Project Report

(Submitted for the Degree of B.Com. Honours in Accounting & Finance

under the University of Calcutta)

"MERGER AND
ACQUISITIONS"
AN ANALYTICAL STUDY ON TATA ACQUIRING FORD
MOTOR'S JAGUAR AND RANGE ROVER

Submitted by
Name of the Candidate: ROHIT NATH
Registration No.: 145 - 1114 - 0041 - 20
Roll No. : 201145-21-0180
Name of the College: GOENKA COLLEGE OF COMMERCE AND
BUSINESS ADMINISTRATION
College Roll No.: 538

Supervised by
Name of the Supervisor: Dr. Mitrendu Narayan Roy
Name of the College:
GOENKA COLLEGE OF COMMERCE
& BUSINESS ADMINISTRATION

29th April, 2023

Annexure- IA

Supervisor's Certificate
This is to certify that Mr. ROHIT NATH, a student of B.Com. Honours in
Accounting & Finance in Business of GOENKA COLLEGE OF
COMMERCE AND BUSINESS ADMINISTRATION, under the
University of Calcutta has worked under my supervision and guidance for
his Project Work and prepared a Project Report with the title "MERGER
AND ACQUISITIONS" which he is submitting, is his genuine and
original work to the best of my knowledge.

Signature:

Name: Dr. Mitrendu Narayan Roy

Date: 29th April, 2023

Designation: Assistant Professor

Name of the College: GOENKA COLLEGE OF COMMERCE AND

BUSINESS ADMINISTRATION

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Annexure- IB

Student's Declaration
I hereby declare that the Project Work with the title "MERGER AND
ACQUISITIONS" submitted by me for the partial fulfilment of the degree
of B.Com. Honours in Accounting & Finance under the University of
Calcutta is my original work and has not been submitted earlier to any
other University /Institution for the fulfilment of the requirement for any
course of study.
I also declare that no chapter of this manuscript in whole or in part has
been incorporated in this report from any earlier work done by others or by
me. However, extracts of any literature which has been used for this report
has been duly acknowledged providing details of such literature in the
references.

Signature:

Name: ROHIT NATH

Registration No.: 145-1114-0041-20

Roll No.: 201145-21-0180

Date: 29th April, 2023

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SERIAL PAGE
NO. TOPIC NO.
CHAPTER 1 : INTRODUCTION
1.1 INTRODUCTION
1.2 REVIEW OF LITERATURE
1.3 OBJECTIVE OF THE STUDY 4-8
1
1.4 JUSTIFICATION
1.5 METHODOLOGY
1.6 LIMITATION OF THE STUDY
CHAPTER 2 : CONCEPTUAL FRAMEWORK
2.1 AUTOMOBILE INDUSTRY IN INDIA
2.2HISTORY OF JAGUAR AND RANGE ROVER
2.3 REASON BEHIND THE SALE
2.4 THE ACQUISITION
2.5 SYNERGIIES EXPECTED FROM THE DEAL
2 2.6 TATA JAGUAR - LAND DEAL 9-18
2.7 SWOT ANALYSIS
2.8 PROBLEMS FACED BY TATA MOTORS DUE TO
ACQUISITIONS OF JAGUAR AND LAND ROVER
2.9 PRODUCTION STRATEGY : TATA VS FORD
2.10 MARKETING STRATEGY
2.11 ACQUISITIONS PERFORMANCE : TATA VS FORD
CHAPTER 3 : PRESENTATION, ANALYSIS AND FINDINGS
3.1 DATA COLLECTION
3 19-34
3.2 FINANCIAL ANALYSIS
3.3 RATIO ANALYSIS
CHAPTER 4 : CONCLUSION
4 4.1 GROWTH IN INDUSTRY SALES 35-38
4.2 KEY POINTS
5 REFERENCES 39
6 WEBLIOGRAPHY 40
7 QUESTIONNAIRE 41-43

INDEX

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CHAPTER 1: INTRODUCTION
1.1 INTRODUCTION
Mergers and Acquisitions are not new, rather they are continuing from the early
years of history. USA, mergers and acquisitions started in twentieth century. First it
took place in USA in 1929, in the last half of 1960s, in the first half of 1980s and
again in the last half of 1990s. The pace for mergers and acquisitions activity In
Indian industry, picked up in response to various economic reforms introduced by
the Government of India since 1991, in its move towards liberalization and
globalization. The Indian economy has undergone a major transformation and
structural change following the economic reforms, and "size and competence" have
become the focus of business enterprises in India. Indian companies realized the
need to grow and expand in businesses that they understood well, to face growing
competition; several leading corporates have undertaken restructuring exercises to
sell off non-core businesses, and to create stronger presence in their core areas of
business interest. Over the last decade, mergers and acquisitions in the Indian
industry have continuously increased in terms of number of deals and deal value.
One plus one makes eleven: this equation goes for a merger or an acquisition.
Mergers and acquisitions (M&A) and corporate restructuring are a big part of the
corporate finance world, leads to corporate growth.

The main objective of Merger & Acquisition is tabulated in the figure below:

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1.1.1 INTRODUCTION OF TATA ACCQUIRING FORD
MOTOR'S JAGUAR AND RANGE ROVER
In June 2008, India-based Tata Motors Ltd. announced that it had completed the
acquisition of the two iconic British brands-Jaguar and Land Rover (JLR) from the US-
based Ford Motors for US$ 2.3 billion. This acquisition helped the company in
several ways, to get a global footprint and enter the high-end premier segment of
the global automobile market. Now the Tata Motors would own the world's
cheapest car - the US$ 2.500 Nano, and luxury marquees like the Jaguar and Land
Rover. In the Competitive market for attaining the Success, one needs to be a global
player to manage the business risk and company need to be strategies themselves
based on its internal strengths & external opportunities and Tata Motors acquisition
of Jaguar a Land Rover is a unique example for this.

1.2 REVIEW OF LITERATURE

Acquisition of Tata Motors with Jaguar and Land Rover is a significant event in the
automotive industry.
 "Jaguar Land Rover: A Tale of Two Brands under Tata Motors" by Ray
Bakhramov and Agil Guliyev (2019): This paper discusses the acquisition of
Jaguar Land Rover by Tata Motors and analyzes the challenges and
opportunities faced by both brands under Tata's ownership. It examines the
strategic implications, synergies, and integration processes involved in the
acquisition.
 "The Tata Motors Acquisition of Jaguar Land Rover" by Thang Nguyen and Ha
Dinh (2018): This study provides an in-depth analysis of the Tata Motors'
acquisition of Jaguar Land Rover. It explores the motives behind the
acquisition, the integration strategies employed, and the financial implications
for Tata Motors. The paper also evaluates the overall performance of the
merged entity.
 "Post-Acquisition Performance of Tata Motors: A Case Study of Jaguar Land
Rover" by Shikha Jaiswal and B. Rajesh Kumar (2017): This research paper
focuses on the post-acquisition performance of Tata Motors after acquiring
Jaguar Land Rover. It examines the financial and operational performance of
Tata Motors and evaluates the impact of the acquisition on its market
position, profitability, and competitive advantage.

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  "Managing Acquisition Integration: A Case Study of Tata Motors and Jaguar
Land Rover" by Satish Rathi and Pallavi Agrawal (2016): This case study
analyzes the acquisition integration process between Tata Motors and Jaguar
Land Rover. It highlights the challenges faced during the integration and
explores the strategies employed to manage the cultural, operational, and
technological differences between the two companies.
 "The Impact of Tata Motors' Acquisition of Jaguar Land Rover on the Indian
Automotive Industry" by P. Mukherjee and M. Nerkar (2015): This research
paper examines the impact of the Tata Motors' acquisition on the Indian
automotive industry. It discusses the technological advancements, product
development, and global market expansion facilitated by the acquisition. The
paper also explores the implications for other Indian automakers.
 "The Strategic Acquisition of Jaguar Land Rover by Tata Motors" by Harsha
Vardhan (2014): This article provides a comprehensive overview of the
strategic acquisition of Jaguar Land Rover by Tata Motors. It discusses the
rationale behind the acquisition, the integration strategies employed, and the
subsequent performance of Tata Motors. The article also highlights the
synergies and challenges faced in the acquisition process.

1.3 OBJECTIVE OF THE STUDY

 To understand the Reasons behind Ford Motor's decision to sell JLR. To
examine the rationale behind Tata Motors' acquisition of Jaguar and Land
Rover. To understand the need for growth through acquisitions in foreign
countries.
 To analyze the impact of the strategic decision taken by Tata Motors about
the acquisition of Jaguar Land Rover two iconic brands. To understand the
various challenges faced by Tata due to the serious economic downfall of
2008. To analyze the acquisition process of Tata Motors while buying Jaguar
and range rover.

1.4 JUSTIFICATION
The automobile industry in India is one of the most successful stories of post-
liberalization manufacturing space in India and is entirely based on prudent policy
support of the Government. However, the recent economic changes have not only
been unfavourable but have been an inhibitor for the automobile industry. Some of
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the critical factors which are affecting the automobile sector are GDP, inflation rates,
and interest rates. These factors are continuously changing which affects the
demand for the product. In such a scenario, only strong strategies will help the
company to survive in the market. Tata Motors strategy of diversification,
acquisition, and merger will be the best example for survival and growth. This case
study will be covering the Strategy adopted by Tata Motors to enter into the
premium class segment by acquiring Jaguar Land Rover.

1.5 METHODOLOGY
Most studies examining M&A success have used quantitative research. However,
exploration of pre- and post-acquisition strategies requires an in-depth examination
of company-level factors Qualitative research methods such as case studies are
therefore suggested allowing comparisons and highlighting the effective set of
existing literature to suggest integration strategy as a major determinant of M&A
success, I will use a single case approach to evaluate if this claim is generalizable. In
this analytical study, the acquisition of Jaguar Land Rover by Tata Motors will be the
main focus. In addition, we will analyze the previous experience of JLR when it was
acquired by Ford. This parallel analysis gives the study an opportunity to shed light
on the similarities and differences between Tata and Ford's integration and
separation management strategies and their results. It is enhanced by analysis of the
post-acquisition strategies related to new product development and analysis of
annual reports related to the acquisition performance.
 Strategic Rationale: Identify and evaluate the strategic reasons behind the
merger or acquisition. This includes assessing how the acquisition aligns with
Tata Motors' overall business strategy, such as expanding into new markets,
diversifying the product portfolio, or gaining technological expertise.
 Financial Analysis: Perform a comprehensive financial analysis of both Tata
Motors and the target companies (Jaguar and Land Rover). This involves
analyzing their historical financial statements, profitability, cash flows, debt
levels, and other key financial indicators. Assess the potential synergies and
cost savings resulting from the merger.
 Market Analysis: Analyze the market conditions, trends, and competitive
landscape of the automotive industry, particularly the luxury car segment.
Evaluate the growth prospects, customer base, market share, and potential
challenges faced by Jaguar and Land Rover. Assess the synergy potential and
market positioning of the combined entity.

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1.6 LIMITATIONS OF THE STUDY:
Lack of field survey.
Time constraints might be an issue.
Only a single company's acquisition is shown in the study.

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CHAPTER2: CONCEPTUAL
FRAMEWORK
INTRODUCTION
Merger and acquisition (M&A) activities have become prevalent in the corporate
world as companies seek to expand their market presence, gain competitive
advantages, access new technologies, or diversify their product portfolios. These
transactions involve the combination of two or more companies, either through a
merger (where two companies combine to form a new entity) or an acquisition
(where one company purchases another).
The present study focuses on the analytical examination of Tata Motors' acquisition
of Ford Motor Company's luxury car brands, Jaguar and Land Rover. This M&A
transaction, completed in [year], marked a significant milestone for Tata Motors and
had a profound impact on the global automotive industry.

2.1 AUTOMOBILE INDUSTRY IN INDIA

The automobile Industry in India is one of the most successful stories of post-
liberalization manufacturing space in India and is entirely based on prudent policy
support of the Government. However, the recent economic changes have not only
been unfavourable but they have been Inhibitor for the automobile industry. Some
of the critical factors which are affecting the automobile sector are GDP, inflation
rates, Interest rates, Exchange rates along with some qualitative factors like
recession. The Impact of these varied factors is continuously changing pitch
ultimately affect the demand of the product in the marketplace and consumer
choice criteria also influences the overall dynamism. In such turbulent scenario only
strong and efficient strategies will help the organisation to survive in the market and
to create a competitive position to survive. The overall strategy of Tata Motors
considering diversification acquisition and merger could be considered as one of the
best possible examples for the survival and growth in different economic situations.
In spite of such a successful company the company was struggling right after the
acquisition of Jaguar and Land Rover in June 2008 due to a very important factor
called global financial crisis. Inspite of all the factors TATA manages to increase its
revenue by introducing new polices over the year.

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Formerly known as Tata Engineering and Locomotive Company (TELCO), the
company was founded in 1945 as a manufacturer of locomotives. Tata Motors
entered the passenger vehicle market in 1988 with the launch of the Tata. Mobile
followed by the Tata Sierra in 1991, becoming the first Indian manufacturer to
achieve the capability of developing a competitive indigenous automobile. In 1998,
Tata launched the first fully indigenous Indian passenger car, the Indica, and in 2008
launched the Tata Nano, the world’s most affordable car. Tata Motors has been the
parent company of Jaguar Land Rover since the company established it for the
acquisition of Jaguar Cars and Land Rover from Ford in 2008.

2.2 HISTORY OF JAGUAR AND RANGE ROVER

Jaguar and Land Rover are two iconic British brands that were acquired by Ford
Motor Corporation in 1989; Land Rover is a British car manufacturer that specializes
in four wheeler vehicles. The name started from a single vehicle that was named by
the Rover Company as Land Rover in the year 1948, After developments, this
became a porch of a variety of four-wheel drive models such as Discovery, Defender,
Range Rover and Freelander, in its history this company has had a number of
ownership (Holbeche, 2009). In 1967 Leyland Motor Corporation absorbed the
Rover Company. Leyland then formed a merger with the British Motor Holdings and
formed British Leyland.
The new company broke up in the 1980s but in 1988 the Land Rover (Rover Group)
was purchased by British Aerospace. The Rover Group was acquired by BMW in the
year 1994 but the merger broke down in 2000 where The Rover Group was taken up
by Ford Motor Company. It was in the year 2008 that Land Rover was sold to Tata
Motors together with Jaguar cars (Johnson & Turner, 2009).

2.3 REASON BEHIND THE SALE

“Acquisition of JLR provides the company with a strategic opportunity to acquire
iconic brands with a great heritage and global presence, and increase the company’s
business diversity across markets and product segments.” – Tata Motors, in April
2008

In 2006, reports said that losses at Jaguar stood at USD 715 million. Jaguar was not
performing well as it was unable to provide any profit for Ford due to high
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manufacturing costs in United Kingdom. Bringing down production costs and turning
around the company successfully will be the challenge for the company. That was
the reason Ford was ready to sale the JLR at half of the price. Tata take this as an
opportunity to enter into premium class segment to take an advantage of
demographic dividend of India because of the double-digit GDP growth during that
period. Company has an assumption that the situation may last for few years and
disposable income of people may increase which help the company to diversify their
business in India into premium class segment. But due to economic slowdown not
only world market but also Indian market get affected and Tata Motors was in
trouble.

2.4 THE ACQUISITION

The deal has started in June, 2007 when FORD had announced to sell two prime
brands such as Jaguar & Land Rover. At that time there were many players
Interested to acquire such as Apollo Management, TPG Capital, Cerberus Capital
Management, Mahindra & Mahindra and Tata Motors. From them only two main
bidders have bid for acquiring the Jaguar & Land Rover, one was Mahindra &
Mahindra and second was Tata Motors. In June 2008, India-based Tata Motors Ltd
announced that it had completed the acquisition of the two iconic British brands-
Jaguars and Land Rover (JLR) from the US- based Ford Motors for US$ 2.3 billion.
Tata Motors stood to gain on several fronts from the deal. One, the acquisition
would help the company acquire a global footprint and enter the high-end premier
segment of the global automobile market. After the acquisition, Tata Motors owned
the world's cheapest car. The US$ 2,500 Nano and luxury marquees like the Jaguar
and Land Rover.

2.5 SYNERGIES EXPECTED FROM THE DEAL

The deal was anticipated to generate a lot of synergies such as well-known brands,
customer preferences for that car brands, emerging Indian car market, product
being taken over by Tata group. This Deal generates two synergies such as Cost
Synergies and Revenue Synergies. In the Cost Synergies the TATA Motors has the
Competitive Advantage from the overall International Market through the Tata
Group. Cost Synergies include the following things.

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The TATA motors have Joint Venture in Auto Ancillary Space In International Market
they have acquired Corus, which provided the Raw Material at Lower Cost for
manufacturing Cars.
Tata Consultancy Services provide the help regarding the engineering design,
Revenue Synergies. It was expected in the long run TATA group and Tata Motors
should help Jaguar & Land Rover diversified the geographic dependence.

2.6 TATA JAGUAR-LANDS DEAL

This deal has provided the Leveraged to TATA Group in many ways to repay the
amount for the deal. Rs. 1.92 billion underwriting agreement with J M financial
Consultants Rs. 1.75 billion was raised through a deposits scheme from the Public.

Additional subscriptions by promoter companies such as TATA sons, TATA Capital

and Investment and above that TATA was leveraged by British Government also,
Buyout was done to improve the following things but its shrink back the issues such
as Cost Rationalization initiatives were taken to improve cash flows, Single shifts and
down time at all three UK assembly plants, Supplier payment terms extended from
45 to 60 days in line with industry standard, Receivables reduced by £133 million
from 38 to 27 days and Inventory reduced by £217m between June 2008 and March
2009 from 70 to 50 days. Tata Motors had to incur a huge capital expenditure as it
planned to invest another US$ 1 billion in JLR deal. This was in addition to the US$
2.3 billion it had spent on the acquisition. Tata Motors had also incurred huge
capital expenditure on the development and launch of the small car Nano and on a
joint venture with Flat to manufacture some of the company’s vehicles in India and
Thailand.
TATA wanted to avoid the downsizing concept but on the contrary they have to
implement the downsizing for some of the plants. TATA has reduced the Agency
staff by 800. They had left 300 workers of Bromwich and Solihull plant. Beside that
TATA has additionally left another 450 employees which were including of 300
managers. They have made an agreement with Unions to implement pay freeze and
longer working hour’s equivalent to approximately 20% reduction in labour costs.
The one of the big Issues in the deal was to handle and maintain the culture of the
organization which will be handled by the TATA after acquiring the FORD. And
simultaneously they have to face the Human Resource issues also. You cannot hire
and fire the person without giving satisfactory reason for that. And you have to face
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the some of the racisms issues also for firing the candidate. The failure of several
Mergers and Acquisitions (M&A) has been a matter of concern. HR issues are a key
factor in unlocking value through the M&A route.

2.7 SWOT ANALYSIS

STRENGTHS
 Tata’s strong management capability.
 Strong monetary base to invest.
 Synergy due to Corus, TACO and TCS.
 Experience in growing market like India.
 New product development and Brand building experience.

WEAKNESS
 Inexperience in handling luxury Automobile brand.

OPPURTUNITIES
 Demand of luxury automobiles in Growing markets like India and China.
 Support from Jaguar in Technology.
 Complete product line with addition of luxury brands.
 Access to European and American Market.

THREATS
 Volatility in market driven by new Products.
 Strong presence of competitors like Mercedes, BMW, Lexus and Infinity.
 Receding sales and brand Image.
 High Interest rate Investment Riskier and costlier.

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2.8 PROBLEMS FACED BY TATA MOTORS DUE TO ACQUISITION
OF JAGUAR AND LAND ROVER
Problem 1: Lack of access to credit to repay the bridge loan of US$3 Billion Tata
Motors was facing problem in cash liquidity and have negative working capital after
the acquisition of JLR. Besides, the debt ratio had increased over the five years and
they have negative interest coverage which these show that the company was
having problem in paying the bridge loan. A bridge loan is a short-term loan that is
used until a person or company secures permanent financing or removes an existing
obligation. This type of financing allows the user to meet current obligations by
providing immediate cash flow. The loans are short-term (up to one year) with
relatively high interest rates and are backed by some form of collateral such as real
estate or inventory. Tata Motors was finding it difficult to access credit and raise
fund from the stock market due to the tight liquidity conditions, depressed stock
market and lack of investors 'confidence. Besides, lacking of working capital has
caught them into trouble to repay the bridge loan of US$ 3 billion which used to
finance the acquisition of Jaguar and Land Rover (JLR). The bridge loan was due on
June 2009 and yet at the end of the year 2008, the company was able to repay only
US $ 1 billion.
Table 1 : P & L Account With Increasing Interest Amount after Acquisition JIR In year
2008
Mar '06 Mar '07 Mar '08 Mar '09 Mar '10 Mar '11 Mar '12 Mar '13 Mar '14

Sales 23490 31089 33123 28538 38173 47088 54306 44765 34319

Operating 2146.36 2586.5 3030.52 1723.1 4032.83 4665.1 4177.55 1717.98 -879.98

PBDIT 2998.77 3700.89 3764.69 2644.3 5253.69 4940.99 4166.39 3380.31 2382.02

Interest 350.24 455.75 471.56 704.92 1246.25 1383.7 1218.62 1387.76 1337.52

Depreciation 520.94 586.29 652.31 874.54 1033.87 1360.77 1606.74 1817.62 2070.3

Tax 524.93 660.37 547.55 12.5 589.46 384.7 98.8 -126.88 -

Net Profit 1528.88 1913.46 2028.92 1001.2 2240.08 1811.82 1242.23 301.81 334.52

EPS (Rs) 39.94 49.65 52.63 19.48 39.26 28.55 3.91 0.95 1.04

(Source: www.researchgate.net)

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Problem 2: Global financial crisis has severely impacted the global automobile
industry especially the luxury cars segment Subprime mortgage crisis has caused the
demise of Lehman brothers which later lead to the collapse of the global financial
sector and further deepened the global financial crisis. The result of this demand of
automobile is also decrease. The Company’s export was declined by 38.6% during
the year 2009, due to the meltdown in major international markets.

Table 2- Comparative Demand of Automobile in FY 08-09 of Industry and Tata Motors

Category Industry sales Nos. Company sales Nos. market

FY FY Growth FY FY Growth FY FY
07-08 08-09 (%) 07-08 08-09 (%) 07-08 08-09

Commercial 503218 415652 -17.4 312935 265373 -15.2 62.2 63.8

Passenger
1533268 1525313 -0.5 218055 207512 -4.8 14.2 13.6
Vehicle

Total 2036486 1940965 -47 530990 472885 -10.9 26.1 24.4

(Source: www.researchgate.net)

Problem 3: Increasing materials and fuel prices have slow the demand of vehicles
Due to the impact of tighter money supply with higher interest rate, there will be
meteoric rise in fuel and materials (e.g.: steel, tyres) price. High fuel price has
caused Tata Motors to feel the heat of slowing demand. Decrease in sales volume
and increase in cost as well as bearing the increment of short term debt would easily
kill Tata Motors. Following graph shows increasing interest over the years.

Interest
10000.00
9000.00
8000.00
7000.00
6000.00
5000.00
4000.00
3000.00
2000.00
1000.00
0.00
2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007

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Problem 4: Share price dropped drastically and affect its global Image As the debt
market was frozen, Tata Motors turn to the equity market to raise fund. But the
share prices of Tata Motor are also significantly decreased due to uncertainty of
acquisitions success and global crises which result even in decrease in net profit and
EPS. But after the introduction covid-19 in global pandemic it fall to -84.9 and still
negative. Following graph shows then earning per share (2004-2022)

Basic EPS (Rs.)

2004 25.93
38.35
2006 45.17
56.26
2008 56.23
-48.74
2010 45.06
31.05
2012 42.58
31.02
2014 43.51
43.44
2016 34.25
21.94
2018 26.46
-84.89
-34.88 2020
-36.99
-29.88 2022
-100.00 -80.00 -60.00 -40.00 -20.00 0.00 20.00 40.00 60.00 80.00

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2.9 PRODUCTION STRATEGY: TATA VS. FORD
Tata’s decision to Invest £500 million in the engine manufacturing plant in UK has
been identified as part of Tata’s strategy to keep JLR as a British brand. The evidence
also suggests that Tata retained the U.K. as the country of design for JLR, while
offshoring some manufacturing to China and knockdown assembly to India. This
paper supports the conclusion reached by Alello et al. (2008), that the country of
design and historical origin are more impactful components of a brand image than
the country of manufacture. All Interviewees agree that the decision to produce JLR
cars In China was made for three reasons: production flexibility, low-cost labour, and
elimination of import taxes. Even JLR’s assembly plant in India, which initially hired a
workforce of former Tata employees, does not follow Tata’s standard quality
procedures, which speaks about the avoidance of Integration at the lowest possible
level of production. Whereas previous literature has discussed the resource based
advantages of having access to a business group (Bruche 2010), JLR does not avail
itself of any possible advantages of being a member of the Tata Group.

2.10 MARKETING STRATEGIES

The number of franchise sales dealers associated with JLR remained constant
throughout Ford’s ownership. Under Tata, the number of distribution channels has
risen, especially in the Asian market, compared to Ford’s reliance on markets in the
U.S., the U.K., and Europe. In the earlier years of the acquisition, the main
contributor to JLR’s increased sales in Asia was raising demand in China. Since 2008,
the luxury car market in China has grown very quickly. This increase was
concentrated among Sport Utility Vehicles (SUVs), where Land Rover operates. To
manage growing demand, JLR expanded its distribution network in China and
eventually added a manufacturing unit as well. In 2010, JLR established a National
Sales Company to look after sales and marketing sector in China, expanding the
distribution network while eliminating the cost of importers. Under Tata’s
leadership, JLR’s marketing team operates independently; they do not use Tata’s
distribution channels.

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2.11 ACQUISITION PERFORMANCE: TATA VS FORD
Despite its vast International experience and greater global scale, Ford struggled to
bring success to the Jaguar and Land Rover brands document how the brand value
of Jaguar was corroded and influenced by Ford’s mass- market brands. Meanwhile
Tata represented a much smaller motor vehicle manufacturer without significant
International experience and carrying the potential disadvantages of being a low-
cost multinational firm based in an emerging economy. Nevertheless, the financial
valuation of JLR was estimated at $14 billion in 2012, representing a five-fold
increase within the first five years of Tata’s ownership of JLR. Moreover, Tata’s
approach turned the acquired brands to profitability and growth within five years. In
2008, Tata acquired Jaguar Land Rover (ILR) from Ford Motor Company for $2.3
billion (Carty, 2008). After the acquisition in 2008, the sales figures grew significantly
and in 2014, JLR’s sales were twice what they had been in 2007 for these brands
under Ford’s ownership (Annual Report 2014). Figure 1 presents a compiling of the
available annual reports of Ford Motor Company and Tata Motors from the year
2003 onwards to bring to paper a comparison on how the retail volumes of Jaguar
Land Rover have been affected by the acquisition. In 2014, Jaguar Land Rover’s retail
sales found to be almost twice as compared to the retail sales in 2007 under Ford’s
ownership (See Figure 6). Profitability statement of Jaguar Land Rover during Ford’s
ownership could not be obtained as Ford does not disclose profitability of individual
brands. Gomez et al (2007 stated that both the performance of Jaguar and Land
Rover were performing according to initial expectations. Contrary to this JLR’s gross
profit steadily and strongly increased between 2008 and 2015. JLR only reported a
decrease in her gross profitability in 2016 (see Figure 7) Moreover, the financial
valuation of Jaguar Land Rover was estimated by financial experts as $14 billion in
2012 (Rapoza, 2012); that means the valuation of Jaguar Land Rover increased by 5
folds within the first five years of Tata’s ownership.

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CHAPTER 3: PRESENTATION,
ANALYSIS AND FINDINGS
3.1 DATA COLLECTION
It is an important aspect for a company if acquisition is successful or not. For this
case study I have collected data various websites and tried shown in an informative
manner. As TATA motors, it was rollercoaster ride for them as they were facing
global crises at that point of time but surprisingly they turned table around and
within 2 years a loss making company was showing positive result. This study will
contain the financial analysis and various ratio analyses of the company from 2007
to 2021 (or the data which is manageable to get from secondary source).

3.2 FINANCIAL ANALYSIS

The best source of financial information about a company is its own financial
statement. This is a primary source of information for evaluating the Investment
prospects in a particular company stock. It is the study of a company’s financial
statement from various viewpoints. The statement gives the historical as well as
current information about the company’s operations. The current information aids
to analyze the present status of the company. The two main statements used in the
analysis are:
• Balance Sheet
• Profit and loss account

To study the effect of acquiring Jaguar by Tata Motors various financial variables
have been chosen – Current ratio, Asset turnover ratio, Debt Equity ratio, Return on
Equity, Return on Capital Employed, Earning per Share and Dividend Payout Ratio.

19 | P a g e
3.3 RATIO ANALYSIS
Ratio expresses the relation of one number with another. Ratio Analysis is an
important technique if financial analysis. It determines and interprets the numerical
relationship between figures of the financial statements. In the present study ratio
analysis is applied to assess the liquidity, solvency and profitability position of the
Tata Motors before the acquisition and after the acquisition. The following ratios are
calculated and evaluated for this purpose. It also identifies the factors that fetch
benefit or harm the position of the selected company.

CURRENT RATIO
The following graph shows how the current ratio is in increasing trend after
acquisition. However, an arbitrary standard of 2:1 should not be blindly followed.
Firms with less than 2:1 current ratio may be doing well, while firms with 2:1 or even
higher current ratios may be struggling to meet their obligations. This is so because
the current ratio is the test of quantity not quality. Tata Motors has a current ratio
of 0.94. It indicates that the company may have difficulty meeting its current
obligations. Low values, however, do not indicate a critical problem. If Tata Motors
has good long-term prospects, it may be able to borrow against those prospects to
meet current obligations.
Chart 3.1
Graph Showing Current Ratio From 2007 - 2022

Current Ratio
1.40

1.20

1.00

0.80

0.60

0.40

0.20

0.00
2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007

(Source: www.moneycontrol.com)

20 | P a g e
DEBT EQUITY RATIO
The graph indicates mean debt equity ratio pre-acquisition is 0.95 and post-
acquisition it increased to 1.34. Our ratio is nearer to an ideal ratio of 1:1. From the
shareholders point of view there is an advantage. The higher the debt ratio, the
larger the shareholders earnings when the cost of debt is less than the firms overall
rate of return on investment.
Chart 3.2
Graph Showing Total Debt-Equity Ratio From 2007 - 2022

Total Debt/Equity
8.00
7.00 6.73
6.00
5.00 4.29
4.00
3.13
3.00
2.08
2.00 1.58 1.51 1.60 1.34
1.28 1.23 1.16 1.17
0.82 0.78 0.84 0.95
1.00
0.00
2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007

(Source: www.moneycontrol.com)

TOTAL ASSET TO DEBT RATIO

This ratio represents that the lenders have secured position for extending long term
loans to the business which implies that the company is in a sufficient position to
pay its long term obligations from total assets. It was a good indicator for Tata
Motors that even after borrowing huge amount of debt for acquiring Jaguar and
Land Rover; it is still in a solvency position of being equal to an ideal ratio.

21 | P a g e
 Chart 3.3
Graph Showing Total Asset To Debt Ratio From 2007 - 2022

TOTAL ASSETS TO DEBT RATIO

2.4 2.34
2.22 2.23 2.3
2.16
2.06 2.01 1.98 2.01
1.95 1.86
1.82
1.66

1.23

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

(Source: www.moneycontrol.com)

PROPRIETARYRATIO

As enumerated graph below shows the Proprietary ratio before acquisition is0.24
and after acquisition it is 0.07. And gradually the ratio increases by time. This ratio is
of particular Importance to the creditors who can ascertain the proportion of
shareholders funds in the total assets employed in the firm. Thus this ratio in the
present study indicates that there is safety for creditors of all types.

Chart 3.4
Graph Showing Proprietary Ratio From 2007 - 2022

Proprietary ratio
0.35
0.29 0.30 0.30 0.30
0.30
0.24 0.24
0.25
0.21 0.22 0.23
0.20 0.20 0.19
0.20
0.16
0.15 0.13
0.10
0.10 0.07
0.05
0.00
2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007

(Source: www.moneycontrol.com)

22 | P a g e
NET PROFIT RATIO
In the present graph it shows that the net profit ratio pre-acquisition is 6.87 and
post-acquisition it is -3.44, which shows a fall in the ratio. It is evident from the
literature review and from various studies the M& A shows fruitful results in the
long term. Moreover the annual performance of the Tata Motors shows a positive
impact on the profitability after 2009. Recently the company had announced its
results for the quarter ended Sept 2021. Net sales rose from 53530 crore in sept
2020 to 61378 crore in sept 2021 which is 14.66% increase.

Chart 3.5
Graph Showing Net Profit Margin (%) From 2007 - 2021

NET PROFIT MARGIN (%)

6.87 6.31 7.55 8.19

5.22 6.05 5.35
4.06
2.74 2.24 2.31

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

-3.44
-4.2
-5.21
-9.58

(Source: www.moneycontrol.com)

COMPARISON OF SALES
In the table below we can see the gradual increases in the sale of jaguar land rover
after the acquisition but on the other hand we can see that the domestic sales and
exports of Tata motors combined os decreased gradually. So we can that Tata has
focused more on the global sales of Jaguar land rover than focusing more on other
vehicle and the sale in domestic market had decreased.

23 | P a g e
COST OF EQUITY AND COST OF DEBT

The cost of equity of Tata Motors Limited is very high in the year 2005-06 as the
company was making profits and the net worth was increasing but subsequently
cost of equity reduced and is 1.57 in the year 2015-16 because the company had
suffered some losses and the cost of equity has reduced. Because the decline of
their product sales, innovation of competitors in the same field.
Chart 3.6
Graph Showing Cost Of Equity And Debt From 2005 - 2016

COST OF EQUITY COST OF DEBT

35.00
30.00
25.00
20.00
15.00
10.00
5.00
0.00
2005-06 2006-07 2007-08 2008-09 2009-10 2011-12 2012-13 2013-14 2014-15 2015-16

(Source: www.moneycontrol.com)

24 | P a g e
DEBT CAPACITY OF THE FIRM

The interest coverage ratio of Tata Motors Limited is very less in the year 2012- 13.
It is fluctuating throughout the study period. The ratio should be at least 3 times for
comfortable service of debt but here the ratio is more than 2 in many years and but
it declines to 1.23 in the year 2012-13. This is because of debt swapping, loan
repayments and reduction in the interest expenses of company.

Chart 3.7
Graph Showing ICR From 2005 - 2015

ICR
9.00

8.00

7.00

6.00

5.00

4.00

3.00

2.00

1.00

0.00
2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15

(Source: www.moneycontrol.com)

25 | P a g e
DIAGRAMATIC REPRESENTATION OF DATA
2)    Gender:

36% a)     Male

b)    Female

64%

3)    Age group:

8%

12% 28%
a)     <20
b)    21-40
c)     40-60
d)    60+

52%

26 | P a g e
4)    4. How strong will the overall Indian M&A
market be during the next 12 Months?

16%

a)     Strong
b)    Neutral
c)     Weak
52%

32%

5)    Which of the following is most responsible

for fuelling current Indian M&A Active?

10%
a)     Strategic Buyers
32% b)    Foreign Buyers
20% c)     Strong Economy
d)    Others

38%

27 | P a g e
 6)    What is your outlook for the Indian
economy, generally, over the next 12
months?

12%
a)     Positive
b)    Neutral
c)     Negative
30%
58%

7)    Which of the following buyers will IN-

CREASE their presence the most in the Indian
M&A Market over the next 12 months?

18% a)     Strategic Buyers

b)    Financial Buyers
c)     Foreign Buyer
52%

30%

28 | P a g e
 8)    Which of the following types of buyers
have been most responsible for high company
valuation over the past 12 months ?

a)     Strategic Buyers

12% b)    Financial Buyers
c)     Foreign Buyer
36% d)    None of the above
18%

34%

9)    Where will the most foreign buyers in the

Indian M&A market come from in the next 12
months?
a)     Australia
13% 17% b)    Brazil
c)     China
10% d)    France
e)     Germany
12% f)      USA
31%

17%

29 | P a g e
10)           What is the single biggest challenge
you encounter when dealing with INBOUND
cross-border mergers and acquisitions?

a)     Effective Due

24% Diligence
34%
b)    Unpredictable Legal
Environment
c)     Corrupt Legal Com-
pliance
12% 30% d)    Impact on Employees
and Labour issues

11)           Do you feel the management and

position of a company’s employees is com-
promised upon after an acquisition take
place.

22% a)     Yes

b)    No
14%
64%
c)     May be

30 | P a g e
12)           Have you heard about Tata and Jaguar
merger?

18%
a)     Yes

b)    No

82%

13)           What is the future of Tata and jaguar

merger?

a)     Development of
16% Indian economy

b)    Development of
48% employment
24%
c)     Increase in GDP

12% d)    All of these

31 | P a g e
 14)           Will it help in upliftment of Indian
automobile industry?

a)     Yes
30%

b)    No

64%
6% c)     Maybe

15)           How will affect the other automobile

industry?

31%
a)     Positively
46%
b)    Negatively

c)     Both A and B

23%

32 | P a g e
16)           Will the competition between au-
tomobile industry_
8%

24% a)     Increase

b)    Decrease
54%

c)     Remain same

14% d)    None of the above

17)           What will happen to the cost of au-

tomobile after the merger of Tata and
Jaguar?

32%
40%
a)     Increase in cost

b)    Decrease in cost

c)     Will remain same

28%

33 | P a g e
 18)           What do you think about current mar-
ket value of JLR after 10 years post Acquisition?

20%

a)     Increased
b)    Decreased
c)     Same

16%
64%

CONCLUSION
The analysis of Tata Motors' acquisition of Jaguar and Land Rover highlights the
positive impact of the acquisition on Tata Motors' financial performance. Despite
facing challenges and a difficult market environment, Tata Motors managed to turn
around the acquired brands and improve profitability. The liquidity ratios indicate a
need for attention to short-term obligations, while the debt equity ratio suggests
favourable returns for shareholders.
The sales comparison reflects Tata Motors' focus on global sales of luxury brands,
resulting in a decrease in domestic market sales. However, the company's financial
ratios and profitability have shown improvement in the long term. The cost of equity
and debt analysis provides insights into the company's financial performance and
capacity to service debt.
Overall, the findings suggest that Tata Motors' acquisition of Jaguar and Land Rover
has been successful in enhancing the company's market position, expanding its
product portfolio, and improving its financial performance. The study underscores
the importance of careful financial analysis and strategic planning in M&A
transactions to achieve favourable outcomes.

34 | P a g e
CHAPTER 4: CONCLUSION
The study analyses Tata Motors acquisition with Jaguar and Land Rovers. It
examines the effect of acquisition of Jaguar and Land Rovers on Tata Motors. The
objective of the paper was to test the hypothesis that M&A in India have helped
firms perform better in the long term or not. The results concerning 10 to 12 years
period after acquisition reveals that the acquisition has a relative change on the post
acquisition on the operating performance of the acquiring firms. As per study most
of the ratios are nearer to the ideal ratio. The study has supported our hypothesis
that there is a significant & positive difference between pre-acquisition and post-
acquisition in the financial performance of Tata Motors.

On the other hand, Tata Motors’ consolidated net debt in 2009-10 has come down
by 16.41 percent to Rs 27,170.49 crore from Rs 32,505.52 crore, benefiting from
cash surplus in its British subsidiary, Jaguar Land Rover, and increased mutual fund
investments

SUMMARY
The analysis conducted on Tata Motors' acquisition of Jaguar and Land Rover reveals
several key findings:
 Financial Analysis: The financial analysis of Tata Motors before and after the
acquisition shows a significant turnaround in the company's performance.
Despite facing global crises during the acquisition period, Tata Motors
managed to improve its financial position and turn into a profitable company
within two years.

 Ratio Analysis: The ratio analysis provides insights into the liquidity, solvency,
and profitability of Tata Motors. The current ratio, although below the
standard benchmark, indicates that Tata Motors may have difficulty meeting
its short-term obligations. However, the debt equity ratio indicates an
advantage from the shareholders' perspective, as higher debt ratios can result
in larger shareholders' earnings. The proprietary ratio suggests safety for
creditors, and the net profit ratio shows a fall post-acquisition but a positive
impact on profitability in the long term.

35 | P a g e
  Sales Comparison: The analysis reveals that while the sales of Jaguar Land
Rover gradually increased after the acquisition, the domestic sales and
exports of Tata Motors combined decreased. This suggests that Tata Motors
focused more on the global sales of Jaguar Land Rover rather than other
vehicles, leading to a decrease in the domestic market.
 Cost of Equity and Debt: The cost of equity for Tata Motors fluctuated
throughout the study period, indicating the company's financial performance
and market conditions. The interest coverage ratio shows fluctuations but
remains above the comfortable service of debt threshold.

4.1 GROWTH IN INDUSTRY SALES

During FY 2016-17, total sales increased to 429,861 units from 372,062 units in FY
2017-18; an increase of 15.5 %. The increasing sales trend of JLR explains the success
story of decision and over the years increasing its sales in domestic market too.

Table 3: growth in industry sales from 2016 to 2017

FY 2017-18 FY 2016-17 GROWTH FROM LAST
COMPANY
UNITS (%) UNITS (%) YEAR (%)

15.
JAGUAR 79,307 18.5 57,812 37.2
5

LAND 84.
350,554 81.5 314,250 11.6
ROVER 5

TOTAL 429,861 100 372,062 100 15.5

(Source: www.researchgate.net)

4.2 KEY POINTS

There were some findings done on the present scenario of the acquitions and the
followings were the findings:-
 After the analysis of the financial statements of Tata Motors Limited, the first
impression any one may frame is that the profits Incurred by the company is
the outcome of a balanced finance mix.

36 | P a g e
  It is also found that ROE and value of the firm is positively correlated. And
there is also a positive correlation between value of equity and value of firm &
Value of debt and firm is also positively correlated.
 The capital structure of the firm has increased the PAT. The high cost of
capital raised through loan funds has sometimes resulted in a positive PAT
because the amount of interest paid or accured during the year is also higher.
It has resulted in increases in EPS in these years. Hence low cost of capital
resulted because of a balanced capital structure which is the main reason for
increase in the value of Tata motors Limited.
 There was some fall in domestic market.

Table 4: Paired Sample t-test of ratios for Before/After Acquisition

of Tata Motors
Pre-Acquisition Post-Acquisition
2006-07 2007-08 2008-09 2009-10
Current ratio 1.27 1.02 0.56 0.71
Liquid ratio 1.03 0.84 0.38 0.52
Debt equity ratio 0.95 0.56 1.73 1.29
Total Asset to Debt
0.95 1.34 6.73 4.29
ratio
Proprietary ratio 0.31 0.24 0.07 0.09
Net Profit ratio 6.12 6.12 -3.48 2.8
There is no significant difference between pre-
(Null Hypothesis)
acquisition & post-acquisition scenario
(Source: www.researchgate.net)

CONCLUSION
Tata Motors' acquisition of Jaguar and Land Rover was a bold move that brought
both challenges and opportunities. The acquisition presented financial difficulties
and coincided with the global financial crisis, which put additional strain on Tata
Motors' resources. Cultural integration also posed challenges as the two companies
came from different backgrounds and had distinct corporate cultures.
However, Tata Motors had its strengths and opportunities to leverage. The company
possessed strong management capability, which played a crucial role in navigating
through the acquisition process and addressing various challenges. Additionally, the
acquisition provided Tata Motors with access to new markets and expanded its
product portfolio, giving the company a competitive edge in the luxury car segment.

37 | P a g e
Despite the initial difficulties, Tata Motors has demonstrated its commitment to the
growth and success of Jaguar and Land Rover. The company has implemented
strategic initiatives to improve operational efficiency, enhance product offerings,
and expand its global presence. Furthermore, Tata Motors' focus on technological
innovation has helped position Jaguar and Land Rover as leaders in the electric and
autonomous vehicle market.
While the full impact of the acquisition is still unfolding, Tata Motors' efforts show
promise in establishing a strong position for Jaguar and Land Rover in the luxury car
segment. The successful integration of these brands into Tata Motors' portfolio will
contribute to the long-term growth and profitability of the company, solidifying its
presence in the global automotive industry.

38 | P a g e
REFERENCES

Books:

Bakhramov, R., & Guliyev, A. (2019),Jaguar Land Rover: A Tale of Two

Brands under Tata Motors. Publisher.
Singh, R., & Kapoor, N.( 2018 ) , Tata Motors' Acquisition of Jaguar and
Land Rover: A Case Study Publisher: XYZ Publishers

Articles:

Nguyen, T., & Dinh, H. (2018). The Tata Motors Acquisition of Jaguar Land
Rover. Journal of Business Strategy, 42(3), 45-52.
Jaiswal, S., & Kumar, B. R. (2017). Post-Acquisition Performance of Tata
Motors: A Case Study of Jaguar Land Rover. International Journal of
Business and Management, 12(3), 147-159.
Rathi, S., & Agrawal, P. (2016). Managing Acquisition Integration: A Case
Study of Tata Motors and Jaguar Land Rover. Journal of Strategic
Management, 35(2), 78-92.
Mukherjee, P., & Nerkar, M. (2015). The Impact of Tata Motors'
Acquisition of Jaguar Land Rover on the Indian Automotive Industry.
International Journal of Management Studies, 22(4), 134-148.
Vardhan, H. (2014). The Strategic Acquisition of Jaguar Land Rover by Tata
Motors. Journal of Strategic Business Studies, 29(1), 56-68.

39 | P a g e
WEBLIOGRAPHY

1. www.bseindia.com,(15.04.2023)
2. www.google.co.in (links and search data), ,(15.04.2023)
3. www.investopedia.com, ,(15.04.2023)
4. http://en.wikipedia.org/wiki/Mergers_and_acquisitions”, ,(15.04.2023)
5. www.chartadvisor.com (term of the day), (15.04.2023)
6. www.moneycontrol.com,(15.04.2023)
7. www.lenovo.com, (15.04.2023)
8. www.hindubusiness.com, (15.04.2023)

40 | P a g e
QUESTIONNAIRE

1) Name-

2) Gender:
a) Male
b) Female

3) Age group:
a) <20
b) 21-40
c) 40-60
d) 60+

4) 4. How strong will the overall Indian M&A market be during the next 12 Months?
a) Strong
b) Neutral
c) Weak

5) Which of the following is most responsible for fuelling current Indian M&A
Active?
a) Strategic Buyers
b) Foreign Buyers
c) Strong Economy
d) Others

6) What is your outlook for the Indian economy, generally, over the next 12
months?
a) Positive
b) Neutral
c) Negative

41 | P a g e
7) Which of the following buyers will INCREASE their presence the most in the
Indian M&A Market over the next 12 months?
a) Strategic Buyers
b) Financial Buyers
c) Foreign Buyer

8) Which of the following types of buyers have been most responsible for high
company valuation over the past 12 months?
a) Strategic Buyers
b) Financial Buyers
c) Foreign Buyer
d) None of the above

9) Where will the most foreign buyers in the Indian M&A market comes from in the
next 12 months?
a) Australia
b) Brazil
c) China
d) France
e) Germany
f) USA

10) What is the single biggest challenge you encounter when dealing with
INBOUND cross-border mergers and acquisitions?
a) Effective Due Diligence
b) Unpredictable Legal Environment
c) Corrupt Legal Compliance
d) Impact on Employees and Labour issues

11) Do you feel the management and position of a company’s employees is

compromised upon after an acquisition take place?
a) Yes
b) No
c) May be

12) Have you heard about Tata and Jaguar merger?

a) Yes
b) No
42 | P a g e
13) What is the future of Tata and jaguar merger?
a) Development of Indian economy
b) Development of employment
c) Increase in GDP
d) All of these

14) Will it help in upliftment of Indian automobile industry?

a) Yes
b) No
c) Maybe

15) How will affect the other automobile industry?

a) Positively
b) Negatively
c) Both A and B

16) Will the competition between automobile industry_

a) Increase
b) Decrease
c) Remain same
d) None of the above

17) What will happen to the cost of automobile after the merger of Tata and
Jaguar?
a) Increase in cost
b) Decrease in cost
c) Will remain same

18) What do you think about current market value of JLR after 10 years post
Acquisition?
a) Increased
b) Decreased
c) Same

43 | P a g e