TATA MOTORS

INTRODUCTION

Vision
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."

Profile
Tata Motors Limited is India's largest automobile company, with consolidated revenues of Rs.70,938.85 crores (USD 14 billion) in 200809. 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. Established in 1945, ranked 19th in global production with 798,265 vehicles. India, as a region, is experiencing one of the highest growth rates in the world. 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. More than 800 million automobiles and light trucks are on the road worldwide with more than 70 million new vehicles sold in 2008. The company's manufacturing base in India is spread across Jamshedpur (Jharkhand), Pune (Maharashtra), Lucknow (Uttar Pradesh), Pantnagar

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(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 companys dealership, sales, services and distributes and markets Fiat branded cars in India. 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. Tata has been actively acquiring and joint venturing with other companies during the past five years. The purchase of Daewoo Commercial Vehicles (2004), a minority investment in Spanish bus and coach manufacturer Hispano Carrocera (2005), an alliance with Fiat, a joint venture with Brazilian bus and coach manufacturer Marcopolo and with Thailands Thonburi Automotive Assembly Plant Company (2006). 2008 heralded two major events: the purchase of Britains icons Jaguar Land Rover and the launch of the Tata Nano, the Peoples Car for 100,000 rupees or approximately $2,100. Seating 4, the Nano is a mere 10 feet long and has a 4 gallon fuel tank. These events have given Tata Motors its 15 seconds of fame. spare parts network comprises over 3500 touch points; Tata Motors also

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Mile stones:
2005 Tata Motors rolls out the 500,000th Passenger Car from its Car Plant Branded buses and coaches - Starbus and Globus - launched Tata Motors acquires 21% stake in Hispano Carrocera SA, Spanish bus manufacturing 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 Inauguration of new factory at Jamshedpur for Novus Tata TL 4X4, India's first Sports Utility Truck (SUT) is launched Launch of Novus range of medium trucks in Korea, by Tata Daewoo Commercial Vehicle Co. (TDCV) 2006 Tata Motors vehicle sales in India cross four million mark concept at Auto Expo 2006 Indica V2 Xeta launched Passenger Vehicle sales in India cross one-million mark Tata Motors and Marcopolo, Brazil, announce joint venture to manufacture fully built buses & coaches for India & markets abroad Facility in Pune

Tata Motors unveils new long wheel base premium Indigo & X-over

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Tata Motors first plant for small car to come up in West Bengal Tata Motors extends CNG options on its hatchback and estate range TDCV develops South Korea's first LNG-Powered Tractor- Trailer agreements Tata Motors introduces a new Indigo range 2007 Construction of Small Car plant at Singur, West Bengal, begins on New 2007 Indica V2 range is launched Tata Motors launches the long wheel base Indigo XL, India's first stretch limousine Common rail diesel (DICOR) engine extended to Indigo sedan and Tata Motors and Thonburi Automotive Assembly Plant Co. (Thonburi), announce formation of a joint venture company in Thailand to manufacture, assemble and market pickup trucks. Roll out of 100,000th Ace Tata-Fiat plant at Ranjangaon inaugurated offering, the Tata Spacio. CRM-DMS initiative crosses the 1000th location milestone Launch of Magic, a comfortable, safe, four-wheeler public Launch of Winger, Indias only maxi-van in India Launch of the Sumo Victa Turbo DI, the new upgraded range of its entry-level utility vehicle, the Sumo Spacio transportation mode, developed on the Ace platform Launch of a new Upgraded range of its entry level utility vehicle estate range January 21 Tata Motors and Fiat Group announce three additional cooperation

Fiat Group and Tata Motors announce establishment of Joint Venture

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Tata Motors launches Indica V2 Turbo with dual airbags and ABS Launch of new Safari DICOR 2.2 VTT range, powered by a new 2.2 L Rollout of the one millionth passenger car off the Indica platform. 2008 Ace plant at Pantnagar (Uttarakhand) begins production. Indica Vista the new generation Indica, is launched. Tata Motors' new plant for Nano to come up in Gujarat. Latest common rail diesel offering- the Indica V2 DICOR, launched. launched. Launch of the new Sumo -- Sumo Grande, which combines the looks of an SUV with the comforts of a family car. Tata Motors unveils its People's Car, Nano, at the ninth Auto Expo. Xenon, 1-tonne pick-up truck, launched in Thailand. purchase Jaguar and Land Rover. Tata Motors completes acquisition of Jaguar Land Rover. Tata Motors introduces new Super Milo range of buses. III Commonwealth Youth Games Pune 2008. Indica Vista the second generation Indica, is launched. Tata Motors launches passenger cars and the new pick-up in D.R. Congo. 2009 Tata Motors begins distribution of Prima World truck Tata Motors is Official Vehicle Provider to Youth Baton Relay for The Tata Motors signs definitive agreement with Ford Motor Company to Indigo CS (Compact Sedan), worlds first sub four-metre sedan, Direct Injection Common Rail (DICOR) engine.

Tata Motors launches the next generation all-new Indigo MANZA

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FREELANDER 2 launched in India Tata Marcopolo Motors' Dharwad plant begins production. Tata Motors launches Nano - The People's Car Introduction of new world standard truck range. Launch of premium luxury vehicles - Jaguar XF, XFR and XKR and Land Rover Discovery 3, Range Rover Sport and Range Rover from Jaguar and Land Rover in India.

Tata Motors is a manufacturer that is relatively unknown in the U.S. yet has a compelling story. And a SWOT analysis of Tata Motors offers lessons for every business owner.

SWOT Analysis of Tata Motors

Strengths The Nano is Tatas iPod. Great engineering and design in a rulesbreaking product that has generated global awareness and admiration The brand is very well established in the economy segment partners and acquired companies this Tatas management is strengthened by the collective experience of its includes general management, marketing, sales and operations Tatas buying power is enhanced and leveraged through its size
Tata is making smart acquisition and partnering decisions so far. Local

management teams remain in place vs. installing Tata leaders from afar. 1+1 = 3, seems to be working so far

Weaknesses

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Tata Motors is not well positioned in the luxury segment. This is not a problem during recessionary times but a lack of diversification can Most of the automobiles Tata manufactures are based on older platforms
The Companys manufacturing practices trail competitors

hurt during better times

Opportunities The Nano could sell well in other geographic markets. Expanding Jaguar and Land Rover provide Tata with an opportunity to establish itself in the luxury segment Threats Powerful competitors for the luxury market including Honda, Toyota, Ford and Mercedes-Benz are beginning to push into the Indian market Tatas competitive price advantage will be under pressure as Rising material costs will create pressure to increase prices There is a trending rise in diesel fuel costs which will hurt Tatas line of products. Other competing car manufacturers have been in the passenger car business for 40, 50 or more years. Therefore Tata Motors Limited has to catch up in terms of quality and lean production. Sustainability and environmentalism could mean extra costs for this low-cost producer. This could impact its underpinning competitive advantage. Obviously, as Tata globalises and buys into other brands this problem could be alleviated. environmental regulations are tightened markets such as China may find the Nano just the answer

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Therefore, the company has done a very good job in the past five years of strengthening its position in the market. It appears to have an excellent challenges. opportunity for future success but like all businesses, faces significant

CONSOLIDATED BALANCE SHEET AND PROFIT&LOSS A/C

Balance sheet
Mar ' 09 Mar ' 08 Mar ' 07 Mar '06 Mar '05

Sources of funds
Owner's fund Equity share capital Share application money Preference share capital Reserves & surplus 514.05 11,855.15 385.54 7,428.45 385.41 6,458.39 382.87 5,127.81 361.79 3,749.60

Loan funds
Secured loans Unsecured loans Total 5,251.65 2,461.99 2,022.04 822.76 489.81 7,913.91 3,818.53 1,987.10 2,114.08 2,005.61 25,534.76 14,094.51 10,852.94 8,447.52 6,606.81

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Uses of funds
Fixed assets Gross block Less : revaluation reserve Less : accumulated depreciation Net block Capital work-in-progress Investments 13,905.17 25.07 6,259.90 7,620.20 6,954.04 12,968.13 10,830.83 25.51 5,443.52 5,361.80 5,064.96 4,910.27 8,775.80 25.95 4,894.54 3,855.31 2,513.32 2,477.00 7,971.55 26.39 4,401.51 3,543.65 951.19 2,015.15 6,611.95 3,454.28 3,157.67 538.84 2,912.06

Net current assets

Current assets, loans & advances Less : current liabilities & provisions Total net current assets Miscellaneous expenses not written Total 10,836.58 10,781.23 10,318.42 9,812.06 7,248.88 12,846.21 12,029.80 8,321.20 7,888.65 7,268.80 -2,009.63 2.02 -1,248.57 6.05 1,997.22 10.09 1,923.41 -19.92 14.12 18.16

25,534.76 14,094.51 10,852.94 8,447.52 6,606.81 12,358.84 4,145.82 558.32 5,433.07 5140.08 2,530.55 5,590.83 3855.04 2,117.86 1,323.08 5,196.07 3853.74 1,648.57 2,480.15 1,550.00 1,260.05 2,185.63 1,450.32 3828.34 3617.52

Notes:
Book value of unquoted investments Market value of quoted investments Contingent liabilities Number of equity sharesoutstanding (Lacs)

Profit loss account

Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05

Income
Operating income 25,660.67 28,767.91 26,664.25 20,088.63 17,199.17 19,039.41 1,171.59 1,551.39 1,224.15 1,867.05 -916.02 23,937.57 1,723.10 20,931.81 1,230.14 1,544.57 1,179.48 1,982.79 -1,131.40 25,737.39 3,030.52 19,529.88 1,200.36 1,367.83 1,068.56 1,488.16 -577.05 24,077.74 2,586.51 14,376.11 929.82 1,143.13 759.54 1,042.52 -308.85 17,942.27 2,146.36 12,101.28 830.45 1,039.34 598.75 911.73 -282.43 15,199.12 2,000.05

Expenses
Material consumed Manufacturing expenses Personnel expenses Selling expenses Adminstrative expenses Expenses capitalised Cost of sales Operating profit

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Other recurring income Adjusted PBDIT Financial expenses Depreciation Other write offs Adjusted PBT Tax charges Adjusted PAT Non recurring items Other non cash adjustments Reported net profit Earnigs before appropriation Equity dividend Preference dividend Dividend tax Retained earnings 841.54 2,564.64 704.92 874.54 51.17 934.01 12.50 921.51 79.75 15.29 1,016.55 2,399.62 311.61 34.09 2,053.92 359.42 3,389.94 471.56 652.31 64.35 2,201.72 547.55 1,654.17 374.75 2,028.92 3,042.75 578.43 81.25 2,383.07 887.23 3,473.74 455.75 586.29 85.02 2,346.68 660.37 1,686.31 227.15 -0.07 1,913.39 2,690.15 578.07 98.25 2,013.83 685.18 2,831.54 350.24 520.94 73.78 1,886.58 524.93 1,361.65 167.23 1,528.88 2,094.54 497.94 69.84 1,526.76 399.94 2,399.99 234.30 450.16 67.12 1,648.41 415.50 1,232.91 4.04 -1.54 1,235.41 1,601.21 452.19 63.42 1,085.60

DEMAND FORECASTING
Demand forecasting is the activity of estimating the quantity of a product or service that consumers will purchase.

Demand forecasting for the year 2009-10 is done using TREND PROJECTION METHOD based on past five years sales figures.

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Year 2004-05 2005-06 2006-07 2007-08 2008-09 Sales in cores (Rs.) 17,199.17 20,088.63 26,664.25 28,767.91 25,660.67 percentage increase(%) 16.80 32.73 7.89 -10.80

Sales in crores
35,000.00 30,000.00 25,000.00 20,000.00 15,000.00 10,000.00 5,000.00 0.00 2004-05 2005-06 2006-07 2007-08 2008-09 Sales in cores

Year 2004-05 2005-06 2006-07 2007-08 2008-09

Sales in X X^2 XY cores(Y) 17,199.17 1 1 17199.17 20,088.63 2 4 40177.26 26,664.25 3 9 79992.75 28,767.91 4 16 115071.64 25,660.67 5 25 128303.35 Y=118380.63 X=15 X^2=55 XY=380744.17

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Equation for the line: y=a+bX Y intercept and slope of the line using : Y=Na+bX XY=aX+bX^2 Substitute the values from the table in above equations: 1,18,380.63=5a+15b 380744.20=15a+55b by solving above, we get a=15995.43 b=2560.23 therefore estimation for the year 2009-10 is as follows: Y for 2005 2006 2007 2008 2009 2010 a+bX 15995.43+2560.23(1) 15995.43+2560.23(2) 15995.43+2560.23(3) 15995.43+2560.23(4) 15995.43+2560.23(5) 15995.43+2560.23(6) sales forecasted 18555.66 21115.89 23676.12 26236.35 28796.58 31356.81

Therefore the demand forecasted for the year 2009-10 would be Rs.31, 356.81.

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And the percentage change would be 22.20%

REASONS FOR FALL IN PROFIT IN 2008-09

Tata Motors Net Revenue in 2008-09 lower at Rs.25660.79 crores, and Net Profit lower at Rs.1001.26 crores, was due to market upheaval. There was severe demand contraction in the automobile industry. Revenues for the year were Rs.25660.79 crores compared to Rs.28739.41 crores in 2007-08, a decline of 10.7%. The Profit before Tax was Rs.1013.76 crores compared to Rs.2576.47 crores in 200708, a decline of 60.7%. The Profit after Tax for the year was Rs.1001.26 crores compared to Rs.2028.92 crores, a decline of 50.7%. The demand contraction was triggered by high interest rates and unavailability of finance throughout the year, particularly in the October-December quarter post the global financial market upheavals. The fall in volumes (sales) combined with peak input prices and high interest rates, brought margins under pressure. Tata Motors consolidated performance in 2008-09 has been hit by the Jaguar-Land Rover (JLR) acquisition as the company reported a loss for the first time in eight years at Rs. 2,505 crore against a profit of Rs. 2,167 crore in the previous year. The numbers are not comparable as the previous years figures did not include that of Jaguar-Land Rover. For the year, Tata Motors reported an operating loss (consolidated) of Rs. 658 crore against an operating profit of Rs. 3,401.14 crore.

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JLR had made a profit in 2007 and continued to do so in the first half of 2008, but the global meltdown, especially after July 2008 with vehicle financing and demand drying up, impacted the auto industry worldwide, including Jaguar-Land Rover.

TURNAROUND STRATERGY
The company accelerated cost reduction measures and proactively managed working capital to contain the impact as best as it could. Tata Motors had already laid off 2,000 workers at its JLR facilities and shut different plants and could consider further lay-offs. Work on low cost sourcing and tight control over cash flows. Stimulus packages from the Government in the last quarter of the year have to an extent helped regenerate overall sales, as in the automobile industry, but growth is yet to revive to earlier levels.