer would have to pay a lower rate of interest.

For further details on vehicle finance or financing options, please contact your nearest
Tata Motors office, the dealer or write to us at: ( svv@tatamotors.com )

Customised Schemes

In this scheme, the customer is assisted in making a choice between one or more of the
schemes mentioned above, thereby customising repayment to suit individual
requirements.

For further details on vehicle finance or financing options, please contact your nearest
Tata Motors office, the dealer or write to us at: ( svv@tatamotors.com )

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 CHAPTER: IV
RESEARCH
METHODOLOGY

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The purpose of methodology is to describe the process involved in research work. This
includes the overall research design, data collection method, the field survey and the
analysis of data.

SOURCE OF DATA COLLECTION:

PRIMARY:
For my survey primary data have been used as a questionnaire to collect the data.

SECONDARY DATA:

 Annual report of TATA MOTORS ,2008-09 and individual contra sheet of

Commercial vehicle for the 2007-08

 Internet

 Induction guide

 Magazines and journals

 E papers

OBJECTIVES:

 To know the awareness about Tata commercial vehicles among customers and its
sales people.

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  To analyze the retail and channel finance system of Tata Motors.

 To analyze the popularity of financing schemes of Tata Motors in comparision to

other companies operating in the industry.

RESEARCH DESIGN:
Research Design is the arrangement for conditioned for data collection & analysis of data
in a manner that aims to combined relevance to research purpose with economy in
procedure.

A research design is a master plan or model for the conduct of formal investigation. It is
blue print that is followed in completing study.

The research conducted by me is a descriptive research. This is descriptive in nature

because study is focused on fact investigation in a well-structured from and is based on
primary data.

RESEARCH PLAN

For completing my study I have gone for sample study because looking at the size of
population & the time limitation it was not convenient for me to cover entire population.
Hence, I have gone for sample study rather than census study.

SAMPLING PLAN:

A sample design is a definite plan for obtaining a sample from a given population. It
refers to the technique or the procedure that researcher would adopt in selecting items to
be inched in the sample i.e. the size of sample. Sampling plan is determined before data
are collected.

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STEPS IN SAMPLING PLAN:

SAMPLING FRAME:
The list of sampling units from which sample is taken is called sampling frame. Gaya
City map was studied thoroughly and samples were selected from the place in a scattered
manner to get effective result.

SAMPLING SIZE:
Total sample size is 150. (For consumer perception about TATA MOTORS CV
FINANCING) and Total sample size is 50. (For consumer perception about TATA CV
PRODUCTS).

SAMPLING PROCEDURE:

The selection of respondents were accordingly to be in a right place at a right time and so
the sampling were quite easy to measure, evaluate and co-operative. It was a randomly
area sampling method that attempts to obtain the sample of convenient.

ANALYSIS:
The important factors and data’s collected were sequentially analyzed and graphed.

FIELD WORK:

I have collected the data through medium called questionnaire collecting the responses
from 100 (50 for showroom) people in all.

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I started my project very first educating the respondents about my entire project, and ask
them to co–operate with me. Mostly all the respondent were aware of this type of
surveys. So I didn’t face any type of difficulty during my project in the process of
explaining and taking their responses on the questionnaire.
PROBLEMS & LIMITATION:

 The study is confined to limited period.

 Accuracy of the study is purely based on the customer’s perception.

 The analysis and conclusion made by me as per my limited understanding and

there may be something variation in the actual situation.

 Survey is limited to a particular area.

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 CHAPTER: V

DATA ANALYSIS

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 PERCEPTION ABOUT TATA MOTOR’S (COMMERCIAL
VEHICLE) FINANCING SCHEMES:

Q.1 Knowledgeable salesperson (who can suggest about vehicle finance)

INFERENCE:

77% of the Respondents were strongly agree with knowledgeable salesperson while18%
of the Respondents were agreeing at the same time.5% of the respondent were disagree.

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Q.2 Employees spent enough time with you to make you satisfied with the financing
schemes of the company?

INFERENCE:

55% of the respondent were strongly agree and says that employ spend enough time
while 36% of respondent were agree.5% of respondent were neither agree nor disagree
and 4% of respondent were disagree they said that employ not spend enough time.

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Q.3 Availability of the product in showrooms

Strongly disagree Disagree

Neither agree nor disagree Agree
Strongly agree
0%
14%

50%

36%

INFERENCE:

50% of the respondent were strongly agree and says that products are available in
showroom . 36% of respondent were agree with availability of product in showroom
while 14% of respondent were neither agree nor disagree.

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Q.4 Attractive schemes offered

INFERENCE:

55% of the respondents were strongly agreed with attractive scheme offered. 41% of
respondent were agree with discount offered while 4% of respondent were neither agree
nor disagree.

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Q.5 Offered on compatible interest rates

INFERENCE:

41% of the respondents were strongly agreed with interest rates test drive offered. 32%
of respondent were agree while 18% of respondent were neither agree nor disagree.9%of
respondent said that they don’t think so that interest rates are compatible.

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Q.6 responds to complaints quickly ( regarding financing of vehicle quickly)

INFERENCE:

Only 5% of the respondents were strongly agreed with quickly respond to

complaints.41% of respondents were agreeing with quickly respond to complaints.36%
of respondents were neither agree nor disagree with quickly respond to complaints and
18% of respondents were strongly disagreeing.

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Q.7 All the commitments are fulfilled( regarding financing of vehicle)

INFERENCE:

Only 9% of the respondents were strongly agree with fulfilled of commitments. 23% of
respondent were agree with fulfilled of commitment.While 45% of respondent were
neither agree nor disagree.18%of respondent were disagree. On the other hand, 5% of
respondent were strongly disagree.

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Q.8 Employees spent enough time with you after sales. (In order to make you satisfy
that you have taken correct decision)

INFERENCE:

32% of the respondent were strongly agree with good service provided by Tata motors.
36% of respondent were agree with good service provided by Tata motors while 27% of
respondent were neither agree nor disagree and 5%of respondent were disagree .

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CONSUMER PERCEPTION ABOUT TATA’S COMMERCIAL
VEHICLE

• The price of the TATA CV is reasonable.

• Fuel mileage of the Tata CV is good.

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• Tata CV is easy to maintain.

• The seats are very comfortable.

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 .

• Feel safe when I drive TATA CV.

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• I feel good whenever I see the ad for my Tata motors on TV, Magazine and
Hoarding.

• A new feature of Tata CV and financing schemes motivates the customer to

buy.

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• Tata CV financing schemes are better then other companies

• Tata motor’s provides better interest rate finance than other companies

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• Tata’s CV price Range is affordable.

• Tata has wide range of CV models.

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• Power steering in TATA CV attracts the people to buy.

• Tata CV is available in wide range of colors.

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• Tata CV long last.

• Tata’s party are available everywhere.

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• Tata’s parts are available at very reasonable price.

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 CHAPTER: VI
FINDINGS
AND
RECOMMENDATION

FINDINGS

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• Tata Motors is number three in commercial vehicle after & Hindustan Motors Ltd.

• Tata Motors have well known scheme and websites which help their customers in
getting financed easily.

• All model and colors of Tata Motors is available in their showrooms alongwith the
financing schemes and eligibility criteria.

• Tata Motors always offer different schemes of financing for every customer and
therefore the customers satisfaction is high with their financing schemes as
compared to the other companies operating in this area.

• According to tata motors survey, they are providing better channel financing than
other commercial vehicle manufactures.

• Majority of customers think that price of Tata’s CV are not available everywhere,
and it is costly than others.

• Fuel mileage of Tata CV is good, but not better.

• People are highly convinced that TATA MOTORS will yield them better results

• Customers were educated by Tata Motors, about their interest rate and offers time-
to-time.

• Improving the marketing Strategies

• Making the decision to capture the rural market. by introducing cheaper schemes
and easy criteria’s of getting financed is giving better result.

• Advertisement in mass media such as television, newspapers, and magazines are

best means to spread awareness about brand repositioning. And it is a better
medium to attract the customer.

• Interest rates are very compatible in market.

RECOMMENDATION

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Though I am young enough and not that experienced but I have tried my best to come out
with suggestion which may be helpful for Tata motors .

• Rural market is untrapped and lack of awareness is there in customers regarding

the scemes,term and policies, and interest rate of Tata motors.

• Tata motors should takes less time as much as possible to fulfill the
commitments. to make a good picture in consumer ‘s mind.

• Price of part’s should be reasonable. And available every where.

• To increase its visibility so that different segments of the customer will notice the
products of Tata motors in varied ways.

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 BIBLIOGRAPHY

svv@tatamotors.com
www.indiastat.com
www.economywatch.com
www.docshoc.com
www.pluggd.in
www.scribd.com
www.quickmba.com
www.google.com

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