DECLARATION

I Zainur Rehman hereby declare that the project report entitled COMPARE THE FINANCIAL STANDING AND STRATEGY OF TATA MOTORS under guidance of Mr. Satyendra Kumar Singh submitted for the requirement of a degree programme of INTERNET INSTITUTE FOR SPECIAL EDUCATION is my original work. Any literature, data or works done by others and cited within this dissertation has been given due acknowledgement and is listed in the reference section.

Signature: Date: 1.5.2012 Place: Lucknow

ACKNOWLEDGEMENT
In order to make my project I acknowledge a special thanks to all those people without whose supports it would not be possible for me to complete for me to complete my report. First of all I really thankful to my INTERNET INSTITUTE FOR SPECIAL EDUCATION because of them I could achieve the target. I express my sincere thanks to my project guide Mr. Satyendra Kumar Singh who had guide to me throughout my project. I am also thankful to the Satluj Motors (TATA MOTORS Dealership) for giving me this opportunity to work on project in Lucknow (U.P). I convey my heart full thanks to the Mr. Satyendra Kumar Singh (Administration Manager) and the staff members of Satluj Motors, with their help and corporation. Also I would like to express my inner feeling for all the people for co-operating and helping me throughout the project. Last but not the least I am thankful to my parents and friends who have provided me with their constant support throughout this project.

Zainur Rehman

PREFACE
The professional training is the internal part of a B.B.A program. It helps the student to understand practical aspects of Business Administration in a better way as a part of my B.B.A. program at INTERNET INSTITUTE FOR SPECIAL EDUCATION. I was supposed to work the organization. Finance Management is the systematic and objective identification, collection, analysis, dissemination, and use of information for the purpose of improving decision making related to identification and solution of problems and opportunity Perception is the process, by which an individual selects, organizes and interprets information inputs to create a meaningful picture of the world around as To be a Master of Business Administration student is a matter of pride because we are in a field, which help us to develop from a normal human being into a disciplined, and dedicated professional. One has to be a good learner to sharper knowledge in the particular field to achieve and attain the desired goals and heights. I analysis the financial position of TATA Motors and conducted a financial analysis of two of its competitors Mahindra & Mahindra and Maruti Udyog. To compare the financial standing and strategy of TATA Motors. I used Balance Sheet, Profit & Loss Account, Cash Flow and Fund Flow Statement, and Ratio Analysis.

INDEX
S.No
1 2 3

Topic
EXECUTIVE SUMMARY INTRODUCTION COMPANY PROFILE: 3.1.TATA Group 3.2.TATA Group Companies PROFILE OF TATA MOTORS LIMITED: 4.1.Industry Outlook 4.2.History 4.3.Important Developments 4.4.Global Operations 4.5.Future Challenges 4.6.Milestones PRODUCTS OF TATA MOTORS: 5.1.Passenger cars and utility vehicles 5.2.Concept vehicles 5.3.Commercial vehicles 5.4.Military vehicles MARKETING STRATEGIES: 6.1.Launch of TATA Nano 6.2.Tapping of Rural Markets SWOT Analysis - Tata Motors Limited FINANCIAL ANALYSIS 7.1.Financial Overview 7.2.Capital Structure 7.3.Weighted Average Cost of Capital (WACC) Vs ROI 7.4.Balance Sheet Analysis 7.5. Financial Analysis of TATA Motors 7.6.Financial Performance as a Measure of Operation Performance FINANCIAL STRATIGIES OF TATA MOTORS COMPARISION OF THE FINANCIAL STANDING OF TATA MOTORS CONCLUSION BIBLIOGRAPHY

Page
5 7 11

16

28

30

7 8

35 37

9 10 11 12

46 48 53 54

EXECUTIVE SUMMARY
The project on COMPARE THE STANDING TATA MOTORS vis--vis THE INDUSTRY & CUSTOMER SATISFACTION SURVEY based on financial performance and on customer survey. The main objectives of the project are: Financial performance in automobile industry Market performance Market position. Economic and the industry environment Cost saving initiatives Awareness regarding the facilities provided by Tata Motors. Overall opinion about Tata Motors. Satisfaction amongst the customers of Tata Motors

For this project Financial Statements was analysis and customer research was carried out at various area of Mandi District of Himachal Pradesh. I learnt analysis financial statement in to find different aspects for compare the standing vis--vis industry and customers perception about TATA Motors. THE REPORTS IS DIVIDED INTO VARIOUS SECTIONS: 1. Company Overview: This part describes the company profile. This part recognizes the achievements and rewards the company has achieved, it also gives little insights into what company offers to the Corporate and the Consumers. This section also describes the kind of technology used. 2. Company Profile: This section gives the information about the company. It includes the company history which depicts the company from the period of foundation. This section also products of the company producing by the company. 3. Analysis of Financial: Financial statements of the company over last few years are analysis in this section and financial performance is output. 4. Competitors of company: The companys competitors are finding and study the business during the financial years. 5. Comparison of companys financial statements with competitors: Comparison of companys Balance Sheet, Profit & Loss Account and Fund and Cash Flow Statement with their competitor to find the standing of company in automobile industry.
5

6. FINDINGS: A detailed analysis of the company shows that the company has had a strong fundamental as well as a strong market performance over the years. Given the economic and the industry environment (improving outlook for the CV industry) TATA Motors would be a key beneficiary. While a pick-up in its CV volumes is evident, operating leverage and cost saving initiatives will improve margins. On an average more than 73% people feel that the prices are affordable whereas 12% do not agree, 74% believe that attractive discounts are offered whereas 26% are not satisfied with the discounts offered. 20% said that the test drives are not offered and 15% said that post sales follow ups are not done regularly whereas 85% said that they were done regularly but people feel that it is the peoples car as it is satisfactory on all other parameters: knowledgeable sales persons, employees spent enough time before and during sales, display of merchandise is attractive, availability of product, variety of merchandize, vehicle in good condition, prices are affordable, attractive discounts are offered, dcor of the waiting area is pleasing, responds to complaints quickly, service at TATA Motors service station is excellent, careful with personal information and is value for money . The overall opinion about TATA Motors is very good. At the end it is submitted to INTERNET INSTITUTE FOR SPECIAL EDUCATION

INTRODUCTION
India is an emerging country with huge potential. The domestic economy is now growing at around 9-10% per annum and Indias importance in global terms is being reinforced by rapidly rising exports and domestic consumption. At a time when numbers of a slowdown and overheating in the Indian economy have started gaining momentum, the Indian rupee sprang a surprise by pushing the GDP figure past the trillion-dollar (42,00,000 crore) mark. The automotive industry is at the center of Indias new global dynamic. The domestic market expanding rapidly as incomes rise and consumer credit becomes more widely available. Manufacturers product lines are being continually expanded, as is the local automotive manufacturing base. Expectation are high that India can develop as a global hub for vehicle manufacturers and as an outsourcing center that offers the global automotive industry solution high up the automotive value chain. India eyes 25 million automotive jobs. India's GDP is set to double over the next decade In percentage terms, the automotive industry's contribution should also double. In dollar terms, the sector's contribution is set to quadruple to some $145bn The automobile industry in India accounts for a business volume of $45 billion and has the potential to grow much faster both through Indian as well as international manufacturers who have established huge facilities in the country With the worlds second largest and fastest-growing population, there is no denying Indias potential in both economic and population terms and the effect it will have on the auto industry in the years to come. The country is already off to a good start, with a well-developed components industry and a production level of 1 million four-wheeled vehicles a year, plus a further 5 million two- and three-wheelers. The implications, market drivers and scope of a future massive Indian vehicle market are covered in the India Strategic Market Profile, a brand-new forecast of Indian automotive and related activity to 2020. Based on Max Pemberton's unique relational long-term forecasting model, it forecasts car and CV sales, demographics, materials usage, auto industry employment, and explains their inter- year of healthy growth in auto industry.

INDUSTRY GROWTH:

Future of the Automobile in the Economy:

US based consultancy, keystone predicts that India will become worlds third largest automobile market by 2030. Overall size expected to exceed 20 million with compounded annual growth rate of over 12%. INDIA THEN & NOW 1983 Number of brands 2 Number of models 2 2011 Number of brands 30 Number of models 70 Tata Motors July sales at 48,054 nos., growth of 18% M&HCV sales record year-on year growth after almost a year - Ashish Garg Tata Motors total sales (including exports) of Tata commercial and passenger vehicles in July 2011 were 48,054 vehicles, a growth of 18% over 40,729 vehicles sold in July 2010. The companys domestic sales of Tata commercial and passenger vehicles for July 2011 were 45,599 nos., a 23% growth over 37,033 nos. sold in July last year. Cumulative sales (including exports) for the company for the fiscal at 171,168 nos., was lower by 1%, compared to 172,462 nos. sold last year. Commercial Vehicles-The companys sales of commercial vehicles in July 2011 in the domestic market were 28,408 nos., a 27% growth compared to 22,381 vehicles sold in July last year. LCV sales were 17,750 nos., a growth of 44% over July last year. M&HCV sales stood at 10,658 nos. turning positive after almost a year with a growth of 6% over July last year and the highest since September 2010. Cumulative sales of commercial vehicles in the domestic market for the fiscal were 100,464 nos., a growth of 7% over last year. Cumulative LCV sales were 63,180 nos., a growth of 32% over last year, while M&HCV sales stood at 37,284 nos. was lower by 19% over last year. Passenger Vehicles-The passenger vehicle business reported a total sale and distribution off take of 19,881 nos. (17,191 Tata + 2,690 Fiat) in the domestic market in July 2011, a 32% increase compared to 15,064 numbers (14,652 Tata + 412 Fiat) in July last year. Sales of Tata cars, at 14,537 nos., grew by 21% over July 2010. Dispatches of the Tata Nano began during the month, and the sales were 2,475 nos. The Indica range sales were 8,563 nos., a growth of 14% over July last year. The Indigo range recorded sales of 3,499 nos., lower by 22% over July last year. The UV/SUV range of Sumo/Safari accounted for sales of 2,638 nos., flat compared to July last year. The company began the sale and deliveries of the Jaguar and Land
9

Rover range through the brands flagship store in Mumbai. The response has been quite encouraging in the first month with the initial India stock and pipeline imports booked to a large extent. Cumulative sales and distribution off take of passenger vehicles in the domestic market for the fiscal were 70,572 nos. (63,028 Tata + 7,544 Fiat), against 67,559 nos. (65,746 Tata + 1,813 Fiat) last year, a growth of 4%. Nano sales were 2,475 nos. Cumulative sales of the Indica range at 37,412 nos., reported a growth of 13%. Cumulative sales of the Indigo family were 12,422 nos., lower by 29%. Cumulative sales of the Sumo/Safari range were 10,690 nos., lower by 29%. Exports-The Companys sales from exports at 2,455 vehicles in July 2011 were lower by 34% compared to 3,696 vehicles in July last year. The cumulative sales from exports for the fiscal at 7,676 nos. were lower by 40% over 12,855 nos. in the same period last year.

10

COMPANY PROFILE
TATA GROUP
Tata is a rapidly growing business group based in India with significant international operations. Revenues in 2010-11 are estimated at $62.5 billion (around Rs251,543 crore), of which 61 per cent is from business outside India. The Group employs around 350,000 people worldwide. The Tata name has been respected in India for 140 years for its adherence to strong values and business ethics. The business operations of the Tata Group currently encompass seven business sectors: communications and information technology, engineering, materials, services, energy, consumer products and chemicals. The Groups 27 publicly listed enterprises have a combined market capitalization of some $60 billion, among the highest among Indian business houses, and a shareholder base of 3.2 million. The major companies in the Group include Tata Steel, Tata Motors, Tata Consultancy Services (TCS), Tata Power, Tata Chemicals, Tata Tea, Indian Hotels and Tata Communications. The Groups major companies are beginning to be counted globally. Tata Steel became the sixth largest steel maker in the world after it acquired Corus. Tata Motors is among the top five commercial vehicle manufacturers in the world and has recently acquired Jaguar and Land Rover. TCS is a leading global software company, with delivery centers in the US, UK, Hungary, Brazil, Uruguay and China, besides India. Tata Tea is the second largest branded tea company in the world, through its UK-based subsidiary Tetley. Tata Chemicals is the worlds second largest manufacturer of soda ash. Tata Communications is one of the worlds largest wholesale voice carriers. In tandem with the increasing international footprint of its companies, the Group is also gaining international recognition. Brand Finance, a UK-based consultancy firm, recently valued the Tata brand at $11.4 billion and ranked it 57th amongst the Top 100 brands in the world. Businessweek ranked the Group sixth amongst the Worlds Most Innovative Companies. And the Reputation Institute, USA, recently rated it as the Worlds Sixth Most Reputed Firm Founded by Jamsetji Tata in 1868, the Tata Groups early years were inspired by the spirit of nationalism. The Group pioneered several industries of national importance in India: steel, power, hospitality and airlines. In more recent times, the Tata Groups pioneering spirit has been showcased by companies like Tata Consultancy Services, Indias first software company, which pioneered the international delivery model, and Tata Motors, which made Indias first indigenously developed car, the Indica, in 1998 and recently unveiled the worlds lowest-cost car, the Tata Nano, for commercial launch by end of 2008. The Tata Group has always believed in returning wealth to the society it serves. Two thirds of the equity of Tata Sons, the Tata Groups promoter company, is held by philanthropic trusts which have created national institutions in science and technology, medical research, social studies and the performing arts. The trusts also provide aid and assistance to NGOs in the areas of education, healthcare and livelihoods. Tata companies also extend social welfare activities to communities around their industrial units. The combined development
11

related expenditure of the Trusts and the companies amounts to around 4 per cent of the Groups net profits. Going forward, the Group is focusing on new technologies and innovation to drive its business in India and internationally. The Nano car is one example, as is the Eka supercomputer (developed by another Tata company), which in 2008 is ranked the worlds fourth fastest. The Group aims to build a series of world class, world scale businesses in select sectors. Anchored in India and wedded to its traditional values and strong ethics, the Group is building a multinational business which will achieve growth through excellence and innovation, while balancing the interests of its shareholders, its employees and wider society. CORE VALUES OF TATA At the Tata Group our purpose is to improve the quality of life of the communities we serve. We do this through leadership in sectors of national economic significance, to which the Group brings a unique set of capabilities. This requires us to grow aggressively in focused areas of business. Our heritage of returning to society what we earn evokes trust among consumers, employees, shareholders and the community. This heritage is being continuously enriched by the formalization of the high standards of behavior expected from employees and companies. The Tata name is a unique asset representing leadership with trust. Leveraging this asset to enhance Group synergy and becoming globally competitive is the route to sustained growth and long-term success. FIVE CORE VALUES The Tata Group has always sought to be a value-driven organization. These values continue to direct the Groups growth and businesses. The five core Tata values underpinning the way we do business are: Integrity: We must conduct our business fairly, with honesty and transparency. Everything we do must stand the test of public scrutiny. Understanding: We must be caring, show respect, compassion and humanity for our colleagues and customers around the world, and always work for the benefit of the communities we serve. Excellence: We must constantly strive to achieve the highest possible standards in our day-today work and in the quality of the goods and services we provide. Unity: We must work cohesively with our colleagues across the Group and with our customers and partners around the world, building strong relationships based on tolerance, understanding and mutual cooperation. Responsibility: We must continue to be responsible, sensitive to the countries, communities and environments in which we work, always ensuring that what comes from the people goes back to the people many times over.

12

TATA Group Companies

Family pride The TATA family of enterprises comprises 98 companies in seven business sectors. This section lists all these companies under the sectors in which they operate, besides the two promoter companies of the Group. The Seven Business Sectors are: Engineering (AUTOMOTIVE): Tata Auto comp systems: Subsidiaries/Associates/Joint Ventures: International Automotive, Knorr Bremse Systems for commercial Vehicles, Tata Auto Comp GY Batteries, TACO Engineering, TACO Faurecia Design Centre, TACO Hendrickson Suspension Systems, TACO Interiors and Plastics Division, Taco Kunstofftechnik, TACO MobiApps Telemaics, TACO Supply Chain Management, TACO Tooling, TACO Visteon Engineering Center, Tata Ficosa Automotive Systems, Tata Johnson Controls Automotive, Tata Toyo Radiator, Tata Yazaki Auto Comp, TC Springs, Technical Stampings Automotive. Tata Motors: Subsidiaries /Associates/ Joint Ventures: Concorde Motors, HV Axels, HV Transmissions, Nita Company, TAL Manufacturing Solutions, Tata Cummins, Tata Daewoo Commercial Vehicles Company, Tata Engineering Services, Tata Precision Industries, Tata Technologies, Telco construction Equipment. Engineering Services Tata Projects, TCE Consulting Engineers, Voltas Engineering Products TAL Manufacturing Solutions, Telco Construction Equipment Company, TRF METALS: TATA STEEL Subsidiaries /Associates/ Joint Ventures: Hooghly Met Coke and Power Company, Jamshedpur Injection Powder (Jamipol), Jamshedpur Utility and Service Company Limited (JUSCO), Lanka Special Steel, Mjunction Serves, NatSteel, Sila Eastern Company, Tata Blue Scope Steel, Tata Metallic, Tata Pigments, Tata Refractories, Tata Ryerson, Tata Sponge Iron, Tata steel (Thailand), Tata Steel KZN, Tayo Rolls, The Dhamra Port Company, The Indian Steel and Wire Products, The Tinplate Company of India, Tm International Logistics, TRF. ENERGY: POWER i) Tata BP Solar India ii) Tata Power
13

iii) Subsidiaries /Associates/ Joint Ventures: Tata Ceramics, Tata Power Trading, North Delhi Power Limited OIL AND GAS i) Tata Petrodyne CHEMICALS: i) Rallis India ii) Tata Pigments iii) Tata Pigments PHARMA i) Advinus Therapeutics SERIVES: HOTELS AND REALTY i) Indian Hotels (Taj Group) Subsidiaries /Associates/ Joint Ventures: Taj Air, Roots Corporation (Ginger Hotels) THDC i) Tata Realty and Infrastructure FINANCIAL SERVICES i) Tata AIG General Insurance, Tata AIG Life Insurance, Tata Asset Management, Tata Capital, Tata Financial Services, Tata Investment Corporation OTHER SERVICES i) Tata Quality Management Services, Tata Services, Tata Strategic Management Group CONSUMER PRODUCTS: i) Infiniti Retail ii) Tata Tea iii) Subsidiaries /Associates/ Joint Ventures: Tata Coffee, Tata Tetley, Tata Tea Inc iv) Tata Ceramics v) Tata McGraw Hill Publishing Company vi) Titan Industries vii) Trent INFORMATION SYSTEMS AND COMMUNICATIONS: i) Nelito Systems ii) Tata Consultancy Services Subsidiaries /Associates/ Joint Ventures: APONLINE, Airline Financial Support Services, Aviation Software Development Consultancy, CMC, CMC Americas Inc, Conscripti, HOTV, Tata America International Corporation, WTI Advance Technology. iii) Tata Elxsi iv) SerWizSol
14

v) Tata Interactive Systems vi) Tata Technologies COMMUNICATIONS i) Tata Sky ii) Tata Teleservices Subsidiaries /Associates/ Joint Ventures: Tata Teleservices (Maharashtra) iii) Tata Communication iv) Tata Net INDUSTRIAL AUTOMATION i) Nelco Subsidiaries /Associates/ Joint Ventures: Tatanet

15

PROFILE OF TATA MOTORS LIMITED

The largest passenger automobile and commercial vehicle manufacturing company of India Tata Motors Limited, was formerly called TELCO (TATA Engineering and Locomotive Company), has its headquarters in Bombay, now Mumbai, India. Established in 1945, listed on the New York Stock Exchange in 2004 has created Rs. 320 billion wealth and was one of the top 10 wealth creators in India, with manufacturing facilities in the towns of Jamshedpur, Lucknow, and Pune. This company was founded by Jamshetji Tata and is run by Ratan Tata under the flagship company known as Tata and sons group. He commands 22000 employees working in three plants as well as other regional and zonal offices across the length and breadth of India. Tata motors passenger cars still need to reach acceptable international requirements. The company commands an imposing 65% share of the domestic commercial vehicle market and is trying to modernize this segment. The financial business of Tata motors was separated into a subsidiary company in sep. 2006, where it recorded a strong financial performance during the last 5 year period. From year 2003-2007, the profits of the company went up at a CAGR of 36.4%, to attain Rs. 331, 525 million in 2007 from Rs. 95, 731 Million in 2003. By floating two rights issues at the end of Sep 2008 Tata Motors Ltd expected to raise Rs 4, 150 crores. They are offering one ordinary share valued at Rs. 340 every six shares expecting to net Rs. 2.90 Crores, the so called A share would have different voting and dividend rights, for every such 6 shares held at a face value of 305 would raise Rs. 1.960 Crores, these proceed would be utilized for an early repayment of the short term funding of 2.3 Billion $ (Rs. 10,189 Crores) Borrowed for Acquisition of jaguar and Land Rover from their principle is The Ford Motor Companys. It is also in talks with private equity funds to offload 25% of stake in each of the following 6 unlisted group units, they are Tata Daewoo commercial vehicle company, HV transmissions, Tata motors finance, Tata technologies and TELCO construction equipment, the sales of the stakes would possible conclude by June 2009, helping it to raise further funds for this acquisition, earlier in July it sold 24% stake in an Auto component unit to a group firm and booked a profit of Rs. 110 crores, it also sold 10 million shares or 1.36% of Tata steel for RS. 486 crores to Tata Sons, the holding company of whole Tata group firms. "The Company aims to monetize a part of its funds through a phased divestment of certain investments preferably as inter-group sales wherever possible at current market prices in the coming six to eight months," the money that will be released from these investments will become a part of the capital to be lifted for repayment of the bridging loan taken for the JaguarLand Rover acquisition- Taken in March 2008" (Tata Motors Profile) It took a 15 month bridge loan of 3 billion in March from a consortium of banks to finance the JLR accusation and its expansion plans. Since the rights issue was announced on 28th may its share value has fallen more than 30% and fell by 1.82% to Rs. 429.85 on BSE, even though the bench mark index gained 3.8% to end at 15, 049.86 points.
16

The Analysts say that, this is a strategic move taken by Tata Motors because it is allowing the company to make a lot of profit even when the market is in the financial pressure allows Tata sons to raise its wager in group companies. If the company will follow the above mentioned trends then possibly it can raise its finances in a low liquidity and high interest rate set-up.

17

INDUSTRY OUTLOOK
The Indian Automobile Industry enjoys the advantage of low cost base, high skilled labour, strong ancillary network coupled with Governments support by way of concessional excise duty of 16% for small cars, ban on overloading and also significant investments proposed for removing infrastructure bottlenecks. The CV industry is directly related to the economic growth and development. The growth in demand for CVs is directly related to the IIP index and any upsurge in economic activities will call for more cargo movement in the economy. The domestic CV market grew at a CAGR of 26.7% during the last 6 years. In FY07, the CV segment registered a growth of 32.2% due to Supreme Courts ban on over loading trucks. However, we believe that this is a one-time demand and the CV segment may not witness such kind of growth repeatedly. There is a regulation that restricts the movement of vehicles above certain age (15 years in National Capital Region and 8 years in Mumbai). Though the rule is not being followed strictly at present, in future if this rule is implemented strictly it will result in huge replacement demand. With the Indian economy expected to grow at 8.5% to 9% in coming years, we expect the demand for CVs to be fairly decent except for the fact that the industry is currently experiencing a correction due to sharp spurt in demand in the previous years. The CV industry witnessed a change in demand dynamics in last few years. The demand for LCVs in the <=3.5 tonnes segment is rising at the cost of demand in 5 to 7.5 tonnes category, while demand in 7.5 to 12 tonnes segment and 16.2 to 25 tonnes segment is booming at the cost of demand in 12 to 16.2 tonnes segment. Demand for trailers of >35.2 tonnes is witnessing a surge while demand for semi-trailers in 26.4 to 35.2 tonnes segment is suffering. This structural shift in demand dynamics is due to the evolution of Hub & Spoke model of distribution, which is now adopted by transportation players because of improved road infrastructure and also the ban on trucks in many cities by the authorities to tackle the traffic congestion issues. According to the Hub & Spoke model, HCVs plying over the highways to transport goods to different states and districts, while MCVs are used in distributing goods to different cities and the last leg of distribution in intra city is done by using <=3.5 tonner vehicles.

18

History
History of TATA Motors 1. Tata Motors launches its first truck in collaboration with Mercedes-Benz. Tata Motors is a part of the Tata and Sons Group, founded by Jamshedji Nussarwanji Tata and J. Baker. The company was established in 1945 as a locomotive manufacturing unit and later expanded its operations to commercial vehicle sector in 1954 after forming a joint venture with Daimler-Benz AG of Germany. 2. TATA Indica-After years of dominating the commercial vehicle market in India, Tata Motors entered the passenger vehicle market in 1991 by launching the Tata Sierra, a multi utility vehicle. After the launch of three more vehicles, Tata Estate (1992, a stationwagon design based on the earlier 'TataMobile' (1989), a light commercial vehicle), Tata Sumo (LCV, 1994) and Tata Safari (1998, India's first sports utility vehicle). Tata launched the Indica in 1998, the first fully indigenous passenger car of India. Though the car was initially panned by auto-analysts, the car's excellent fuel economy, powerful engine and aggressive marketing strategy made it one of the best selling cars in the history of the Indian automobile industry. A newer version of the car, named Indica V2, was a major improvement over the previous version and quickly became a mass-favorite. A badge engineered version of the car was sold in the United Kingdom as the Rover CityRover. Tata Motors also successfully exported large quantities of the car to South Africa. The success of Indica in many ways marked the rise of Tata Motors. 3. TATA Brad-Tata Novus is one of the best selling commercial trucks in South Korea. With the success of Tata Indica, Tata Motors aimed to increase its presence worldwide. In 2004, it acquired the Daewoo Commercial Vehicle Company of South Korea. The reasons behind the acquisition were: i) Companys global plans to reduce domestic exposure. The domestic commercial vehicle market is highly cyclical in nature and prone to fluctuations in the domestic economy. Tata Motors has a high domestic exposure of ~94% in the MHCV segment and ~84% in the light commercial vehicle (LCV) segment. Since the domestic commercial vehicle sales of the company are at the mercy of the structural economic factors, it is increasingly looking at the international markets. The company plans to diversify into various markets across the world in both MHCV as well as LCV segments. ii) To expand the product portfolio Tata Motors recently introduced the 25MT GVW Tata Novus from Daewoos (South Korea) (TDCV) platform. Tata plans to leverage on the strong presence of TDCV in the heavy-tonnage range and introduce products in India at an appropriate time. This was mainly to cater to the international market and also to cater to the domestic market where a major improvement in the Road infrastructure was done through the National Highway Development Project iii) Tata remains India's largest heavy commercial vehicle manufacturer and Tata Daewoo is the 2nd largest heavy commercial vehicle manufacturer in South Korea. Tata Motors has jointly worked with Tata Daewoo to develop trucks such as Novus and World Truck and buses namely, GloBus and StarBus.
19

4) HISPANO CARROCERA-In 2005, sensing the huge opportunity in the fully built bus segment, Tata Motors became acquired 21% stake in Hispano Carrocera SA, Aragonese bus manufacturing company giving it controlling rights of the company. 5) JAGUAR CARS AND LAND ROVER-After the acquisition of British Jaguar Land Rover (JLR) business, which also includes the Rover, Daimler and Lanchester brand names Tata Motors, became a major player in the international automobile market. Jaguar XF Land Rover's Range Rover On 27 March 2008, Tata Motors reached an agreement with Ford to purchase their Jaguar and Land Rover operations for US$2 billion. The sale was completed on 2 June 2008 Tata has gained the rights to the Daimler, Lanchester, and Rover brand names. In addition to the brands, Tata Motors has also gained access to 2 design centers and 3 plants in UK. The key acquisition would be of the intellectual property rights related to the technologies. 6) JOINT VENTURES-Tata MarcoPolo released this low-floor bus in India & now it is widely used as public transport. In 2005, sensing the huge opportunity in the fully built bus segment, Tata Motors acquired 21% stake in Hispano Carrocera SA, Aragonese bus manufacturing company & introduced its highend inter-city buses in the country. Tata Motors has also formed a 51:49 joint venture with Marcopolo S.A., a Brazil-based global leader,lead by Brian Behrle, in bus body building. This joint venture is to manufacture and assemble fully-built buses & coaches targeted at developing mass rapid transportation systems. The joint venture will absorb technology and expertise in chassis & aggregates from Tata Motors, & Marcopolo will provide know-how process & system for bodybuilding & bus body design.

20

IMPORTANT DEVELOPMENTS
In 2005 & 06 Tata Ace, India's first indigenously developed sub-one ton mini-truck, was launched in May 2005. The mini-truck was a huge success in India with auto-analysts claiming that Ace had changed the dynamics of the light commercial vehicle (LCV) market in the country by creating a new market segment termed the small commercial vehicle (SCV) segment. Ace rapidly emerged as the first choice for transporters and single truck owners for city and rural transport. By October 2005, LCV sales of Tata Motors had grown by 36.6 percent to 28,537 units due to the rising demand for Ace. The Ace was built with a load body produced by Autoline Industries. By 2005; Autoline was producing 300 load bodies per day for Tata Motors. Ace is still one of the number makers for TML, TML sold the 2,00,000th Ace in August 2008, within 4 years since its introduction. Tata Ace has also been exported to several European, South American and African countries. Electric-versions of Tata Ace are sold through Chrysler's Global Electric Motorcars division. In 2007 In 2007, Tata Motors launched several concept models and future designs of existing models. It also formed joint ventures with various local companies in several countries to assemble Tata cars. Tata Motors launched a re-designed version of Tata Xenon TL during Motor Show Bologna which would be assembled in Thailand and Argentina. A pick-up variant of Tata Sumo was also launched under the program 'Global Pick-Up'. The company plans to launch the new pick-up model in India, Southeast Asia, Europe, South Africa, Turkey and Saudi Arabia. Tata Motors also unveiled newer model of Tata Indigo and Tata Elegante concept-car during the Geneva Auto Show. Tata Motors also formed a joint venture with Fiat and gained access to Fiats diesel engine technology. Tata Motors is looking to extend its relationship with Fiat and Iveco to other segments like the 'Global Pick-Up' program. The launch of the 'Global Pick-Up' will mark the entry of the company into developed markets like Europe and the United States. The project was initially collaboration between Tata Motors and its subsidiary Tata Daewoo Commercial Vehicles, but later Tata Motors decided to work with Iveco as Daewoos design was not in sync with the needs of sophisticated European customers. In 2008 COMPRESSED AIR CAR Motor Development International of Luxembourg has developed the world's first prototype of a compressed air car, named OneCAT. In 2007, MDI owner Guy Negre was reported to have "the backing of Tata". It has air tanks that can be filled in 4 hours by plugging the car into a standard electrical plug. In 2008 MDI planned to also design a gas station compressor, which would fill the tanks in 3 minutes. There are no gasoline costs and no fossil fuel emissions from the vehicle when run in town, but "the compressed air driving the pistons can be boosted by a fuel burner".

21

IN 2009 AND ONWARDS Electric vehicles Tata Motors unveiled the electric versions of passenger car Tata Indica and commercial vehicle Tata Ace. Both run on lithium batteries. The company has indicated that the electric Indica would be launched locally in India in about 2010, without disclosing the price. The vehicle would be launched in Norway in 2009. Tata Motors' UK subsidiary, Tata Motors European Technical Centre, has bought a 50.3% holding in electric vehicle technology firm Miljobil Grenland/Innovasjon of Norway for US$1.93 M, which specialises in the development of innovative solutions for electric vehicles, and plans to launch the electric Indica hatchback in Europe next year.

22

GLOBAL OPERATIONS
Tata Motors has been aggressively acquiring foreign brands to increase its global presence. 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. Tata Motors has also acquired from Ford the rights to three other brand names: Daimler, Lanchester and Rover. 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, giving it controlling rights of the company. Hispanos presence is being expanded in other markets. On Tata's journey to make an international foot print, it continued its expansion through the introduction of new products into the market range of buses (Starbus & Globus) as well as trucks (Novus). These models were jointly developed with its subsidiaries Tata Daewoo and Hispano Carrocera. In May, 2009 Tata unveiled the Tata World Truck range jointly developed with Tata Daewoo. They will debut in South Korea, South Africa, the SAARC countries and the Middle-East by the end of 2009. 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. Tata Motors has expanded its production and assembly operations to several other countries including South Korea, Thailand, South Africa and Argentina and is planning to set up plants in Turkey, Indonesia and Eastern Europe. Tata also franchisee/joint venture assembly operations in Kenya, Bangladesh, Ukraine, Russia and Senegal. Tata has dealerships in 26 countries across 4 continents. Though Tata is present in many counties it has only managed to create a large consumer base in the Indian Subcontinent namely India, Bangladesh, Bhutan, Sri Lanka and Nepal and has a growing consumer base in Italy, Spain and South Africa. The Government of India announced an automobile policy in December 1997. The policy required majority-owned subsidiaries of foreign car firms to invest at least US$50 million in equity if they wished to set up manufacturing projects in India. It also forced them to take on export obligations to fund their auto part imports and required them to submit to a schedule for increasing the share of locally made parts in their cars. Mere car assembling operations were not welcomed. An Indian cabinet panel will soon consider a new automobile policy that aims to set fresh investment guidelines for foreign firms wishing to manufacture vehicles in the country. Investments in making auto parts by a foreign vehicle maker will also be considered a part of the minimum foreign investment made by it in an auto-making subsidiary in India. The move is aimed at helping India emerge as a hub for global manufacturing and sourcing for auto parts. The policy sets an export target of $1 billion by 2005 and US$2.7 billion by 2010. The policies adopted by Government will increase competition in domestic market, motivate many foreign commercial vehicle manufactures to set up shops in India, whom
23

will make India as a production hub and export to nearest market. Thus Tata Motors CV will have to face tough competition in near future, which might affect its growth negatively. The purchase of Jaguar Cars is expected to help give Tata Motors a foothold in European and American markets. With the unveiling of Tata Elegante during Geneva Motor Show, Tata Motors revealed its intention to enter the sedan and sports car markets. Tata Indica assembled in Thailand and Argentina. Tata Prima. The Luxury Sedan was designed by Pininfrina and has marked the entry of Tata into the international sedan market. The car is to be sold in India by 2013 and around the world by 2015 Tata Motors has expanded its production and assembly operations to several other countries including South Korea, Thailand, South Africa and Argentina and is planning to set up plants in Turkey, Indonesia and Eastern Europe.

24

FUTURE CHALLENGES
Mahindra and Mahindra: JV with ITEC, North American leader in heavy trucks. M&M has formed a 51:49 JV called Mahindra International with ITEC, USA (parent Navistar International), to manufacture commercial vehicles and to bolster its position in the CV business. ITEC is the leader in medium and heavy trucks and buses in North America, and is the world's largest manufacturer of medium-duty diesel engines. Mahindra International aims to have a presence across the CV market (6-35 tonnes GVW) with variants of passenger transport, cargo and specialised load applications and is likely to start producing medium/heavy commercial vehicles from FY09. Force Motors Ltd: JV with MAN for manufacturing high-tonnage vehicles Force Motors has paired up with MAN in a 70:30 JV to manufacture high-tonnage and specialty vehicles, such as long-haul trucks, tippers, tractor trailers and multi-axle vehicles in the 16-32 tonne range at its Pithampur plant, with an initial capacity of 24,000 units per annum and at an investment of Rs7bn. The JV plans to sell nearly half of its production in the domestic market, while the rest is to be exported to the Middle East, Turkey, Russia, Asia and Africa. Further, the two companies have formed another JV to manufacture buses in India from end-2007. Ashok Leyland: Acquisition of Czech Republic-based Avia. Ashok Leyland (ALL) recently acquired the truck unit of Czech Republic-based Avia for US$35m. Avia manufactures 6-9 tonne LCVs and has a capacity of 20,000 units per annum. The acquisition has given ALL direct access to an entire range of Avia trucks, Avias press shop with dies and tools, welding lines, state-of-the-art paint shop and R&D facilities. ALL has also entered into technology agreements with Hino Motors of Japan and ZF of Germany to complement its in-house R&D efforts and developing complementary components and aggregates. Suzuki: Suzuki through its subsidiary, Maruti Suzuki in the Indian market may also be alarming. Maruti has aggressively launched family cars to undermine the Tata models.

25

MILESTONES
1945- Tata Engineering and Locomotive Co. Ltd. was established to manufacture locomotives and other engineering products. 1948- Steam road roller introduced in collaboration with Marshall Sons (UK). 1954- Collaboration with Daimler Benz AG, West Germany, for manufacture of medium commercial vehicles. The first vehicle rolled out within 6 months of the contract. 1959- Research and Development Centre set up at Jamshedpur. 1977- First commercial vehicle manufactured in Pune. 1983- Manufacture of Heavy Commercial Vehicle commences. 1985- First hydraulic excavator produced with Hitachi collaboration. 1986- Production of first light commercial vehicle, Tata 407, indigenously designed, followed by Tata 608. 1991- Launch of the 1st indigenous passenger car Tata Sierra. 1994- Launch of Tata Sumo - the multi utility vehicle. 1995- Mercedes Benz car E220 launched. 1996- Tata Sumo deluxe launched. 1997- Tata Sierra Turbo launched. 1998- Tata Safari - India's first sports utility vehicle launched. - 2 millionth vehicles rolled out. - Indica, India's first fully indigenous passenger car launched. 2001- Indica V2 launched - 2nd generation Indica. - 100,000th Indica wheeled out. - Launch of the Tata Safari EX 2002- 2,00,000th Indica rolled out. - Launch of the Tata Sumo'+' Series - Launch of the Tata Indigo. - Tata Engineering signed a product agreement with MG Rover of the UK. 2003- On 29th July, J. R. D. Tata's birth anniversary, Tata Engineering becomes Tata Motors Limited. -3 millionth vehicles produced. - First CityRover rolled out 2004- Tata Motors and Daewoo Commercial Vehicle Co. Ltd. sign investment agreement and complete acquisition of Daewoo Commercial Vehicle Company. - Sumo Victa launched - Indigo Marina launched - Tata Motors lists on the NYSE 2005- Tata Motors rolls out the 500,000th Passenger Car from its Car Plant Facility in Pune - The Tata Xover unveiled at the 75th Geneva Motor Show - Branded buses and coaches - Starbus and Globus - launched - Tata Ace, India's first mini truck launched - The power packed Safari Dicor is launched - Tata Motors launches Indica V2 Turbo Diesel. 2006- Tata Motors vehicle sales in India cross four million mark - Indica V2 Xeta launched
26

- Passenger Vehicle sales in India cross one-million mark - Tata Motors first plant for small car to come up in West Bengal - Tata Motors and Fiat Group announce three additional cooperation agreements 2007- Construction of Small Car plant at Singur, West Bengal, begins on January 21 - New 2007 Indica V2 range is launched - 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. - Tata-Fiat plant at Ranjangaon inaugurated - Launch of a new Upgraded range of its entry level utility vehicle offering, the Tata Spacio. - Launch of Magic, a comfortable, safe, four-wheeler public transportation mode, developed on the Ace platform - Launch of Winger, Indias 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- Latest common rail diesel offering- the Indica V2 DICOR, launched. - Indigo CS (Compact Sedan), worlds first sub four-metre sedan, launched. - Launch of the new Sumo -- Sumo Grande, which combines the looks of an SUV with the comforts of a family car. - Tata Motors unveils its People's Car, Nano, at the ninth Auto Expo. - Xenon, 1-tonne pick-up truck, launched in Thailand. - 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- V the second generation Indica, is launched. - Tata Motors launches passenger cars and the new pick-up in D.R. Congo. 2009- Tata Nano is launched.

27

Products of TATA Motors

[1] Passenger cars and utility vehicles Tata Sierra Tata Estate Tata Sumo/ Spacio Tata Indica Tata Indigo Tata Indigo Marina Tata Winger Tata Nano Tata Xenon XT Tata Xover

TATA SAFARI

Indica Vista

28

[2] Concept vehicles 2000 Aria Roadster 2001 Aria Coupe 2002 Tata Indica 2002 Tata Indiva 2004 Tata Indigo Advent 2005 Tata Xover 2006 Tata Cliffrider 2007 Tata Elegante 2009 Tata Prima [3] Commercial vehicles Tata Ace Tata TL/ Telcoline /207 DI Pickup Truck Tata 407 Ex and Ex2 Tata 709 Ex Tata 809 Ex and Ex2 Tata 909 Ex and Ex2 Tata 1109 (Intermediate truck) Tata 1510/1512 (Medium bus) Tata 1610/1616 (Heavy bus) Tata 1613/1615 (Medium truck) Tata 2515/2516 (Medium truck) Tata Globus (Low Floor Bus) Tata Marcopolo Bus (Low Floor Bus) Tata 3015 (Heavy truck) Tata 3118 (Heavy truck) (8X2) Tata 3516 (Heavy truck) Tata 4923 (Ultra-Heavy truck) (6X4) Tata Novus (Heavy truck designed by Tata Daewoo) [4] Military vehicles Tata LSV (Light Specialist Vehicle) Tata 2 Stretcher Ambulance Tata 407 Troop Carrier, available in hard top, soft top, 4x4, and 4x2 versions Tata LPTA 713 TC (4x4) Tata LPT 709 E Tata SD 1015 TC (4x4) Tata LPTA 1615 TC (4x4) Tata LPTA 1621 TC (6x6) Tata LPTA 1615 T

29

MARKETING STRATEGIES
1. LAUNCH OF TATA NANO TATA unveiled its long awaited 1 Lakh rupee car (actually a little over 1 lakh after tax) for the masses and they call it The Peoples Car. Its a sweet looking small car, just enough to take four people around the city. 1 Lakh rupees roughly translate to 2500 rupees monthly installment and because of this reason TATA is expect to sell record breaking numbers and leave Indian roads blocked. Following TATA Nano car specs in comparison with Maruti 800: Overall Length of Nano is 3100 MM which is 7% shorter than Maruti 800 Overall Breadth of Nano is 1500MM which is 4% Wider than Maruti 800 Overall Height of Nano is 1600MM which is 14% Taller than Maruti 800 Overall inside Space of Nano is 21% Bigger than Maruti 800 Engine Capacity 623CC 2 Cylinders, Maruthi 800s got 3 Cylinders Power 33BHP, less than Maruthi 800 Top Speed: 120 Kmph Top Speed Lower Than Maruti 800 Fuel efficiency is 20 Kmpl just as Maruti 800 TATA Nano will hit the roads and as it is a definite threat to Maruti 800. TATA stated that the initial production of this car will be of 250,000 a year. After about four years of hard efforts TATA Nano (1 lakh rupee car) was on road now. The introduction of the Nano received media attention due to its targeted low price. The car is expected to boost the Indian economy, create entrepreneurial-opportunities across India, as well as expand the Indian car market by 65%. The car was envisioned by Ratan Tata, Chairman of the Tata Group and Tata Motors, who has described it as an eco-friendly "people's car". Nano has been greatly appreciated by many sources and the media for its low-cost and eco-friendly initiatives which include using compressed-air as fuel and an electric-version (E-Nano). Tata Group is expected to massmanufacture the Nano, particularly the electric-version, and, besides selling them in India, to also export them worldwide. Critics of the car have questioned its safety in India (where reportedly 90,000 people are killed in road-accidents every year), and have also criticised the pollution that it would cause (including criticism by Nobel Peace Prize winner Rajendra Pachauri). However, Tata Motors has promised that it would definitely release Nano's eco-friendly models alongside the gasoline model. The Nano was originally to have been manufactured at a new factory in Singur, West Bengal, but increasingly violent protests forced Tata to pull out October 2008. Currently, Tata Motors is reportedly manufacturing Nano at its existing Pantnagar (Uttarakhand) plant and a mother plant has been proposed for Sanand Gujarat. The company will bank on existing dealer network for Nano initially. The new Nano Plant could have a capacity of 500,000 units, compared to 300,000 for Singur. Gujarat has also agreed to match all the incentives offered by West Bengal government. The Tata Nano is a rear-engine, four-passenger city car built by Tata Motors, aimed primarily at the Indian market. The car is very fuel efficient, achieving
30

around 26.00km/l on the highway and around 22.00km/l in the city. It was first presented at the 9th annual Auto Expo on January 10, 2008, at Pragati Maidan in New Delhi. Nano had a commercial launch on March 23, 2009 and a booking period from April 9 to April 25, generating more than 200,000 bookings for the car. The sales of the car begin in July 2009, with a starting price of Rs 115,000 (rupees). This is cheaper than the Maruti 800, its main competitor and next cheapest Indian car priced at 184,641Rupees.

DESIGN

Tata Nano Ratan Tata, the Chairman of Tata Motors, began development of the world's cheapest production car in 2003, inspired by the number of Indian families with two-wheeled rather than fourwheeled vehicles. The Nano's development has been tempered by the company's success in producing the low cost 4 wheeled Ace truck in May 2005. Contrary to speculation that the car might be a simple four-wheeled auto rickshaw, The Times of India reported the vehicle is "a properly designed and built car". The Chairman is reported to have said, "It is not a car with plastic curtains or no roof it's a real car." To achieve its design goals, Tata refined the manufacturing process, emphasized innovation and sought new design approaches from suppliers. The car was designed at Italy's Institute of Development in Automotive Engineering with Ratan Tata requesting certain changes, such as the elimination of one of two windscreen wipers. Some components of the Nano are made in Germany by Bosch, such as Fuel Injection, brake system, Value Motronic ECU, ABS and other technologies. The Nano has 21% more interior space (albeit mostly as headroom, due to its tall stance) and an 8% smaller exterior compared to its closest rival, the Maruti 800. Tata offered the car in three versions: the basic Tata Nano Std; the Cx; and the Lx. The Cx and Lx versions each have air conditioning, power windows, and central locking. Tata has set its initial production target at 250,000 units per year.

31

COST CUTTING FEATURES

The Nano's trunk does not open. Instead, the rear seats can be folded down to access the trunk space. It has a single windscreen wiper instead of the usual pair. It has no power steering. Its door opening lever was simplified. It has three nuts on the wheels instead of the customary four. It only has one side view mirror.

PRICE
Tata initially targeted the vehicle as "the least expensive production car in the world" aiming for a starting price of 100,000 rupees or approximately, despite rapidly rising material prices at the time. As of August 2009, material costs had risen from 19% to 29% over the cars development, and Tata faced the choice of: introducing the car with an artificially low price through government subsidies and tax breaks forgoing profit on the car using vertical-integration to artificially boost profits on cars at the expense of their materials industries partially using inexpensive polymers or biodegradable plastics instead of a full metal body raising the price of the car Nano is available in three trim levels: The basic Tata Nano Std priced at 123,000 Rupees has no extras; The deluxe Tata Nano CX at 151,000 Rupees has air conditioning; The luxury Tata Nano LX at 172,000 Rupees has air conditioning, power windows and central locking The Nano Europa, European version of the Tata Nano has all of the above plus a larger body, bigger 3-cylinder engine, anti-lock braking system (ABS) and meets European crash standards and emission norms. The base model will have fixed seats, except for the driver's, which will be adjustable, while the deluxe and luxury models will get air conditioning and body coloured bumpers.

Technical specifications
According to Tata Group's Chairman Ratan Tata, the Nano is a 33 PS (33 hp/24 kW) car with a 623 cc rear engine and rear wheel drive, and has a fuel economy of 4.55 L/100 km (21.97 km/L, 51.7 mpg (US), 62 mpg (UK)) under city road conditions, and 3.85 L/100 km on highways (25.974 km/L, 61.1 mpg (US), 73.3 mpg (UK)). It is the first time a two-cylinder no opposed petrol engine will be used in a car with a single balance shaft. Tata Motors has reportedly filed 34 patents related to the innovations in the design of Nano, with powertrain accounting for over half of them. The project head, Girish Wagh has been credited with being one of the brains behind Nano's design.
32

Much has been made of Tata's patents pending for the Nano. Yet during a news conference at the New Delhi Auto Expo, Ratan Tata pointed out none of these is revolutionary or represents earth-shaking technology. He said most relate to rather mundane items such as the two-cylinder engines balance shaft, and how the gears were cut in the transmission. Though the car has been appreciated by many sources, including Reuters due to "the way it has tweaked existing technologies to target an as-yet untapped segment of the market", yet it has been stated by the same sources that Nano is not quite "revolutionary in its technology", just low in price. Moreover, technologies which are expected of the new and yet-to-be-released car include a revolutionary compressed-air fuel system and an eco-friendly electric-version, technologies on which Tata is reportedly already working, though no official incorporation-date for these technologies in the new car has been released. According to Tata, the Nano complies with Bharat Stage-III and Euro-IV emission standards. Ratan Tata also said, 'The car has passed the full-frontal crash and the side impact crash'. Tata Nano passed the required 'homologation tests with Pune-based Automotive Research Association of India (ARAI).This means that the car has met all the specified criteria for roadworthiness laid out by the government including emissions or noise & vibration and can now ply on Indian roads. Tata Nano managed to score around 24 km per litre during its homologation tests with ARAI. This makes Tata Nano the most fuel efficient car in India. Nano will be the first car in India to display the actual fuel mileage figures it recorded at ARAIs tests on its windshield. According to ARAI it conforms to Euro IV emission standards which will come into effect in India in 2010. REAR MOUNTED ENGINE The use of a rear mounted engine to help maximize interior space makes the Nano similar to the original Fiat 500, another technically innovative "people's car". A concept vehicle similar in styling to the Nano, also with rear engined layout was proposed by the UK Rover Group in the 1990s to succeed the original Mini but was not put into production. The eventual new Mini was much larger and technically conservative. The independent, and now-defunct, MG Rover Group later based their Rover CityRover on the Tata Indica. Tata is also reported to be contemplating offering a compressed air engine as an option. NANOs TECHNICAL SPECIFICATIONS Engine: 2 cylinder petrol with Bosch multi-point fuel injection (single injector) all aluminium 33 horsepower (25 kW) 624 cc (38 cu in ) Value Motronic engine management platform from Bosch 2 valves per cylinder overhead camshaft Compression ratio: 9.5:1 Bore stroke: 73.5 mm (2.9 in) 73.5 mm (2.9 in) Power: 33 PS (33 hp/24 kW) @ 5500 rpm Torque: 48 Nm (35 ftlbf) @ 2500 rpm Layout and Transmission:
33

Rear wheel drive 4-speed manual transmission Steering: mechanical rack and pinion Turning radius: 4 metres Performance: Acceleration: 0-70 km/h (43 mph): 14 seconds Maximum speed: 120 km/h (75 mph) Fuel efficiency (overall): 20 kilometres per litre (5 litres per 100 kilometres (56 mpg-imp; 47 mpg-US)) Body and dimensions: Seat belt: 4 Trunk capacity: 150 L (5.3 cu ft) Suspension, Tires & Brakes: Front brake: drum Rear brake: drum Front track: 1,325 mm (52.2 in) Rear track: 1,315 mm (51.8 in) Ground clearance: 180 mm (7.1 in) Front suspension: McPherson strut with lower A arm Rear suspension: Independent coil spring 12-inch wheels

2. TAPPING OF RURAL MARKETS

According to the National Council for Applied Economic Research, or NCAER, rural India accounts for 70% of Indias population, 56% of the national income, 64% of the total expenditure and one-third of the total savings. So, the difficulties faced in cracking these markets pale before the huge potential they offer a company. Of the total sales (of consumer goods), around 55% come from rural India, and going ahead, the contribution is likely to grow. NCAER data suggests that in real terms, at 1999 prices, the size of the rural economy will be about Rs16 trillion in 2012-13 compared with Rs12 trillion in 200708. The share of non-farm income will be about two-thirds of the rural economy by 2012-13. Noticing this huge potential Tata motors now plans to tap the rural market, 60 per cent of which runs on cash. Tata motors ltd. is working on strategies to make inroads into these markets.

34

SWOT Analysis - Tata Motors Limited

SWOT Strengths, Weaknesses, Opportunities, Threat STRENGTHS The internationalization strategy so far has been to keep local managers in new acquisitions, and to only transplant a couple of senior managers from India into the new market. The benefit is that Tata has been able to exchange expertise. For example after the Daewoo acquisition the Indian company leaned work discipline and how to get the final product 'right first time.' The company has a strategy in place for the next stage of its expansion. Not only is it focusing upon new products and acquisitions, but it also has a programme of intensive management development in place in order to establish its leaders for tomorrow. The company has had a successful alliance with Italian mass producer Fiat since 2006. This has enhanced the product portfolio for Tata and Fiat in terms of production and knowledge exchange. For example, the Fiat Palio Style was launched by Tata in 2007, and the companies have an agreement to build a pick-up targeted at Central and South America. WEAKNESSES The company's passenger car products are based upon 3rd and 4th generation platforms, which put Tata Motors Limited at a disadvantage with competing car manufacturers. Despite buying the Jaguar and Land Rover brands (see opportunities below); Tat has not got a foothold in the luxury car segment in its domestic, Indian market. Is the brand associated with commercial vehicles and low-cost passenger cars to the extent that it has isolated itself from lucrative segments in a more aspiring India? One weakness which is often not recognised is that in English the word 'tat' means rubbish. Would the brand sensitive British consumer ever buy into such a brand? Maybe not, but they would buy into Fiat, Jaguar and Land Rover. OPPORTUNITIES In the summer of 2008 Tata Motor's announced that it had successfully purchased the Land Rover and Jaguar brands from Ford Motors for UK 2.3 million. Two of the World's luxury car brand have been added to its portfolio of brands, and will undoubtedly off the company the chance to market vehicles in the luxury segments. Tata Motors Limited acquired Daewoo Motor's Commercial vehicle business in 2004 for around USD $16 million. Nano is the cheapest car in the World - retailing at little more than a motorbike. Whilst the World is getting ready for greener alternatives to gas-guzzlers, is the Nano the answer in terms of concept or brand? Incidentally, the new Land Rover and Jaguar models will cost up to 85 times more than a standard Nano. The new global track platform is about to be launched from its Korean (previously Daewoo) plant. Again, at a time when the World is looking for environmentally friendly transport alternatives, is now the right time to move into this segment? The answer to this question (and the one above) is that new and emerging industrial nations such as India, South Korea and China will have a thirst for low-cost passenger and commercial vehicles. These are the
35

opportunities. However the company has put in place a very proactive Corporate Social Responsibility (CSR) committee to address potential strategies that will make is operations more sustainable. The range of Super Milo fuel efficient buses are powered by super-efficient, eco-friendly engines. The bus has optional organic clutch with booster assist and better air intakes that will reduce fuel consumption by up to 10%. THREATS 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 globalizes and buys into other brands this problem could be alleviated. Since the company has focused upon the commercial and small vehicle segments, it has left itself open to competition from overseas companies for the emerging Indian luxury segments. For example ICICI bank and DaimlerChrysler have invested in a new Punebased plant which will build 5000 new Mercedes-Benz per annum. Other players developing luxury cars targeted at the Indian market include Ford, Honda and Toyota. In fact the entire Indian market has become a target for other global competitors including Mahindra and Mahindra, Maruti Udyog, General Motors, Ford and others .Rising prices in the global economy could pose a threat to Tata Motors Limited on a couple of fronts. The price of steel and aluminium is increasing putting pressure on the costs of production. Many of Tata's products run on Diesel fuel which is becoming expensive globally and within its traditional home market

36

FINANCIAL ANALYSISFINANCIAL OVERVIEW

Year
Equity Paid Up Network Capital Employed Gross Block Net Working Capital (Incl Def.
Tax)

2011-06
385.54 7813.99 14094.51 10805.32 -1248.57 10781.23 12029.80 26118.26 32885.03 28529.40 972.93 28488.92 24611.49 1179.48 3654.39 3228.78 3002.08 2576.47 2028.92 2681.23 2844.12 1695.58 0 1314.31 202.68 24037.11 67.44 50.52 150 29.7

2010-06
385.41 6843.8 10852.94 8749.85 1997.22 10688.65 8691.43 19534.28 31611.21 27185.77 547.11 27535.45 23290.95 1068.56 3527.98 3159.47 2941.69 2573.18 1913.46 2499.75 2714.68 1504.74 0 472.76 177.57 28048.94 62.31 47.10 150.00 31.85

2009-06
382.87 5510.68 8447.52 7945.16 1923.41 9638.56 7715.15 16148.55 23673.43 20293.30 693.92 20550.21 17447.80 756.54 2867.81 2574.32 2346.87 2053.38 1528.88 2049.82 2384.81 1132.9 0 264.88 143.93 3507.39 51.19 37.59 130 34.6

2008-06
361.79 4111.39 6606.81 6611.95 -19.92 7188.72 7208.64 13797.29 20152.03 17088.59 560.29 17232.59 14614.45 581.41 2319.87 2102.06 1869.71 1651.90 1236.95 1687.11 1497.85 671.40 0 226.84 113.64 14976.30 44.88 32.44 125.00 38.66

2007-06
353 3589.77 4849.54 5985.4 -1477.22 3830.76 5307.98 10135.33 15165.85 12895.55 427.79 12753.57 10511.53 455.56 1877.42 1674.94 1494.82 1292.34 810.34 1192.94 1016.64 354.38 0 43.22 101.69 17331.23 32.77 21.93 80.00 36.44

Current Assets (Incl Def. Tax) Current Liabilities and Provision (Incl Def. Tax) Total Assets/ Liabilities Gross Sales Net Sales Other Incomes Value of Output Cost of Production Selling Cost PBIDT PBDT PBIT PBT PAT CP Revenue earnings in forex Revenue expenses in forex Capital earnings in forex Capital expenses in forex Book Value (Unit Curr) Market Capitalisation CEPS (annualised), (Unit Curr.) EPS (annualised), (Unit Curr.) Dividend (annualized %) Payout (%)

37

YEARS 2006-07 2007-08 2008-09 2009-10 2010-11

DIVIDEND PER SHARE9(DPS) in Rs 8.00 12.50 13.00 15.00 15.00

FORMULAE AT GLANCE Cost of Equity, Ke =DIV/P+G Dividend Per Yield= Dividend Per Share / Book Value Growth rate (G) = Retention Ratio x ROE = (1- Payout Ratio) x ROE ROE = (PAT Preference Dividend) / Equity Shareholder Funds Equity Shareholder Funds = Equity Share Capital + Reserves P& L A/C (Dr. Balance) Cost of Debt Kd = Interst/Total Debt ROI =PBIT/Capital Employed CAPITAL STRUCTURE

Year
DPS(Rs) Book Value(Rs.) Payout (%) Retention Ratio PBT Tax PAT Preference Dividend Equity Reserves P & L Account(Dr Balance) Equity Shareholder Fund ROE Growth Rate (%) Cost of Equity (%) Interest Total Debt

2008
15 202.68 29.7 0.703 2576.47 139.01 2437.46 0 385.54 7453.96 0 7839.5 0.31 21.86 29.26 425.61 6280.52

2007
15 177.57 31.85 0.6815 2573.18 476 2097.18 0 385.41 6484.34 0 6869.75 0.31 20.80 29.25 368.51 4009.14

2006
13 143.93 34.6 0.654 2053.38 363.35 1690.03 19.94 382.87 5154.2 0 5537.07 0.30 19.73 28.76 293.49 2936.84

2005
12.5 113.64 38.66 0.6134 1651.9 363.82 1288.08 0 361.79 3749.6 0 4111.39 0.31 19.22 30.22 217.81 2495.42

2004
8 101.69 36.44 0.6356 1292.34 96 1196.34 0 353 3236.77 0 3589.77 0.33 21.18 29.05 202.48 1259.77

38

WEIGHTED AVERAGE COST OF CAPITAL (WACC) Vs ROI Year

2008 2007 2006 2005 2004

WACC (%)
8.18 11.20 12.59 12.00 20.69

ROI (%)
21.30 27.11 27.78 28.30 30.82

Difference
13.12 15.91 15.19 16.30 10.13

39

REASONS
Fiscal 2010-11, the second year of 11th Five Year Plan saw a marginal fall in GDP growth rate of 9%. The slowdown in economy. Increase in inflation. Poor credit availability. Hardening of interest rate Rise in price of input material Proposed increase in fuel price and volatility in foreign exchange rates. Manufacturing expenses, employee cost increase. Net raw material consumption inclusive of processing charges increased, with pressure on volumes and margins.

40

BALANCE SHEET ANALYSIS

From the above statement it is seems that the company has become highly geared year after year. To substantiate this, the net current asset which is a representation of their long term debit is on the increase (Rs. 27,203.30 million In 2009, Rs. 40,235.10 million in 2010, and Rs. 58,792.80 million In 2011) this forms a lower percentage of the total debit (when short term debit and capital cases are added) the company is perhaps aware of the results that may effect the interest on the total equity and rather have a preference for short term loans as the environment dictate, hence, increasing the total equity year by year. During the year, the Company recorded its highest ever sale of 5, 85,649 vehicles and grew its turnover to Rs. 33,094 crores to remain as India's largest automobile company by revenue. The Company's margins were under pressure during the year due to rising interest rates, constraints in availability of vehicle financing from outside sources and unprecedented increase in prices of raw materials. For long term financial plan and expansion of the new product (Nano) Tata has decided to raise funds from the stock market rather than going for a loan option (GEARING). This is because in the past heavy amounts were gained as interest on loans which have a negative effect on the profit and returns to the stake holders. To support my analysis in financial year 2009, Rs.36,641 million loans was taken, and in the year 2020, Rs. 79,137 million loan was taken, And also the companys net profit margins have gone down abruptly from 6.8% in 2008 to 5.6% in 2010, most probably because of the rising cost of the raw material used by the 5 company, but still the profits of the Tata Motors remain highest than the other auto manufacturers. The rate of interest on vehicles in India is running very high, because of which the sales growth have gone a little down. Even then Tata Motors have increased there profits to 6.2% year after year. And are still financing most of their sales, up to 31% in 2010 from 24% in 2009. Hence, gross accounts receivable are greater than before by 35% every year and they also had to make up the shortage of cash by borrowing. When combined with the other expenses to the growth of fuel, it has augmented its short as well as its the long-term debt extensively. The EBIDTA (earnings before interest, taxes, depreciation, and amortization) margin at 10.8% was lower than last year as increase in input costs could only be partially absorbed by the market. Note: Amortization = non-cash expense of writing off intangible assets over their useful lives. The Profit Before-Tax at Rs.2, 576 crores was 0.1 % higher than last year, The Profit after Tax at Rs.2, 029 crores, was 6.1 % higher than last year. FINANCIAL PERFORMANCE With significant increase in the Company's capital expenditure programs and the growing business requirement, the overall borrowings of the Company stood at Rs.6, 280.52 crores at a Debt: Equity ratio of 0.80:1.

41

The Indian economy remained in high growth phase but witnessed moderation in GDP growth to 90/ in FY 10-11 as compared to over 9% growth achieved in the previous two years. The commercial vehicle industry which grew by over 33% in FY 09-10 was impacted by moderation in economic growth as wet as substantial reduction in vehicle financing and posted a 8.1% growth this fiscal. The passenger vehicle industry also witnessed a slowdown but managed to grow by 11.1 % by increasing discounts on mature products, launching new models and due to reduction in excise duty announced by the government in Budget during February'11. Vehicle exports also grew, albeit at a slightly lower rate of 11.9% as compared to 14.8% witnessed in the previous year. Amidst moderation in economic growth, a high interest rate regime and tightening of the liquidity position, the domestic passenger vehicle industry was able to grow by 11.3% to an all time high of over 1.5 million vehicles, albeit at a lower growth rate than 21% of the last fiscal. The Industry's growth rate in fact fell to single digit in the last four months of the fiscal. Growth was primarily driven by new launches and discounts on existing volume models. Along with two wheelers, entry level cars (price point below Rs 3 lacs) declined by 2%.The luxury segment however doubled in size to over 5,000 vehicles and were immune to the slowing market conditions. Of over 90 models in the industry the top 10 constitute 65% of the industry sales. After six years of consecutive growth, the Company's passenger vehicle sales decreased marginally by 4.5% to 2, 18,055 vehicles (including 3,297 Fiat branded vehicles) and the Company had a 14.2% share in the passenger vehicle market between TATA and Fiat branded vehicles. Fiscal 2010-11, the second year of 11th Five Year Plan saw a marginal fall in GDP growth rate of 9%. In view of the slow down in economy, increase in inflation, poor credit availability, hardening of interest rates, rise in prices of input materials, proposed increase in fuel prices and volatility in foreign exchange rates, the commercial and passenger vehicle industry has a challenging year ahead, with pressure on volumes and margins. Fiscal Total short-term debt (Excluding current portion of long-term debt) Long-term debt net of current portion Total Debt 2009 7,973 2010 (Millions of Rupees) 33,145

27,203 36,641

40,235 79,137

42

FINANCIAL ANALYSIS OF TATA MOTORS

On the back of a 3.9% volume growth, the company registered 14.4% y-o-y growth in net revenue to Rs.60.57 bn during 1QFY09 due to vehicle price increases and favorable mix Significant cost increases were witnessed in raw material consumption and employee cost which witnessed y-o-y growth of 18.2% and 13.9% respectively. Excluding the impact of foreign exchange valuation related losses, the Companys EBITDA stood at Rs.5,304.7 mn, compared to Rs.5,463.0 mn the year ago quarter. EBITDA margin, excluding foreign exchange losses was 7.7% in 1QFY09, compared to 9.0% 1QFY08. In a rising cost scenario, pressure on margins was visible as the companys raw material cost as percentage of net revenues of the Company rose by 240 bps to 72.0% in 1QFY09; from 69.7% in 1QFY08. Cost reduction in 1Q FY09 stood at 294 mn. Net interest expense increased 37.7% y-o-y to Rs.1123.3 mn in Q1 FY09, compared to Rs.815.6 mn due to rising interest rates and higher debt. However, the interest expense as a % of net sales increased marginally from 1.3% in Q1 FY08 to 1.6% in Q1 FY09. Tax rate for first quarter declined substantially and stood at 5.5% as compared to 21.2% for same period last year, on account of large dividends received by Company on its Investments/Subsidiaries which are not taxable in the hands of the Company and weighted deductions available on R&D expenditure. As on 30th June08, the balance sheet size of the Company was Rs. 183.98 bn as compared to Rs 150.96 bn as on 31st March08. Net of vehicle financing loans and receivables the Companys capital employed was Rs 178.33 bn as on 30th June08 against Rs.135.76 bn as on 31st March08. As on 30th June08, 385.62 mn shares (Face value Rs.10) were outstanding on the balance sheet of Tata Motors. The Gross total debt (inc. FCCNs) stood Rs 94.97 bn as on 30th June08 as compared to Rs. 62.8 bn as on 31st March08. The Companys Net Debt (Net of the surplus investible funds) stood at Rs 89.3 bn as on 30th June08. As on 30th June08, the Companys net debt to equity ratio stood at 1.12:1. Up to June 30th, 2008, 99.94% of the 1% convertible Notes (due 2008) and 97.09% of the Zero coupon Convertible Notes (due 2009) have been converted into Ordinary Shares / ADSs. There have been no conversions of the other FCCNs issued by the Company. The Companys Balance Sheet includes Receivables and loans of Rs. 27.94 bn

43

FINANCIAL PERFORMANCE AS A MEASURE OF OPERATIONAL PERFORMANCE

In a challenging environment, the Company has been able to marginally grow its revenues and profits. Whilst the Company's profit after tax improved to Rs.2,028.92 crores from Rs.1,913.46crores in the previous year, the margins were under pressure mainly due to the rising input costs and lower volume growth. Turnover, net of excise duties increased by 4.6% to another record high of Rs. 28,730.82 crores from Rs.27, 470.03 crores in FY 2009-10.The total number of vehicles sold during the year increased by 0.9% to 585,649 units from 580,280 units in FY 200910.The domestic volumes increased by 0.8% to 530,990 units from 526,806 units in FY 2009-10, while export volumes increased by 2.22% to 54,659 units in FY 2010-11 from 53,474 units in FY 2009-10. Net Raw Material consumption inclusive of processing charges increased by 6.2%to Rs.21, 082.10 crores in FY 2010-11, from Rs.19,849.04 crores in FY 2009-10. Material Cost as a % of net turnover has increased to 73.4% from 72.3% for the last year. This was largely a result of increase in prices of steel, aluminum, nickel, copper and natural rubber. However, the Company managed to lower the impact through its ongoing cost reduction program with initiatives like global sourcing, vendor rationalization and value engineering. Employee Cost increased by 12.9% during the year to Rs. 1,544.57 crores from Rs. 1,368.09 crores registered in the previous year mainly inline with trends in industry and economy. The manpower increased marginally to 23,230 from 22,349 with increases also in flexible manpower. Manufacturing and Other Expenses increased by 2.4% to Rs. 3,011.83 crores in FY 2010-11 from Rs.2,940.53 crores in FY 2009-10.These were 10.5% of net turnover for the year as compared to 10.7% for the previous year. Profit before depreciation, interest and tax increased by 0.5% to Rs.3,575.50 crores from Rs.3,557.56 crores in FY 2009-10.The margin decreased to 12.4% from 13% in FY 2009-10 Depreciation (including product development expenditure) for 2010-11 increased by 6.8% to Rs. 716.66 crores from Rs.671.31 crores in FY 2009-10 on account of increase in fixed assets. It represents 2.5% of net turnover as compared to 2.4% for FY 2009-10. Net interest cost decreased to Rs. 282.37 crores in FY 2010-11 from Rs.313.07 crores in FY 2009-10. Despite increase in interest rates and increase in capital expenditure, the reduction was mainly on account of significant reduction in the Company's vehicle financing portfolio (on account of securitization), better working capital management, interest earnings and larger capitalization of interest in line with the increase in capital expenditure. Profit before Tax (PBT) of the Company increased by 0.13% to Rs. 2,576.47 crores from Rs. 2,573.18 crores in FY 2009-10. Profit after Tax (PAT) increased by 6.03% to Rs. 2,028.92 crores from Rs.1, 913.46 crores in FY 2009-10. This was mainly on account of a lower tax provision owing to the increase in spends on Research and Development and income from capital gains,
44

which is subject to a lower tax rate. Basic Earning Per Share (EPS) increased by 5.79% to Rs.52.64 as compared to Rs.49.76 last year. Investments increased to Rs.4, 910.27 crores in FY 2010-11 from Rs.2, 477.00 crores in FY 2009-10. The Profit Before Tax at Rs. 2,576 crores was 0.1% higher than last year. The Profit after Tax at Rs. 2,029 crores, was 6.1% higher than last year. Financial performance of a company is satisfactory and attaining good returns of the capital employed even in peak stage as WACC is less than about 13.12%

GLOBAL AUTOMOBILE INDUSTRY

EXPECTED GROWTH by 2015-16

Expected to grow at 13% p.a over the next decade to reach around USD $ 120 - 159 bn by 2016.
45

Financial strategy of TATA Motors Limited

Realignment of TMF business sourcing channels. Dealer driven business sourcing. Direct sales agents (DSAs). Direct marketing for fleet customers in CV and corporate clients in PC Marketing Service Providers to increase Feet on street. Increase presence in M&HCV fleet segment. Operating leases for high end M&HCV and for car fleet owners. Refurbishment of old vehicles. Used vehicle financing in CV and PC. Improve collection efficiency, credit control & remedial measures to reduce over dues.

Focus Areas for Vehicle Financing Business

Increase penetration. Realign the marketing channel ( Dealer and Direct) to complement each other. Consolidate the strong position in MUVs and LCVs. Increase the presence in car and Fleet segment in M&HCV. Maintain strong position in rural market ( B and C class cities). Better risk management and improve collection efficiency. Constantly thriving for cost rationalization. IT enabled service offerings to increase operational efficiencies and provide better service to customers. New business initiatives with higher margins. Refinance, operating leases, insurance brokerage , refurbishment.

Financial Management
Organic Growth Plans Rs. 60 bn capex programme to be implemented over five years beginning April 2011. Targeted investment areas. New Product Introduction Capacity Expansion Enhancing ERC capabilities Product up-gradation Sustenance Expenditure
46

Cost Reduction Drive

Value Engineering Target Costing E Sourcing and Global Sourcing Supplier base rationalization Process Improvement Productivity Improvement Outsourcing

Rs 10 bn cost reduction target over the next 3 years.

Tata Technologies 94.3% Subsidiary

Increased scale of business. Current revenue size is of Rs. 1.7 billion to over Rs.6.7 billion. Access to a broader customer base in the automotive, aerospace and manufacturing industries. Wider presence in all major geographies and markets. Access to INCATs high end consulting skills and project management capabilities. INCATs areas of Knowledge management and appropriate IPRs to provide wider product range. Tata Technologies is a provider of Engineering & Design and enterprise services in the field of Engineering Automation and PLM solutions to automotive and aerospace OEMs (FY11 revenue at Rs 1.7 b). To pursue its growth plans globally, the company has recently announced its intention of acquiring 100% stake in a UK based company named INCAT. The following advantages are seen with the acquisition. The offer price for INCAT acquisition is 220p per share which is at 4% premium to the current market price that time. The implied market capitalization is GBP53.4 mn. The exit PE for this transaction is around ~ 17 xs. INCAT is cash positive (~GBP 7.4 mn) company and the net cost of acquisition is GBP 46.0 mn The integration will be completed within 100 days beginning October 2011.

47

Comparison of THE FINANCIAL STANDING OF TATA MOTORS

TO COMPARE THE STANDING TATA MOTORS vis - vis THE INDUSTRY. I CONDUCTED A FINANCIAL ANALYSIS OF TWO OF ITS COMPETITORS MAHINDRA & MAHINDRA AND MARUTI UDYOG. The comparison is based on the detailed analysis of the financial statement on the lines of Liquidity, Solvency, Profitability and efficiency. LIQUIDITY POSITION: Purpose of the Liquidity Ratios: The liquidity ratios help to determine a companys ability to meet its short-term liabilities. It can be in the form of the current ratio, liquid ratio, absolute ratio or the operating cycles. While the current ratio, liquid ratio and absolute cash ratio provide information about the companys ability to payoff the shot-term obligations, the operating cycle provides qualitative information about how quickly the company can convert its stock into cash. Company Analysis: Current Ratio for TATA Motors is greater, which implies that it has comfortable liquidity position, however as compared to its competitors it is least liquid since inventories form a considerable portion of its current assets and cash i.e. the most liquid asset, the least. Further, it has a negative operation cycle, which is primarily due to the high credit period provided to its creditors. While both TATA and M&M have similar inventory days M&M has an even lower operating cycle due to an even higher credit period. Maruti on the other hand has an operating cycle of 7 days, which is much higher as compared to the other two. LIQUIDITY POSITION GRAPHICAL:

48

Inferences Drawn: We can, therefore conclude that TATA Motors has a favorable liquidity position which is neither too high nor too low, as an extremely high liquidity position would mean that the company is not using its funds well while a low liquidity position would imply that it would have difficulty in meeting its short term obligations. SOLVENCY POSITION: Purpose of the Solvency Ratios: The solvency ratios are used to measure a companys ability to meet its long term obligation. The commonly used ratios to ascertain the solvency position of a company are Debt Equity Ratio and Interest Coverage Ratio. Debt/Equity Ratio: The ratio gives the proportion of debt and equity in the total capital structure. TATA Motors has a debt equity ratio of about 52% which means that one-third of its total assets are financed through debt. Maruti on the other hand has a low Debt Equity Ratio only 9% i.e the company primarily uses its profits and reserves to find its assets. Interest Coverage Ratio: A ratio used to determine how easily a company can pay interest on outstanding debt. The ratio is calculated by dividing a companys earning before interest and taxes (PBIT) of one period by the companys interest expenses of the same period. PBIT/Sale: The lower the ratio, the more the company is burdened by debt expense. When a companys interest coverage ratio is 1.5 or lower, its ability to meet interest
49

expenses may be questionable. An interest coverage ratio below 1 indicates the company is not generating sufficient revenues to satisfy interest expenses. TATA Motors has an ICR of 9.22 which implies that it can easily service its debt obligations. However, its ICR is much less as compared to its competitors. This is primarily because it the proportion of debt financing employed by TATA Motors is much higher as compared to M&M or Maruti Udyog. Consequently its debt obligation is also higher than the other tow. SOLVENCY RATIO GRAPHICAL ANALYSIS:

50

PROFIT MARGIN RATIO: This ratio measure how much out of every rupee of sales a company keeps as earnings. The two determinants of profit margin are Operating Profit PBIT It is interesting to note here that while TATA Motors has a higher operating profit margin of 12% as compared to M&Ms 9%, its Net Profit Margin (PBIT/Sales) of 10% is much lower than M&Ms 15%. This implies that a large portion of TATAs profit are from its operations while M&M has a considerable amount of non operating income. Maruti has the highest profitability among the three companies indicating that it has been most successful in controlling its costs. Rate of Return Ratios ROTA: ROTA is an indicator of how profitable a company is relative to its total assets. ROTA given an idea as to how efficient management is at using its assets to generate earnings. ROCE: It indicated the efficiency and profitability of a companys capital investments. ROCE should always be higher than the rate at which the company borrows; otherwise any increase in borrowing will reduce shareholders earnings

PROFITABILITY RATIO GRAPHICAL ANALYSIS:

51

Inferences about the companies: ROTA and ROCE for TATA Motors is the least among the three companies. While TATA has an ROCE of 25% Marutis ROCE is nearly 30%. It implies that there is potential in the industry that is not being fully exploited by TATA Motors. There is still considerable scope for the company to increase its profits by effectively utilization its assets. MARKET POSITION: PE ratio and MV/BV is lowest among the three companies for TATA Motors, despite the fact that its earnings and book value is higher than M&M. The reason as to why these ratios are low is clearly its low market value as competitors. The MV/BV Ratio for M&M is 5.2 which is much higher than TATAs 3.73 despite the fact that M&Ms BV per share is Rs. 148.11 which is lower than TATA Motorss BV of Rs. 198.66 per share.

52

CONCLUSION
A detailed analysis of the company shows that the company has had a strong fundamental as well as a strong market performance over the years. Given the economic and the industry environment (improving outlook for the CV industry) TATA Motors would be a key beneficiary. While a pick-up in its CV volumes is evident, operating leverage and cost saving initiatives will improve margins. Current Ratio for TATA Motors is greater, which implies that it has comfortable liquidity position, however as compared to its competitors it is least liquid since inventories form a considerable portion of its current assets. TATA Motors has a debt equity ratio of about 52% which means that one-third of its total assets are financed through debt. TATA Motors has an ICR of 9.22 which implies that it can easily service its debt obligations. However, its ICR is much less as compared to its competitors. This is primarily because it the proportion of debt financing employed by TATA Motors is much higher as compared to M&M or Maruti Udyog TATA Motors has a higher operating profit margin of 12% as compared to M&Ms 9%, its Net Profit Margin (PBIT/Sales) of 10% is much lower than M&Ms 15%. ROTA and ROCE for TATA Motors is the least among the three companies. While TATA has an ROCE of 25% Marutis ROCE is nearly 30%. It implies that there is potential in the industry that is not being fully exploited by TATA Motors.

53

BIBLIOGRAPHY
Books: 1. Philip Kotler, Kevin Keller (2009), Marketing Management (Thirteenth Edition) 2. Marketing Management, the McGraw.Hill Company Rajan Saxena (Third Edition) 3. Berman, Berry and Joel r Evans (Oct- 1997) Retail Management: A strategic approach 8th edition Englewood cliffs NJ printcehall 4. Country analysis 1997 A framework to identify and evaluate the national business environment Hardward business review. MAGAZINES: A) OUTLOOK BUSINESS (FEB, 2009) B) BUSINESS STANDARD (April-July 2009) C) 4PS OF BUSINESS AND MARKETING (June 2009) D) BUSINESS TODAY - Pick and Choose E) BUSINESS TODAY - Tata Motors to bring Jaguar, Land Rover to India INTERNET: 1. Tata Motors' Official Website 2. Wiki - Tata Motors Ltd 3. http://www.docasi.com/doc/12248800/Grand-Project-on-NANO-Car 4. http://www.capitaline.com 5. http://www.tatamotors.com/our_world/press_releases.php?ID=458&action=Pull 6. http://www.tatamotors.com/our_world/press_releases.php?ID=500&action=Pull 7. http://money.rediff.com/companies/tata-motors-ltd/10510008/cash-flow 8. htttp://www.moneycontrol/com/tata-group/tatamotors 9. http://www.yahoofinance.com/tatamotors 10. http://www.carwale.com/research/cars/tata

54