House of

Acquiring Global Footprint

Submitted by:
Abhijit H
Apurva Yandra
Meghna Peethambaran
Selvin Chinnaiah
Shreya Birla
Vishnu M
 INTRODUCTION

• Founded by Jamsetji Tata in 1868

• Headquartered in India
• Comprising ten verticals.

• Mission: To improve the quality of life of the communities we serve globally,

through long-term stakeholder value creation based on Leadership with Trust’.

• In 2018-19, the revenue of Tata companies, taken together

was $113.0 billion (INR 792,710 crore).
 INTRODUCTION

Acquisition of Land Acquisition of Corus Mergers and 3 Questions

Rover and Jaguar by Tata Steel Acquisitions
The House of Tata
● Founded as trading firm in 1868 by Jamsetji Tata
● Tata Sons, a promoter company
● The Tata Group portfolio expanded greatly from 13 companies in 1938 to 300 in 1991.
● Ratan Tata- took over as chairman in 1991.
 Streamlined the portfolio
 Made Tata Group a more unified corporate entity
 Tata Sons
● Aggregate market value of Tata Group companies increased from $8.2
billion in FY 1995-96 to approx. $60 billion in 2007.
● In 2007, Tata Group consisted of 96 operating companies.
GROWING
GLOBAL
The group established representative offices
in London in 1907 and in the U.S. in 1945,
but until recently, the group’s international
growth was almost exclusively organic

TATA Group companies developed more

international profiles in terms of where
theyprocured, produced and sold goods and
services.
ECONOMIC SETTING

With the dismantling of the

licensing regime and other
regulations that planned and
protected Indian industry,
business were given freer rein,
In mid 1991, India was on the and were exposed to foreign
brink of defaulting on its competition At the end of the 1990s, the Asian
international obligations: foreign financial crisis took place and the
economy was India thus got
currency assets fell to a low of just
affected.
$975 million on July 12, 1991
As international economic
The crisis precipitated dramatic integration accelerated in 1990s and
reforms of the Indian economy early 200s, many industries operated
on global scale
TATA comapnies partnered with
AT&T, Mercedes –Benz, IBM,
Silicon Graphics, Cummins
Engine, Honeywell, and other
foreign companies during 1990s.
 ECONOMIC
SETTING
India’s foreign exchange reserves grew from the trough in 1991 and this loosened the limits in
international operations.

In 2000, the Foreign Exchange Management Act replaced the constrictive Foreign Exchange
Regulatory Act, easing the regulations on foregn exchnage

Starting of 2004, Indian companies could invest as much as 100% of their net worth overseas and
could invest acquire businessess overseas .

Starting of 2005, Indian companies were allowed to borrow from domestic banks for foreign direct
investment and acquisitions.
 TATA CONSULTANCY SERVICES
TCS is the group’s
information technology
(IT) consulting giant. The
company built its business
around IT service exports
to North America & Europe
It developed into a global
service provider of IT,
business process
outsourcing, and consulting
services with 89,000
employees and delivery
centres in India, Australia,
Brazil,
China,Hungary,Japan,Mexic
o & Hungary
In FY 2006-07, TCS TCS accounted for
derived 91% of its $27.8 billion of the
$4.3 billion in TATA Group’s
revenues from outside collective $59.5
India. TCS used billion market
M&A in India and capitalization as of
overseas to make Aug 2007.
targeted additions to
its technological
capabilities to
accelerate the process
 TITAN

Titan was India’s leading watch brand and a jewelry brand.

It incurred significant losses when it entered the European

market in the 1990s.

Titan found more success when it targeted markets in the

Middle East with significant populations of non resident
Indians
 TATA TEA
The groups' first use of M&A as a tool of transformative internationalization came with Tata Tea’s acquisition
of UK based Tetley in February 2000.

At £ 271 million, the Tetley deal was the largest overseas acquisitor by any Indian company at the time

The deal was executed through a UK based special purpose vehicle (SPV)

Tata Tea contributed £ 70million in equity – 45million of which was raised through a global depositary
receipt and the balance was funded through non recourse debt financing, meaning that creditors could not
seek repayment from assets other than the project for which the money was loaned

In 2005-06, Tata tea acquired Good Earth, a speciality tea company in the
US, Czech tea company Jemca, US based Eight O’Clock Coffee and
bought a 30 % stake in U.S based Enery Brands Inc. for
$677 million
 INDIAN HOTEL COMPANY
Indian Hotels Company (IHC), parent of the group’s hospitality businesses including Taj Hotels, was among the
earliest group companies to begin globalizing its business.

The company purchased 51, Buckingham Gate and St. James Court Hotel in 1982. The London properties returned to
profitability in FY 2005-06.

IHC also owned properties in New York, Chicago, and Washington but divested them in the late 1990s.

IHC’s strategy for globalization shifted to a preference for management contracts with small equity positions in
properties instead of outright ownership.

IHC acquired several properties like Sydney's W Hotel in December 2005, the Ritz-Carlton, Boston, in November
2006, and Campton Place in San Francisco in April 2007.

Taj Hotels established a presence in international markets in part to build “seamless connectivity” to global customers,
who would also be potential customers of the company's’ properties in India
 1907 - Established
as the Tata Iron and
Steel Company
1944 – “The crown
2003 – Planned to
in Tata’s diadem of
grow in India and
benevolent
overseas.
paternalism”

2001-2002 – Early 1990-

B.Muthuraman Liberalisation
began his tenure as landed TISCO in
managing director trouble.

1990s –
2000-01 – Reduced
Improvement in
its workforce
competitiveness.
 Strategies to grow in India and overseas:

De- Raw
integrated material Logistics
strategy security control.

Domestic Mature Downstream

expansion market products
M&A
 Risks in Corus Acquisition:

Combined entity
provided only 17%
Corus was not of its raw materials
Corus had slight
integrated to the and hence was Interest payments.
profit margins.
extend of Tata Steel exposed to raw
material price
fluctuation.
ROLE OF TATA GROUP IN GLOBALIZATION

1 2 3 4

They hired Mr. Alan Established offices in Tata brand promotion Bringing together
and Mr. Arun Gandhi key market to and procurement representatives of
coordinate government different operating
and media relations companies working in
the same country
 5
The group also helped Tata operating
company as well the acquired firm during
the process

6
Internationalization of common business
processes

7
Integration committee after acquisition.

9
The group also helped Tata operating
company as well the acquired firm during
the process
8
They need to acquire firms bigger than
operating Tata companies
Project Prune

 Economies of scale

 Cost saving initiatives Project Prune to look at

procurement cost across group companies and
negotiate with providers to supply the best
deals to all Tata companies.
 TATA MOTORS

Tata Group’s largest operating company

India’s largest auto maker

Dominating in passenger car and commercial truck market

CHALLENGES FACED - SOLUTIONS ADOPTED

Economic Foreign
downturn – Commercial truck competitors –
Comprehensive business – Expand Internationalize &
global strategy into less cyclical Strategic
segments pricing
TATA MOTORS Daewoo Commercial vehicle company of Korea
(2004)

ACQUISITION
Hispano Carrocera (2005)

Marcopola in Brazil

Thonburi Automative Assembly (2006)

BOTTOM VS TOP OF THE
PYRAMID MARKET

Tata Ace
Tata Nano

Ford’s Jaguar and Land Rover acquisition (2008)

Conclusion : Balance between risks and opportunities

 Conclusion

The role of Tata Group center in Globalization helps to increase the visibility of Tata Group as a
whole, to smoothen the Mergers and Acquisition and to provide the financial muscle power during
acquisition of a larger firm.
 LEARNINGS
• Tata also got two advance
Three main objectives How Tata group gained
behind M&A of Tata from M&A?
Group:
• The acquisition of
• Improving Jaguar and Land
Profitability Rover helped the • The cost competitive
• Rapid growth in scale company to enter
• Acquirement of new into the high-end
technology premier segment of
the global automobile
market.
• After the acquisition,
design studios and TATA-Corus combine
technology as part of the became the 5th largest
deal. This would provide steel producer in the world
Tata Motors access to latest with an output around a
technology which would quarter that of the largest,
also allow Tata to improve Arcelor Mittal.
their core products in India.
• The acquisition paved the
way for TATA to access
advantage as Corus was the the R&D facilities of
main supplier of automotive Corus as well as to
high-grade steel to JLR and introduce its low-cost
other automobile industry in production techniques in
US and Europe. This would the Western markets. This
have provided a synergy for can be considered as one
TATA Group on a whole. of the most important
synergies in the entire
deal.
THANK
YOU