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 crore’s (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.

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 (Uttarakhand) and
Dharwad (Karnataka). Following a strategic alliance with
Fiat in 2005, it has set up an industrial joint venture with
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Fiat Group Automobiles at Ranjangaon (Maharashtra) to
produce both Fiat and Tata cars and Fiat powertrains. 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.

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 Thailand’s Thonburi Automotive
Assembly Plant Company (2006).

2008 heralded two major events: the purchase of Britain’s

icons Jaguar Land Rover and the launch of the Tata Nano,
the “People’s 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”.

Mile stones:

2005
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 Tata Motors rolls out the 500,000th Passenger Car from
its Car Plant Facility in Pune
 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

 Tata Motors unveils new long wheel base premium Indigo
& X-over 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
 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
 Tata Motors and Fiat Group announce three additional
cooperation agreements
 Tata Motors introduces a new Indigo range

2007
 TATA MOTORS
 Construction of Small Car plant at Singur, West Bengal,
begins on January 21
 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 estate range
 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
 Launch of a new Upgraded range of its entry level utility
vehicle offering, the Tata Spacio.
 CRM-DMS initiative crosses the 1000th location
milestone
 Launch of Magic, a comfortable, safe, four-wheeler public
transportation mode, developed on the Ace platform
 Launch of Winger, India’s only maxi-van
 Fiat Group and Tata Motors announce establishment of
Joint Venture in India
 Launch of the Sumo Victa Turbo DI, the new upgraded
range of its entry-level utility vehicle, the Sumo Spacio
 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 Direct Injection Common Rail (DICOR) engine.
 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.
 Indigo CS (Compact Sedan), world’s first sub four-metre
sedan, launched.
 TATA MOTORS
 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.
 Tata Motors signs definitive agreement with Ford Motor
Company to purchase Jaguar and Land Rover.
 Tata Motors completes acquisition of Jaguar Land Rover.
 Tata Motors introduces new Super Milo range of buses.
 Tata Motors is Official Vehicle Provider to Youth Baton
Relay for The 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 launches the next generation all-new Indigo
MANZA
 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
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 The Nano is Tata’s iPod. Great engineering and design in
a rules-breaking product that has generated global
awareness and admiration
 The brand is very well established in the economy
segment
 Tata’s management is strengthened by the collective
experience of its partners and acquired companies – this
includes general management, marketing, sales and
operations
 Tata’s 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

 Tata Motors is not well positioned in the luxury segment.

This is not a problem during recessionary times but a
lack of diversification can hurt during better times
 Most of the automobiles Tata manufactures are based on
older platforms
 The Company’s manufacturing practices trail
competitors

Opportunities

 The Nano could sell well in other geographic markets.

Expanding markets such as China may find the Nano just
the answer
 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
 Tata’s competitive price advantage will be under
pressure as environmental regulations are tightened
 TATA MOTORS
 Rising material costs will create pressure to increase
prices
 There is a trending rise in diesel fuel costs which will hurt
Tata’s 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.

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 opportunity for future
success but like all businesses, faces significant challenges.
 TATA MOTORS

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 514.05 385.54 385.41 382.87 361.79
Share application money - - - - -
Preference share capital - - - - -
Reserves & surplus 11,855.15 7,428.45 6,458.39 5,127.8 3,749.6
1 0

Loan funds
Secured loans 5,251.65 2,461.99 2,022.04 822.76 489.81
Unsecured loans 7,913.91 3,818.53 1,987.10 2,114.08 2,005.6
1
Total 25,534.7 14,094.5 10,852.9 8,447.5 6,606.8
6 1 4 2 1

Uses of funds
Fixed assets
Gross block 13,905.1 10,830.8 8,775.80 7,971.5 6,611.95
7 3 5
Less : revaluation reserve 25.07 25.51 25.95 26.39 -
Less : accumulated depreciation 6,259.90 5,443.52 4,894.54 4,401.5 3,454.2
1 8
Net block 7,620.20 5,361.80 3,855.31 3,543.6 3,157.6
5 7
Capital work-in-progress 6,954.04 5,064.96 2,513.32 951.19 538.84
Investments 12,968.1 4,910.27 2,477.00 2,015.1 2,912.0
3 5 6

Net current assets

Current assets, loans & advances 10,836.5 10,781.2 10,318.4 9,812.0 7,248.8
8 3 2 6 8
Less : current liabilities & 12,846.2 12,029.8 8,321.20 7,888.6 7,268.8
provisions 1 0 5 0
Total net current assets -2,009.63 -1,248.57 1,997.22 1,923.4 -19.92
1
Miscellaneous expenses not 2.02 6.05 10.09 14.12 18.16
written
Total 25,534.7 14,094.5 10,852.9 8,447.5 6,606.8
 TATA MOTORS
6 1 4 2 1

Notes:
Book value of unquoted 12,358.8 4,145.82 2,117.86 1,648.5 2,480.1
investments 4 7 5
Market value of quoted 558.32 2,530.55 1,323.08 1,550.0 1,260.0
investments 0 5
Contingent liabilities 5,433.07 5,590.83 5,196.07 2,185.6 1,450.3
3 2
Number of equity 5140.08 3855.04 3853.74 3828.34 3617.52
sharesoutstanding (Lacs)

Profit loss account

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

Income
Operating income 25,660.6 28,767.9 26,664.2 20,088.6 17,199.1
7 1 5 3 7

Expenses
Material consumed 19,039.4 20,931.8 19,529.8 14,376.11 12,101.2
1 1 8 8
Manufacturing expenses 1,171.59 1,230.14 1,200.36 929.82 830.45
Personnel expenses 1,551.39 1,544.57 1,367.83 1,143.13 1,039.34
Selling expenses 1,224.15 1,179.48 1,068.56 759.54 598.75
Adminstrative expenses 1,867.05 1,982.79 1,488.16 1,042.52 911.73
Expenses capitalised -916.02 -1,131.40 -577.05 -308.85 -282.43
Cost of sales 23,937.5 25,737.3 24,077.7 17,942.2 15,199.1
7 9 4 7 2
Operating profit 1,723.10 3,030.52 2,586.51 2,146.36 2,000.05
Other recurring income 841.54 359.42 887.23 685.18 399.94
Adjusted PBDIT 2,564.64 3,389.94 3,473.74 2,831.54 2,399.99
Financial expenses 704.92 471.56 455.75 350.24 234.30
Depreciation 874.54 652.31 586.29 520.94 450.16
Other write offs 51.17 64.35 85.02 73.78 67.12
Adjusted PBT 934.01 2,201.72 2,346.68 1,886.58 1,648.41
Tax charges 12.50 547.55 660.37 524.93 415.50
Adjusted PAT 921.51 1,654.17 1,686.31 1,361.65 1,232.91
 TATA MOTORS
Non recurring items 79.75 374.75 227.15 167.23 4.04
Other non cash adjustments 15.29 - -0.07 - -1.54
Reported net profit 1,016.55 2,028.92 1,913.39 1,528.88 1,235.41
Earnigs before 2,399.62 3,042.75 2,690.15 2,094.54 1,601.21
appropriation
Equity dividend 311.61 578.43 578.07 497.94 452.19
Preference dividend - - - - -
Dividend tax 34.09 81.25 98.25 69.84 63.42
Retained earnings 2,053.92 2,383.07 2,013.83 1,526.76 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.

Sales in cores
Year (Rs.) percentage increase(%)
2004-05 17,199.17 -
2005-06 20,088.63 16.80
2006-07 26,664.25 32.73
2007-08 28,767.91 7.89
2008-09 25,660.67 -10.80
 TATA MOTORS
Year Sales in X X^2 XY
cores(Y)
2004- 17,199.17 1 1 17199.17
05
2005- 20,088.63 2 4 40177.26
06
2006- 26,664.25 3 9 79992.75
07
2007- 28,767.91 4 16 115071.64
08
2008- 25,660.67 5 25 128303.35
09
∑Y=11838 ∑X= ∑X^2 ∑XY=3807
0.63 15 =55 44.17

Equation
for the line:
y=a+bX

Y intercept and slope of the

line using :
∑Y=Na+b∑X
∑XY=a∑X+b∑X^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:
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Y for a+bX forecasted

15995.43+2560
2005 .23(1) 18555.66
15995.43+2560
2006 .23(2) 21115.89
15995.43+2560
2007 .23(3) 23676.12
15995.43+2560
2008 .23(4) 26236.35
15995.43+2560
2009 .23(5) 28796.58
15995.43+2560
2010 .23(6) 31356.81

Therefore the demand forecasted for

the year 2009-10 would be Rs.31,
356.81.

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
 TATA MOTORS
10.7%. The Profit before Tax was Rs.1013.76 crores
compared to Rs.2576.47 crores in 2007-08, 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 year’s 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.
 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.
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 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.