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1.1 INTRODUCTION:Creating history, Indias top corporate Tatas on Wednesday acquired luxury auto brandsJaguar and Land Roverfrom Ford Motors for $ 2.3 billion, stamping their authority as a takeover tycoon. Beating compatriot Mahindra and Mahindra for the prestigious brands on 2nd June 2008 announced the deal they signed with Ford, which on its part would chip in $600 million towards JLRS pension plan. We are very pleased at the prospect of Jaguar and Land Rover being a significant part of our automotive business, Group Chairman Ratan Tata said after making the deal public. Tata Motors' acquisition of two iconic British brandsJaguar and Land Rover - was finally completed. Well, it is true that their immediate previous owners were American, but the flavour of the two companies continues to be very Brit. Tata has acquired the two companies for about half the price that Ford paid their original owners when the latter acquired them in 1989. Though that sounds like a good deal, it is not going to be all rosy for Tata Motors after the acquisition. The real work starts now for this global Indian, trying to pull together the two brands and making them more profitable while still being weighed down by their historical issues. Jaguar and Land Rover are both special, super premium brands that have a huge fan following. The ownership of the two brands has changed hands, but the brands themselves will remain untarnished. And Tata Motors itself has just become more global. Calls to separate the passenger car business from the rest of the company will only get shriller now. Tata Motors is now officially the proud parent of the Jaguar, and its sister Land Rover. The deal is a fulfillment of Mr. Tatas personal vision and is intended to catapult Tata Motors, the owner of the Nano, into the global big league of auto majors. It will also reinforce the global perception of India Inc as a leader in international business, and not just in IT. Yet, the final lap of Group Tatas long-drawn-out bid to acquire

Jaguar-Land Rover (JLR) from Ford for $2.3 billion in cash was a bit of an anti-climax. Compared with the Corus deal, this was almost hush-hush. In open-for-business Britain, the headlines are already calling the Tatas the Corus owners, and not the Indian auto company. The key challenge for the new owner of Jaguar and Land Rover will be to grow and maintain sales of the two brands in a global downturn and credit crunch. Tata Motors will have to commit significant managerial and financial resources to engineer a turnaround. It will have to significantly step up its R&D budget as well as increase operating expenditure and capital expenditure to meet JLRs requirements. Auto analysts tracking the development say the acquisition was just the first step; the real challenge lies in running JLR. The acquisition cost of $2.3 billion is financed by a bridge loan, which will be raised through a syndicate of banks. The bridge money will be replaced by a combination of long-term debt and equity at an appropriate time. The company will raise funds to finance its equity contribution by selling a portion of its stake in some of its subsidiaries in the next few months. Largest cross-border auto takeover SOURCES indicate that initially two joint ventures with Hitachi for axles and transmission - HVAL and HVTL- and auto component maker TACO are some of the subsidiary companies Tata Motors is looking to divest. Citigroup and JPMorgan are the lead advisors to the deal, which is the largest cross-border auto acquisition by an Indian company. The deal is expected to close by the end of June 2008, subject to regulatory approvals and the achievement of financial closure. The transaction is significant for a number of reasons. Coming as it does amidst a global freeze in credit markets; it shows that top-notch Indian companies have the ability to raise large amounts of money at reasonably low rates of interest. Besides the two US banks, the bridge loan is being underwritten by a consortium of eight banks State Bank of India, Bank of Tokyo-Mitsubishi UFJ, BNP Paribas, ING, Mizuho and Standard Chartered. The loan has been structured in the form of step-up financing: for the first six months, the interest charge

would be Libor (London Inter-Bank Offered Rate) plus 70 basis points and for the next six months, it would be 140 basis points over the benchmark rate. The six-month Libor is currently at 2.63%. The bridge loan is being raised by a special purpose vehicle Tata Motors UK, which will own these two brands, banking sources said. Tata Motors UK is 100% owned by Tata Motors.


To discuss the form of mergers and acquisitions.

To highlight the real motives of merger and acquisitions.

Understand the advantages and disadvantages of cross-border acquisitions.

Understand the need for growth through acquisitions in foreign countries.

1.3 Limitations of the study

The information collected is limited by the authenticity and accuracy of the information as these are mostly collected from secondary source. The data collected from the websites are limited and certain information is not available in the website

The study is limited to analyze short term performance of the acquisition.

No company visits are possible so assumptions are based on secondary data, current scenario and statistics.

Limited information was available from company side.

INTRODUCTION OF THE TOPIC 2.1 Mergers and Acquisition

Business combinations which may take forms of merger, acquisitions, amalgamation and takeovers are important features of corporate structural changes. They have played an important role in the financial and economic growth of a firm. Merger is a combination of two or more companies into one company. One or more companies may merge with an existing company or they may merge to form a new company. Laws in India use the term amalgamation for merger. For example, Section 2(1A) of the Income Tax Act, 1961 defines amalgamation as the merger of one or more companies with another company or the merger of two or more companies (called amalgamating company or companies) to form a new company (called amalgamated company) in such a way that all assets and liabilities of the amalgamated company and shareholders holding not less than nine-tenths in value of the shares in the amalgamating company or companies become shareholders of the amalgamated company. Merger or amalgamation may take two forms: Merger through absorption Merger through consolidation

Absorption: In absorption, one company acquires another company. All companies except one lose their identity in merger through absorption.

In a consolidation, two or more companies combine to form a new company. In this form of merger, all companies are legally dissolved and a new entity is created. In consolidation, the acquired company transfers its asset, liabilities and shares to the acquiring company for cash or exchange of shares.

A fundamental charectaristic of merger (either through absorption or consolidation) is that the acquiring company (existing or new) takes over the ownership of other companies and combine their operations with its own operations. In an acquisition two or more companies may remain independent, separate legal entity, but there may be change in control of companies.

A takeover may also define as obtaining of control over management of a company by another. Under the Monopolies and Restrictive Trade Practices Act, takeover means acquisition of not less than 25% of the voting power in a company. If a company wants to invest in more than 10% of the subscribe capital of another company, it has to be approved in the shareholders general meeting and also by the central government. The investment in shares of another companies in excess of 10% of the subscribed capital can result into their takeover.

2.2 Types of Merger

There are three major types of mergers they can be explain as follows:

1 Horizontal Merger: This is a combination of two or more firms in similar type of production, distribution or area of business.

2 Vertical Mergers: This is a combination of two or more firms involved in different stages of production or distribution. Vertical merger may take the form of forward or backward merger. Backward merger: When a company combines with the supplier of material, it is called backward merger. Forward merger: When it combines with the customer, it is known as forward merger.

3 Conglomerate Mergers: This is a combination of firms engaged in unrelated lines of business activity. Example is merging of different business like manufacturing of cement products, fertilizers products, electronic products, insurance investment and advertising agencies.

Advantages of Merger and Acquisitions

1 Maintaining or accelerating a companys growth. 2 Enhancing profitability, through cost reduction resulting from economies of scale. 3 Diversifying the risk of company, particularly when it acquires those business whose income streams are not correlated. 4 Reducing tax liability because of the provision of setting-off accumulated losses and unabsorbed depreciation of one company against the profits of another. 5 Limiting the severity of competition by increasing the companys market power.

2.3 Motives behind the Merger

Motives of merger can be broadly discussed as follows: 1 Growth: One of the fundamental motives that entice mergers is impulsive growth. Organizations that intend to expand need to choose between organic growth or acquisitions driven growth. Since the former is very slow, steady and relatively consumes more time the latter is preferred by firms which are dynamic and ready to capitalize on opportunities.

2 Synergy: Synergy is a phenomenon where 2 + 2 = 5. This translates into the ability of a business combination to be more profitable than the sum of the profits of the individual firms that were combined. It may be in the form of revenue enhancement or cost reduction.

3 Managerial Efficiency: Some acquisitions are motivated by the belief that the acquires management can better manage the targets resources. In such cases, the value of the target firm will rise under the management control of the acquirer.

4 Strategic: The strategic reasons could differ on a case-to-case basis and a deal to the other. At times, if the two firms have complimentary business interests, mergers may result in consolidating their position in the market.

5 Market entry: Firms that are cash rich use acquisition as a strategy to enter into new market or new territory on which they can build their platform.

6 Tax shields: This plays a significant role in acquisition if the distressed firm has accumulated losses and unclaimed depreciation benefits on their books. Such acquisitions can eliminate the acquiring firms liability by benefiting from a merger with these firms.

2.4 Benefits of Mergers

1 Limit competition 2 Utilize under-utilized market power 3 Overcome the problem of slow growth and profitability in ones own industry 4 Achieve diversification 5 Gain economies of scale and increase income with proportionately less investment 6 Establish a transnational bridgehead without excessive start-up costs to gain access to a foreign market. 7 utilize under-utilized resources- human and physical and managerial skills. 8 Displace existing management. 9 Circum government regulations. 10 Reap speculative gains attendant upon new security issue or change in P/E ratio. 11 Create an image of aggressiveness and strategic opportunism, empire building and to amass vast economic power of the company.

2.5 Steps of Merger and Acquisitions

There are three important steps involved in the analysis of merger and acquisitions can be explained as follows:

1 Planning: The most important step in merger and acquisition is planning. The planning of acquisition will require the analysis of industry specific and the firm specific information. The acquiring firm will need industry data on market growth, nature of competition, capital and labour intensity, degree of regulation etc. About the target firm the information needed will include the quality of management, market share, size, capital structure, profit ability, production and marketing capabilities etc,

2 Search and Screening: Search focuses on how and where to look for suitable candidates for acquisition. Screening process short lists a few candidates from many available. Detailed information about each of these candidates is obtained. Merger objectives may include attaining faster growth, improving profitability, improving managerial effectiveness, gaining market power and leadership, achieving cost reduction etc. These objectives can be achieved in various ways rather than through merger alone. The alternatives to merger include joint venture, strategic alliances, elimination of inefficient operations, cost reduction and productivity improvement, hiring capable manager etc. If merger is considered as the best alternative, the acquiring firm must satisfy itself that it is the best available option in terms of its own screening criteria and economically most attractive.

3 Financial Evaluations: Financial evaluation of a merger is needed to determine the earnings and cash flows, area of risk, the maximum price payable to the target company and the best way to finance the merger. The acquiring firm must pay a fair consideration to the target firm for acquiring its business. In a competitive market situation with capital market efficiency, the current market value is the current market value of its share of the target firm. The target firm will not accept any offer below the current market value of its share. The target firm in fact, expects that merger benefits will accrue to the acquiring firm. A merger is said to be at a premium when the offer price is higher than the target firms pre merger market price. The acquiring firm may pay the premium if it thinks that it can increase the target firms after merger by improving its operations and due to synergy. It may have to pay premium as an incentive to the target firms shareholders to induce them to sell their shares so that the acquiring firm is enabled to obtain the control of the target firm.

2.6 Reasons for Merger The reason of merger can be broadly explain as follows:

1 Accelerated Growth: Growth is essential for sustaining the viability, dynamism and value enhancing capability of a firm. Growing operations provide challenges and excitement to the executives as well as opportunities for their job enrichment and rapid career development. This help to increase managerial efficiency. Other things being the same, growth leads to higher profits and increase in the shareholders value. It can be achieve growth in two ways: Expanding its existing markets Enhancing in new market

A firm may expand and diversify its markets internally or externally. If company cannot grow internally due to lack of physical and managerial resources, it can grow externally by combining its operations with other companies through mergers and acquisitions.

2 Enhanced Profitability: The combination of two or more firm may result in more than the average profitability due to cost reduction and efficient utilization of resources. This may happen because of the following reasons:

a) Economies of Scale : When two or more firm combine, certain economies are realized due to the larger volume of operations of the combined entity. These economies arise because of more intensive utilization of production capacities, distribution networks, engineering services, research and development facilities, data processing systems and so on.

b) Operating Economies : In addition to economies of scale, a combination of two or more firm may result into cost reduction due to operating economies. A combined firm may avoid or reduce fuctions and facilities. It can consolidate its management functions such as manufacturing, R & D and reduce operating costs. For example, a combined firm may eliminate duplicate channels of distribution or create a centralized training center or introduce an integrated planning and control system.

c) Strategic Benefits : If a firm has decided to enter or expand in a particular industry, acquisition of a firm engaged in that industry rather than dependence on internal expansion may offer strategic advantages such as less risk and less cost.

d) Complementary Resources : If two firms have complementary resources it may make sense for them to merge. For example, a small firm with an innovative product may need the engineering capability and marketing reach of a big firm. With the merger of the two firms it may be possible to successfully manufacture and market the innovative product. Thus, the two firms, thanks to their complementary resources, are worth more together than they are separately.

e) Tax Shields : When a firm with accumulated losses and unabsorbed tax shelters merges with a profit making firm, tax shields are utilized better. The firm with accumulated losses and unabsorbed tax shelters may not be able to derive tax advantages for a long time. However, when it

merges with a profit making firm, its accumulated losses and unabsorbed tax shelters can be set off against the profits of the profit making firm and tax benefits can be quickly realized.

Utilisation of surplus funds: A firm in a mature industry may generate a lot of cash but may not have opportunities for profitable investment. Most managements have a tendency to make further investments, even though they may not be profitable. In such a situation a merger with another firm involving cash compensation often represents a more efficient utilization of surplus fund.

Managerial Effectiveness: One of the potential gains of merger is an increase in managerial effectiveness. This may occur if the existing management team, which is performing poorly, is replaced by a more effective management team. Another allied benefit of a merger may be in the form of greater congruence between the interests of managers and the shareholders. A common argument for creating a favourable environment for mergers is that it imposes a certain discipline on the management.

Diversification of Risk: A commonly stated motive for mergers is to achieve risk reduction through diversification. The extent, to which risk is reduced, of course, depends on the correlation between the earnings of the merging entities. While negative correlation brings greater reduction in risk. The positive correlation brings lesser reduction in risk.

Lower Financing Costs: The consequence of large size and greater earnings stability is to reduce the cost of borrowing for the merged firm. The reason for this is that the creditors of the merged firm enjoy better protection than the creditor of the merging firms independently.

Legal, Tax and Financial aspects of Merger

3.1 Legal Procedures for Merger and Acquisition The following is the procedures for merger or acquisition is fairly long dawn. Normally it involves the following steps: Permission for merger: Two or more firm can amalgamate only when amalgamation is permitted under their memorandum of association. Also, the acquiring firm should have the permission in its object clause to carry on the business of the acquired company. In the absence of these provisions in the memorandum of association, it is necessary to seek the permission of the shareholders, board of directors and the Company Law Board before affecting the merger.

Information to the stock exchange: The acquiring and the acquired companies should inform the stock exchange where they are listed about the merger.

Approval of board of directors: The boards of the directors of the individual firm should approve the draft proposal for amalgamation and authorize the managements of companies to further pursue the proposal.

Application in the High Court: An application for approving the draft amalgamation proposal duly approved by the board of directors of the individual firm should be made to the High Court. The High Court would convene a meeting of the shareholders and creditors to approve the amalgamation proposal. The notice of meeting should be sent to them at least 21 days in advance.

Shareholders and Creditors meetings: The individual firm should hold separate meetings of their shareholders and creditors for approving the amalgamation scheme. At least 75% of shareholders and creditors in separate meeting, voting in person or by proxy, must accord their approval to the scheme.

Sanction by the High Court: After the approval of shareholders and creditors on the petitions of the companies, the High Court will pass order sanctioning the amalgamation scheme after it is satisfied that the scheme is fair and reasonable. If it deems so, it can modify the scheme. The date of the courts hearing will be published in two newspapers and also the Regional Director of the Law Board will be intimated.

Filing of the Court order: After the Court order its certified true copies will be filed with the Registrar of Companies.

Transfer of asset and liabilities: The asset and liabilities of the acquired firm will be transferred to the acquiring firm in accordance with the approved scheme, with effect from the specified date.

Payment by cash or securities: As per the proposal, the acquiring firm will exchange shares and debentures and pay cash for the shares and debentures of the acquired firm. These securities will be listed on the stock exchange.

3.2 Financial Aspects of Merger

There are many ways in which a merger can result into financial synergy. A merger may help in: Eliminating the financial constraint Deploying surplus cash Enhancing debt capacity Lowering the financial cost.

Financial Constraint: A firm may be constrained to grow through internal development due to shortage of fund. The firm can grow externally by acquiring another firm by the exchange of shares and thus, release the financial constraints.

Surplus Cash: A firm may be faced by a cash rich firm. It may not have enough internal opportunities to invest its surplus cash. It may either distribute its surplus cash to its shareholders or use it to acquire some other firm. The shareholders may not really benefit much if surplus cash is returned to them since they would have to pay tax at ordinary income tax rate. Their wealth may increase through an increase in the market value of their shares if surplus cash is used to acquire another firm. If they sell their shares they would pay tax at a lower, capital gain tax

rate. The company would also be enabled to keep surplus funds and grow through acquisition.

Debt capacity: A merger of two firms, with fluctuating, but negatively correlated, cash flows, can bring stability of cash flows of the combined firm. The stability of cash flows reduces the risk of insolvency and enhances the capacity of the new entity to service a larger amount of debt. The increased borrowing allows a higher interest tax shield which adds to the shareholders wealth.

Financing cost: Does the enhanced debt capacity of the merged firm reduce its cost of capital? Since the probability of insolvency is reduced due to financial stability and increased protection to lenders, the merged firm should be able to borrow at a lower rate of interest. This advantage may, however be taken off partially or completely by increase in the shareholders risk on account of providing better protection to lenders. Another aspect of the financing costs is issue costs. A merged firm is able to realize economies of scale in flotation and transaction costs related to an issue of capital. Issue costs are saved when the merged firm makes a larger security issue.

THE COMPANY PROFILE: 4.1 Jaguar and Land Rover Profile

The design for the original Land Rover vehicle was started in 1947 by Maurice Wilks, chief designer at the Rover Company, on his farm in Newborough, Anglesey. It is said that he was inspired by an American World War II Jeep that he used one summer at his holiday home in Wales. The first Land Rover prototype, later nicknamed 'Centre Steer', was built on a Jeep chassis.

The early choice of colour was dictated by military surplus supplies of aircraft cockpit paint, so early vehicles only came in various shades of light green; all models until recently feature sturdy box section ladder-frame chassis.

The early vehicles, such as the Series I, were field-tested at Long Bennington and designed to be field-serviced; advertisements for Rovers cite vehicles driven thousands of miles on banana oil. Now with more complex service requirements this is less of an option. The British Army maintains the use of the mechanically simple 2.5-litre four-cylinder 300TDiengined versions rather than the electronically controlled 2.5-litre five-cylinder TD5 to retain some servicing simplicity. This engine also continued in use in some export markets using units built at a Ford plant in Brazil, where Land Rovers were built under license and the engine was also used in Ford pick-up trucks built locally.

Production of the TDi engine ended in the United Kingdom in 2006, meaning that Land Rover no longer offers it as an option. International Motors of Brazil offer an engine called the 2.8 TGV Power Torque, which is essentially a 2.8-litre version of the 300TDi, with a corresponding increase in power and torque. All power is combined with an All-Terrain Traction Control which gives active terrain response; Ferrari uses a similar system in race traction.

During its ownership by Ford, Land Rover was associated with Jaguar. In many countries they shared a common sales and distribution network (including shared dealerships), and some models shared components and production facilities.

A Land Rover dealership in San Jose, California 1947: Rover's chief designer Maurice Wilks and his associates create a prototype for a new off-road vehicle 1948: The first Land Rover was officially launched the 30th April, 1948, at the Amsterdam Motor Show 1958: Series II launched 1961: Series IIA began production 1967: Rover becomes part of Leyland Motors Ltd, later British Leyland (BL) as Rover Triumph 1970: Introduction of the Range Rover 1971: Series III launched 1975: BL collapses and is nationalized, publication of the Ryder Report recommends that Land Rover be split from Rover and be treated as a separate company within BL and becomes part of the new commercial vehicle division called the Land Rover Leyland Group

1976: One-millionth Land Rover leaves the production line 1978: Land Rover Limited formed as a separate subsidiary of British Leyland 1980: Rover car production ends at Solihull with the transfer of SD1 production to Cowley, Oxford; Solihull is now exclusively for Land Rover manufacture. 5-door Range Rover introduced. 1983: Land Rover 90 (Ninety)/110 (One-Ten)/127 (renamed Defender in 1990) introduced 1986: BL plc becomes Rover Group plc; Project Llama started 1988: Rover Group is privatised and becomes part of British Aerospace, and is now known simply as Rover 1986: Range Rover is introduced to the U.S market in April 1986 1989: Introduction of the Discovery 1994: Rover Group is taken over by BMW. Introduction of second-generation Range Rover. (The original Range Rover was continued under the name 'Range Rover Classic' until 1995) 1997: Land Rover introduces the Special Edition Discovery XD with AA Yellow paint, subdued wheels, SD type roof racks, and a few other off-road upgrades directly from the factory. Produced only for the North American market, the Special Vehicles Division of Land Rover created only 250 of these bright yellow SUV's. Official formation of the Camel Trophy Owners Club by co-founders Neill Browne, Pantelis Giamarellos and Peter Sweetser. 1997: Introduction of the Free lander 1998: Introduction of the second generation of Discovery 2000: BMW breaks up the Rover Group and sells Land Rover to Ford for 1.8 billion 2002: Introduction of third-generation Range Rover

2004: Introduction of the third-generation Discovery/LR3 2005: Introduction of Range Rover Sport 2005: Adoption of the Jaguar AJ-V8 engine to replace the BMW M62 V8 in the Range Rover 2005: Land Rover 'founder' Rover, collapses under the ownership of MG Rover Group 2006: Announcement of a new 2.4-litre diesel engine, 6-speed gearbox, dash and forward-facing rear seats for Defender. Introduction of second generation of Freelander (Freelander 2). Ford acquires the Rover trademark from BMW, who previously licensed its use to MG Rover Group 2007: 4,000,000th Land Rover rolls off the production line, a Discovery 3 (LR3), donated to The Born Free Foundation 2007: Announcement from the Ford Motor Company that it plans to sell Land Rover and also Jaguar Cars 2007: India's Tata Motors and Mahindra and Mahindra as well as financial sponsors Cerberus Capital Management, TPG Capital and Apollo Global Management expressed their interest in purchasing Jaguar Cars and Land Rover from the Ford Motor Company. 2008: Ford agreed to sell their Jaguar Land Rover operations to Tata Motors. 2008: Tata Motors finalised their purchase of Jaguar and Land Rover from Ford.


Tata Motors Limited is Indias largest automobile company, with revenues of Rs. 35651.48 crores (USD 8.8 billion) in 2007-08. 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 worlds fourth largest truck manufacturer, and the worlds second largest bus manufacturer. The companys 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 companys manufacturing base in India is spread across Jamshedpur (Jharkhand), Pune (Maharashtra), Lucknow (Uttar Pradesh) and Pantnagar (Uttarakhand). 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 power trains. The company is establishing two new plants at Dharwad (Karnataka) and Sanand (Gujarat). The companys dealership, sales, services and spare parts network comprises over 3500 touch points; Tata Motors also distributes and markets Fiat branded cars in India.

Tata Motors, the first company from Indias 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 Koreas 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. Hispanos 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 companys 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 at the Bangkok Motor Show 2008.

Tata Motors is also expanding its international footprint, established through exports since 1961. The companys 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 companys 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 2,500 engineers and

scientists, the companys Engineering Research Centre, established in 1966, and has enabled pioneering technologies and products. The company today has R&D centers in Pune, Jamshedpur, Lucknow, in India, and in South Korea, Spain, and the UK. It was Tata Motors, which developed the first indigenously developed Light Commercial Vehicle, Indias first Sports Utility Vehicle and, in 1998, the Tata Indica, Indias first fully indigenous passenger car. Within two years of launch, Tata Indica became Indias largest selling car in its segment. In 2005, Tata Motors created a new segment by launching the Tata Ace, Indias first indigenously developed mini-truck In January 2008, Tata Motors unveiled its Peoples Car, the Tata Nano, which India and t he world have been looking forward to. 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. When launched in India later in 2008, the car will be available in both standard and deluxe versions. 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 minimize weight, which helps maximize 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. 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 focusing on environmentfriendly 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 labor 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.