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Group #3:
(CBoP)
The merger was important to face competition from foreign banks looking to
enter the Indian Banking front.
Both banks had a strong foothold in various sectors like SME & retail Segments
and Retail deposit franchise, vehicle financing, etc.
CBoP's asset quality and resource profile, though healthy, are slightly weaker than
HDFC Bank's own and could impact HDFC Bank adversely in the short term.
Post merger
Following Cost Rationalisation initiatives were taken to
improve cash flows:
1.Single shifts and down time at all three UK assembly plants.
2. Supplier payment terms extended from 45 to 60 days in line
with industry standard.
3.Receivables reduced by 133 million from 38 to 27 days.
4. Inventory reduced by 217m between June 2008 and March
2009 from 70 to 50 days .
5] Labor actions
- Voluntary retirement to 600 employees.
- Agency staff reduced by 800.
-Offered leaves to 300 workers of Bromwhich and solihull plant.
-Additional 450 job cuts including 300 managers.
6] Agreement with Unions to implement pay freeze and longer working hours
(equivalent to approximately 20% reduction in labor costs.)
7] Engineering and capital spending efficiencies.
8] Fixed marketing and selling costs reduced in line with sales volume.
9] Reduction in all other non-personnel related overhead costs.
Problems
Drop in share prices
Failure of rights issue
Huge debt burden
Sales volume decreased by 35.2%
Lack of consumer loans
Issue of timing
Operational freedom slows pace of change
Benefits
Tata wanted to make a global impact and it thinks that
buying these brands at a lower rate now, will give better
value later on.
This acquisition also eases the entry of Tata in European
market which it has been eyeing for long. A previous JV
with FIAT took place, this would further help them
penetrate EU market.
Reduce the company dependence on the Indian market
which accounted for 90% of its sales
Increase sales in emerging markets
Strengths:
Tatas strong management capability
Strong monetary base to invest
Weaknesses:
Jaguars declining sales record
Inexperience of handling such luxury
brands
Jaguar
Tatas
Land Rover
Acquisition
Market is volatile and driven by new
Opportunities:
Support from Ford in terms of
Technology,Engine, IT, Accounting
Adding up of luxury brands in the
product line
Access to European Market
products
Strong presence of competitors like
Mercedes, BMW, Lexus and Infinity