MASTER OF BUSINESS ADMINISTRATION

ASSIGNMENT SAIM

ANALYSIS OF TATA MOTORS LTD. Submitted to:

Ms. Richa

Submitted by:
MBA 3rd Semester

Akanksha Jain(05817003909) Govind Singh Bisht(06917003909)

SESSION: 2010 - 2011

TECNIA INSTITUTE OF ADVANCED STUDIES
Approved by AICTE, Ministry of HRD, Govt. of India, Affiliated To Guru Gobind Singh Indraprastha University, Delhi INSTITUTIONAL AREA, MADHUBAN CHOWK, ROHINI, DELHI- 110085 E-Mail: director.tecniaindia@gmail.com , Website: www.tecniaindia.org Fax No: 011-27555120, Tel: 011-27555121-24

TATA MOTORS
BACKGROUND
Tata Motors Ltd is a multinational corporation headquartered in Mumbai, India. Part of the Tata Group, it was formerly known as TELCO (TATA Engineering and Locomotive Company). Tata Motors is Indias largest automobile company, with consolidated revenues of USD 20 billion in 2009-10. It is the leader in commercial vehicles and among the top three in passenger vehicles. Tata Motors has winning products in the compact, midsize car and utility vehicle segments. The company is the world's fourth largest truck manufacturer, the world's second largest bus manufacturer, and employs 24,000 workers. Since first rolled out in 1954, Tata Motors has produced and sold over 4 million vehicles in India. Established in 1945, when the company began manufacturing locomotives, the company manufactured its first commercial vehicle in 1954 in collaboration with Daimler-Benz AG, which ended in 1969. Tata Motors is a dual-listed company traded on both the Bombay Stock Exchange, as well as on the New York Stock Exchange. Tata Motors in 2005 was ranked among the top 10 corporations in India with an annual revenue exceeding INR 320 billion. In 2010, Tata Motors surpassed Reliance to win the coveted title of 'India's most valuable brand' in an annual survey conducted by Brand Finance and The Economic Times. Tata Motors has auto manufacturing and assembly plant in Jamshedpur, Lucknow, Ahemdabad, Sanand And Pune In India, as well as in Argentina, South Africa and Thailand. Despite the success of its commercial vehicles, Tata realized his company had to diversify and he began to look at other products. Based on consumer demand, he decided that building a small car would be the most practical new venture. So in 1998 it launched Tata Indica, India's first fully indigenous passenger car. Designed to be inexpensive and simple to build and maintain, the Indica became a hit in the Indian market. It was also exported to Europe, especially the UK and Italy. Acquisition

In 2004 Tata Motors acquired Daewoo's truck manufacturing unit, now known as Tata Daewoo Commercial Vehicle, in South Korea. In 2005, Tata Motors acquired 21% of Aragonese Hispano Carrocera giving it controlling rights of the company.

In 2007, Formed a joint venture with Marcopolo of Brazil and introduced low-floor buses in the Indian Market. In 2008, Tata Motors acquired British Jaguar Land Rover (JLR), which includes the Daimler and Lanchester brand names. In 2010, Tata Motors acquired 80% stake in Italy-based design and engineering company Trilix for a consideration of 1.85 million. The acquisition is in line with the companys objective to enhance its styling/design capabilities to global standards.

JAGUAR CARS AND LAND ROVER After the acquisition of the British Jaguar Land Rover (JLR) business, which also includes the Daimler, Lanchester and Rover brands, Tata Motors became a major player in the international automobile market. On 27 March 2008, Tata Motors reached an agreement with Ford to purchase their Jaguar Land Rover operations for US$2 billion. The sale was completed on 2 June 2008. In addition to the brands, Tata Motors has also gained access to two design centers and two plants in UK. The key acquisition would be of the intellectual property rights related to the technologies. JOINT VENTURE Tata Motors has formed a 51:49 joint venture in bus body building with Marcopolo of Brazil. This joint venture is to manufacture and assemble fully-built buses and coaches targeted at developing mass rapid transportation systems. The joint venture will absorb technology and expertise in chassis and aggregates from Tata Motors, and Marcopolo will provide know-how in processes and systems for bodybuilding and bus body design. Tata and Marcopolo have launched a low-floor city bus which is widely used by Chennai, Delhi, Mumbai, Lucknow and Banglore transport corporations. Tata Motors also formed a joint venture with Fiat and gained access to Fiats diesel engine technology. Tata Motors sells Fiat cars in India and is looking to extend its relationship with Fiat and Iveco to other segments. Tata has also formed several JV's with many small companies in various countries around the world. IMPORTANT DEVELOPMENTS Tata Nano In January 2008, Tata Motors launched Tata Nano, the least expensive production car in the world at about Rs. 100,000 (US $2,500). The city car was unveiled during the Auto Expo 2008 exhibition inPragati Maidan, New Delhi.

Tata has faced controversy over developing the Nano as some environmentalists are concerned that the launch of such a low-priced car could lead to mass motorization in India with adverse effects on pollution and global warming. Tata has set up a factory in Sanand, Gujarat and the first Nanos are to roll out summer 2009. Tata Nano Europa has been developed for sale in developed economies and is to hit markets in 2010 while the normal Nano should hit markets in South Africa, Kenya and countries in Asia and Africa by late 2009. A battery version is also planned.

Tata Ace Tata Ace, India's first indigenously developed sub-one ton mini-truck was launched in May 2005. The mini-truck was a huge success in India with auto-analysts claiming that Ace had changed the dynamics of the light commercial vehicle (LCV) market in the country by creating a new market segment termed the small commercial vehicle (SCV) segment. Ace rapidly emerged as the first choice for transporters and single truck owners for city and rural transport. By October 2005, LCV sales of Tata Motors had grown by 36.6 percent to 28,537 units due to the rising demand for Ace. The Ace was built with a load body produced by Autoline Industries. By 2005, Autoline was producing 300 load bodies per day for Tata Motors. Tata Ace - Apka Pyaara Chota Hathi. Ace is still a top seller for TML with 5M units sold to date (June 2010). Ace has also been exported to several European, South American and African countries and allelectric models are sold through Chrysler's Global Electric Motorcars division.

Electric Vehicles Tata Motors unveiled the electric versions of passenger car Tata Indica and commercial vehicle Tata Ace. Both run on lithium batteries. The company has indicated that the electric Indica would be launched locally in India in about 2010, without disclosing the price. The vehicle would be launched in Norway in 2009. Tata Motors' UK subsidiary, Tata Motors European Technical Centre, has bought a 50.3% holding in electric vehicle technology firm Miljbil Grenland/Innovasjon of Norway for US$1.93 M, which specializes in the development of innovative solutions for electric vehicles, and plans to launch the electric Indica hatchback in Europe next year. On 17 Sept 2010 Tata

motors presented to the DTC [Delhi Transport corporation] Four CNG - Electric Hybrid low floored Star buses to be used for commonwealth games. These will be the first Environmentally friendly buses to be used for public transportation in India.

TATA MOTORS TECHNOLOGY AND DESIGN SUBSIDIARIES Telco Construction Equipment (TELCON) TELCON is a joint venture between Tata Motors and Hitachi, which focuses on excavators and other construction equipment. HV Transmission (HVTL) and HV Axles (HVAL) HVAL and HVTL are 100% subsidiary companies of Tata Motors engaged in the business of manufacture of gear boxes and axles for heavy and medium commercial vehicles, with production facilities and infrastructure based at Jamshedpur. Tata Technologies Limited (TTL) TTL provides Engineering and Design (E&D) solutions to the Automotive Industry. Tata Motors holds 86.91% of TTLs share capital. TTL is based in Pune (Hinjawadi) and operates in the US and Europe through its wholly owned subsidiaries in Detroit and London respectively. It also has a presence in Thailand. Tata Technologies is a software service provider in the IT services and BPO space. Its global client list includes Ford, General Motors, Toyota and Honda, to name a few. It bought over the British engineering and design services company, Incat International Plc for Rs4b in August 2005. Incat specializes in engineering & design services and product lifecycle management in the international automotive, aerospace and engineering markets. With this acquisition, Tata Motors will have closer proximity to its global customers and be able to provide a wider range of services. Tata Motor European Technical Centre Tata Motor European Technical Centre is Tata's subsidiary based in the UK. It was the joint developer of the World Truck.

FACTORS OF SUCCESS Strong Presence in the Marketplace Tata Motors is the only company in India with a broad based 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 - and key segments - compact, midsize car and utility vehicle segments - of the passenger vehicles market.

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, Indias first sub one tone 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 will be launched in 2008.

Skill Base Developed Over the Last 40 Years Tata Motors is also very well-placed on technology capability. The company had set up its Engineering Research Centre as early as 1966.With 1400 scientists and engineers and state-ofthe-art development, testing and validation facilities, it is this technology capability which has, allowed Tata Motors, over the decades, to offer indigenously developed products. This strength has been accentuated, with the inclusion of TMETC, TDCV and Hispano Carrocera in the R&D network, besides several other specialist external agencies. The company no longer needs to develop every necessity itself. Today it just has to manage the process of product creation, drawing upon already available R&D and skills from different sources.

People Strength

The companys key strength is its people. The over 22,000 employees comprise a very broad talent base, with the required skills in every aspect of the industry. With increasing international initiatives by the company, this talent base is now getting enriched with the necessary competencies to respond to meet world-class standards of quality and cost.

FUTURE PLANS
Tata Motors goal is to enhance its leadership in India, and establish meaningful presence in select international markets. The company will achieve this by developing and marketing relevant products, on its existing platforms and new ones, which delight consumers in every market they are introduced in. The global automobile industry seems to be recovering in line with the worlds improving economic climate. Market sentiment has improved. The outlook for Tata Motors appears to be robust. The automotive demand in Asia remains strong and the market in Europe, United Kingdom and the United States has improved. JLRs operations have been profitable over the last two quarters and the new Jaguar and Land Rover products recently launched have all been well-received in the market. The Company has enormous talent, capabilities and skills, in addition to an impressive development of product and process technologies. These will enable the Company to achieve a more prominent position in the international automobile marketplace in the coming years.

Highlights for each brand and their future plans are summarized below:Jaguar The newly launched XF and XJ luxury sedans have been welcomed by customers in the market. Jaguar cars are regaining the confidence of customers as being reliable, in addition to being high-performance, with great road-handling and occupant safety. The Company is considering widening the product range of Jaguar cars by introducing a station wagon, a new entry-level Jaguar, and a new roadster. Land Rover / Range Rover The Range Rover continues to be the gold standard for offroad vehicles. Work is underway to revamp and refresh the entire model range. The new Range Rover EVOQUE will be a bold design evolution in SUVs. Fuel-efficient start/stop and hybrid

vehicles will also be introduced progressively. The current range of vehicles has seen resurgence in demand, and the challenge before the Company today is to deliver enough vehicles to meet market demand. China has emerged as the third-largest global market for Land Rover/Range Rover and studies are underway to consider options to increase market penetration in China, India and other developing markets. Tata Motors India During the year Tata Motors launched its all-new second-generation Indigo Manza sedan to join the new Indica Vista hatchback launched last year. Both have been well-received in the market. In January, the Company also displayed its new Crossover vehicle, two new passenger carriers and an entire new range of heavy commercial vehicles. These are being released progressively during the current year. The shift of the Nano manufacturing facilities from Singur in West Bengal to Sanand in Gujarat has been completed. The new plant in Sanand, Gujarat, has become operational in a record 14 months time and while this new facility will initially produce 250,000 Nanos per annum, it will have the capability to expand to 500,000 units per annum. In the interim, Nano deliveries had been executed from the Companys facilities in Uttaranchal. The new Sanand plant will now make it possible to derive scale and optimization of manufacturing processes. The Nano has been selling extremely well and continues to evoke unprecedented customer interest across the country. Recognizing that scale and market growth are essential, Tata Motors has, in addition to its domestic growth, viewed international expansion as an important strategic factor. With the acquisition of Jaguar/Land Rover, Daewoo Commercial Vehicle Company Limited, Hispano Carrocera S.p.A. Spain, and a major bus joint venture with Marco Polo of Brazil, Tata Motors expects to be in a position to offer a much wider product range in passenger cars and commercial vehicles in an increasing number of international markets. The operational strategy would be to leverage the Companys strengths in the design and development of products for the base of the pyramid, namely, addressing the often-unserved large potential market at the low end, while also growing in the higher priced segment. The Company also plans to undertake several joint initiatives which will leverage the respective strengths and economies of its various domestic and overseas establishments. While sales of JLR, as also the Indian commercial vehicle segment

suffered badly in 2008-09 during the global meltdown, resulting in a consolidated loss, all these segments have been able to register an impressive recovery in 2009-10, vindicating the sound fundamentals of the Companys longer-term strategies. There is great confidence that with the major initiatives undertaken in terms of global acquisitions, product development, new product introductions and operational synergies, Tata Motors will achieve growth and take its place as a respected and viable automobile enterprise in the global industry with meaningful size and scale in the various segments in which it operates. The progress which the Company has made would never have been possible without the tremendous support of our management, our workforce and our unions. We also appreciate the confidence and loyalty displayed by our customers, whom we will always strive to serve better. Last, but not least, we wish to thank our shareholders for their continued faith and support to the Company through good times and bad. All of this has gone towards making Tata Motors the company it is today. We would need this continued support to achieve the goals we have set for Tata Motors in the years ahead.

MANAGEMENT
Ratan N Tata(Chairman) Ravi Kant(Vice-Chairman) J J Irani R Gopalakrishnan N N Wadia S M Palia R A Mashelkar S Bhargava N Munjee V K Jairath Ranendra Sen Carl-Peter Forster(Chief Executive Officer & Managing Director) P M Telang(Managing Director- India Operations) C Ramakrishnan(Chief Financial Officer)

MARKET SHARE The Company recorded a sale of 633,862 vehicles in 2009-10, a growth of 34% over previous year (472,885 vehicles) in the domestic market in India, representing a 25.5% share in the industry (improving from 24.4% share in the previous year). Commercial vehicle sales were highest ever at 373,842 vehicles achieving a robust growth of 40.9% over previous year and a market share of 64.2% (a gain of 0.4%, over previous year). A strong product portfolio, successful launch of new products and variants, extensive efforts in marketing and finance enablement for customers and leadership in market research and penetration, contributed to the significant improvement in overall performance.

Passenger vehicle sales were 260,020 vehicles, highest ever, achieving a growth of 25.3% over previous year and a market share of 13.7% (stable compared to 13.6% in the previous year). The Company continues to be amongst the top three players in the passenger vehicle market which has over 25 players. The growing sales of the new generation Indica Vista and successful launch and market response for the Indigo Manza mainly contributed to the growth.

OPPORTUNITIES AND RISK OPPORTUNITIES Road development Hardening of RISK interest rates and other

inflationary trends Population Dividend and Increase in income Fuel Prices levels Growing consumer culture Rural Market Growth Increasing scope for international business Input Costs Government Regulations Global Competition Exchange Rates

ANALYSIS
SUMMARIZED BALANCE SHEET
(RS. IN CRORES) PARTICULARS LIABILITIES NET WORTH LOANS FOREIGN CURRENCY MONETARY ITEM TRANSLATION DIFFERENCE ACCOUNT (NET) DEFERRED TAX LIABILITY (NET) TOTAL FUNDS EMPLOYED ASSETS NET FIXED ASSETS GOODWILL INVESTMENTS . FOREIGN CURRENCY MONETARY ITEM TRANSLATION DIFFERENCE ACCOUNT (NET) NET CURRENT ASSETS MISCELLANEOUS EXPENDITURE TOTAL ASSETS AS AT 31.03.10 14965.47 16625.91 AS AT 31.03.09 12230.15 13165.56 164.12

1508.64 33100.02

865.81 26425.64

16436.04 22336.90 161.69

14592.16 12968.13

(5834.61) 33100.02

(1136.67 2.02 26425.64

SUMMARIZED PROFIT AND LOSS ACCOUNT

(RS. IN CRORES) PARTICULARS INCOME SALE OF PRODUCTS AND INCOME FROM OPERATIONS LESS : EXCISE DUTY AS AT 31.03.10 OTHER 38364.10 AS AT 31.03.09 28568.21

2771.05

2938.48

35593.05

25629.73

DIVIDEND AND OTHER INCOME

1853.45

925.97

TOTAL INCOME

37446.50

26555.70

EXPENDITURE RAW MATERIALS / COMPONENTS, MANUFACTURING AND OTHER EXPENSES EMPLOYEE COST PRODUCT DEVELOPMENT EXPENDITURE 29578.64 22325.90

1836.13 144.03

1551.39 51.17

DEPRECIATION / AMORTISATION INTEREST AND DISCOUNTING CHARGES

1033.87 1103.84

874.54 673.68

EXCEPTIONAL ITEMS TOTAL EXPENDITURE PROFIT / (LOSS) BEFORE TAX TAX EXPENSE PROFIT /(LOSS) AFTER TAX

920.45 34616.96 2829.54 (589.46) 2240.08

65.26 25541.94 1013.76 (12.50) 1001.26

COMPARATIVE CHANGE
PARTICULARS GROSS REVENUE % CHANGE NET REVENUE (EXCLUDING EXCISE DUTY) TOTAL EXPENDITURE OPERATING PROFIT % CHANGE OTHER INCOME PROFIT BEFORE INTEREST, DEPRECIATION, AMORTIZATION, EXCEPTIONAL ITEMS & TAX INTEREST AND DISCOUNTING CHARGES (NET) CASH PROFIT % CHANGE DEPRECIATION, AMORTISATION & PRODUCT DEVELOPMENT EXPENSES EXCEPTIONAL ITEMS PROFIT / (LOSS) BEFORE TAX % CHANGE TAX EXPENSE PROFIT / (LOSS) AFTER TAX % CHANGE BALANCE BROUGHT FORWARD FROM PREVIOUS YEAR AMOUNT AVAILABLE FOR APPROPRIATIONS DIVIDEND (INCLUDING TAX) % CHANGE 2010 38,364.10 34.28% 35,593.05 31,414.77 4,178.28 138.43% 1,853.45 6,031.73 2009 28,568.21 -13.68% 25,629.73 23,877.29 1,752.44 -40.22% 925.97 2,678.41 2008 33093.93 28739.41 25807.82 2931.59 483.18 3414.77

1,103.84 4,927.89 145.81% 1177.90 920.45 2,829.54 179% 589.46 2,240.08 123.73% 1,685.99 3,926.07 991.94 186.94%

673.68 2,004.73 -36.00% 925.71 (65.26) 1,013.76 -60.65% 12.50 1,001.26 -50.65% 1,383.07 2,399.62 345.70 -47.60%

282.37 3132.4 652.31 160.73 2576.47 547.55 2028.92 1013.83 3042.75 659.68 -

In this table, the comparative change is shown of various important items like gross revenue, operating profit, and profit after tax etc. All are showing the same pattern: there are decreases in 2009 and growth rate is very high in 2010.

SHAREHOLDING PATTERN OF COMPANY (as at 31.03.10)

SHAREHOLDERS Promoters and Promoter Group Mutual Funds and Unit Trust of India Government Companies, Financial Institutions Banks and cos Foreign Institutional Investors NRIs, Foreign companies and ADRs/GDRs Others Total Ordinary shares 37% 2.15% 15.78% A Ordinary shares 84.27% 00.00% 12.77%

17.83% 17.41%

0.09% 0.02%

9.83% 100%

2.85% 100%

This table presents the shareholding pattern of the company i.e. which shows the share of different shareholders in ownership.

RATIOS
RATIO CURRENT RATIO DEBT-EQUITY RATIO RETURN ON EQUITY RETURN ON INVESTMENT ASSETS TURNOVER RATIO PAY-OUT RATIO 2010 0.89 1.11 16% 13% 1.3 times 44% 2009 0.66 1.08 10% 8% 1.3 times 35%

CURRENT RATIO= CURRENT ASSETS/ CURRENT LIABILITIES DEBT-EQUITY RATIO=DEBT/EQUITY RETURN ON EQUITY=PROFIT AFTER TAX AND PREFERNCE DIVIDEND*100/NET WORTH RETURN ON INVESTMENT: PROFIT BEFORE TAX*100/TOTAL CAPITAL EMPLOYED. ASSETS TURNOVER RATIO: SALES/FIXED ASSETS PAY-OUT RATIO: DIVIDEND PER SHARE*100/EARNING PER SHARE This table shows the different ratios which are important to calculate to understand the position of the company with the help of formulas written above. All ratios are increasing as compared to previous year which is a sign of good performance but some ratio like current ratio and returns can be increased.

CASH FLOW FROM DIFFERENT ACTIVITIES

PARTICULARS NET CASH FROM OPERATING ACTIVITIES NET CASH USED IN INVESTING ACTIVITIES NET CASH FROM FINANCING ACTIVITIES As at 31.03.10 6586.03 (11848.29) 5348.49 As at 31.03.09 1295.02 (10585.12) 8104.70

This table shows the cash flow from different activities in the organization.

SHARE PERFORMANCE ON NATIONAL STOCK EXCHANGE

ORDINARY SHARES MONTH APR-09 MAY-09 JUN-09 JUL-09 AUG-09 SEP-09 OCT-09 NOV-09 DEC-09 JAN-10 FEB-10 MAR-10 HIGH 281.50 363.25 389.20 421.55 499.70 614.85 589.25 663.15 791.55 826.45 721.55 813.00 A ORDINARY SHARES MONTH APR-09 MAY-09 JUN-09 JUL-09 AUG-09 SEP-09 OCT-09 NOV-09 DEC-09 JAN-10 FEB-10 MAR-10 HIGH 215.00 296.10 320.00 350.85 365.10 437.95 449.85 495.10 513.55 511.35 420.35 484.55 LOW 175.35 210.20 267.00 235.25 300.05 383.05 413.75 431.50 472.40 415.05 379.35 422.25 LOW 180.00 257.30 290.75 262.65 403.85 508.30 529.30 552.35 688.70 694.35 667.40 725.20

This table shows the share performance of shares of TATA MOTORS LTD. On National Stock Exchange. The value of share is increased manifolds in this time-period.

EARNING PER SHARE

PARTICULARS PROFIT AFTER TAX WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES FOR BASIC EPS WEIGHTED AVERAGE NUMBER OF A ORDINARY SHARES FOR BASIC EPS SHARE OF PROFIT FOR ORDINARY SHARES FOR BASIC EPS SHARE OF PROFIT FOR A ORDINARY SHARES FOR BASIC EPS EARNINGS PER ORDINARY SHARE(BASIC) EARNINGS PER A ORDINARY SHARE (BASIC) 31.03.10 2240.08 46,37,36,463 31.03.09 1001.26 41,30,53,469

6,41,76,028

2,74,28,499

1964.94 275.14 42.37 42.87

937.63 63.63 22.70 23.20

EARNING PER SHARE=PROFIT AVAILABLE FOR EQUITY SHAREHOLDER NUMBER OF EQUITY SHARES This table shows the earning per share of by the company which is also increased as compared to previous year. It is the basic earning per share, not the diluted. Earning per share is quiet good but it can be improved.

REFERENCE
WEBSITE WWW.WIKEPEDIA.ORG WWW.SCRIBD.COM WWW.TATAMOTOS.COM WWW.MONEYCONTROL.COM