Description
The doc describes automobile giants Tata motors tells about passenger and commercial vehicles, alliances, subsidaries, market products, position, channels, partners suppliers, SWOT, business strategies etc.
TATA MOTORS
Introduction Tata Motors is a leading Indian automobile company with its presence across the globe. Today, it is the only fully integrated automobile manufacturer that offers the entire range units: • • Commercial Vehicle Business Unit (CVBU) Passenger Car Business Unit (PCBU). Tata Motors Limited is a public limited company listed on 4 stock exchanges (BSE, NSE, MPSE and CSE) in India and internationally listed at Luxembourg Stock Exchange and Singapore Stock Exchange. Company’s Depositary Receipt in more than 70 Programme is listed on the New York Stock Exchange. Tata Motors has major operations in India with sales and marketing operations countries. 7.35 % revenue is earned through exports of its vehicles. of commercial, passenger and defence vehicles for transportation of goods and passengers through its two major business
1
Corporate Overview 1.1 Company History In 1945, JamshedJi Tata established Tata Locomotive and Engineering Company to manufacture steam locomotives. In 1954, after 9 years of R & D, first Tata Mercedez Benz Truck was launched. Tata had a fruitful collaboration with Daimler Benz for few years which ended in 1969. The company was renamed as TELCO - Tata Engineering Locomotive Company in the year 1960 and in year 2002-03 it was again renamed as Tata Motors. Tata Motors had presence only in the commercial vehicles segment till the 1990s. It first entered the utility vehicle (SUV) segment in 1994 with Tata Sumo, which was a runaway success. In 1999, it entered into the
passenger car (compact car) segment with the launch of ‘Indica’ followed by entry into the midsize segment with ‘Indigo’ in 2003. Company has its presence in Central American, South American and European markets; also company has manufacturing and assembly units in Argentina, Spain, Thailand and South Korea. Today it has achieved leadership position in commercial vehicles segment; it is also the second largest in the passenger vehicles market with, midsize car and utility vehicle segments. The company is the world's fifth largest medium and heavy commercial vehicle manufacturer, and the world's second largest medium and heavy bus manufacturer. The company's Engineering Research Centre was established in 1966, and has facilities in Pune, Jamshedpur and Lucknow. It is also credited to develop India’s first totally indigenous passenger car, Tata Indica. It is India’s second largest passenger car manufacturer and it’s under various variants of Tata Indica, Tata Indigo and also handles the distribution of FIAT in India.
1.2 Key Facts
• • • •
One of India’s largest private sector companies. The leading commercial vehicle manufacturer. Annual turnover of over Rs 108 billion. Has a strong client following not only in India but also in Europe.
1.3 Key Subsidiaries/Alliances Tata Motors in international markets is collaborating with local players such as Daewoo in Korea and Hispano Carrocera in Spain to launch its new product. It markets these products as fuel efficient, reliable, technologically advanced yet stylish and luxurious. It is specially targeting the markets of Russia, Central and South America, Europe, Canada, Thailand, Spain and Korea. Company has already entered in to partnership with local players for assembly and distribution of its vehicles. Recently it has acquired the world’s most stylish brands Jaguar and Land Rover to target the growing and lucrative high end market
segment. The company is now planning to launch it in India to target growing number of rich urban Indians. Tata Motors has several companies (Annexure – 1): joint venture, subsidiary and associate
1.4 Recent Developments • Tata Motors Net Revenue grows to Rs.6928.44 crores in 1st Qtr 2008-09. • • Launch of “Tata Nano” – The Peoples’ Car. Tata Motors is the Official Vehicle Provider to the Youth Baton Relay which is part of the 3rd Commonwealth Youth Games Pune 2008 (CYG). • Tata Motors has introduced a new range of Super Milo bus chassis across the country. • Tata Motors completes the acquisition of the Jaguar Land Rover businesses from Ford Motor Company for a net consideration of US $2.3 billion. Ford has contributed about US $600 million to the Jaguar Land Rover pension plans.
2
Business Description 2.1 Market Products Company is in the business of heavy and light commercial vehicles like trucks, mini-trucks, buses, small commercial vehicle, medium size passenger cars, sports utility and military vehicles.
Passenger cars • Tata Fiat • Tata Indica
• Tata Indigo • Tata Nano (September 2008) Utility Vehicles • • Safari Dicor Sumo
Commercial vehicles • • • • Medium and Heavy Commercial Vehicle – Tata Novus, Tata 1613 Intermediate Commercial Vehicle – Tata 1109, Tata Starbus Light Commercial Vehicle – TL 4x4 Small Commercial Vehicle – Tata Ace, Tata 709 ex
Military vehicles
• •
Tata LSV (Light Specialist Vehicle) Tata 407 Troop Carrier, available in hard top, soft top, 4x4, and 4x2 versions Tata LPTA 713 TC (4x4) Tata SD 1015 TC (4x4)
• •
2.2Market Position Tata Motors Limited is India's largest automobile company, with revenues close to Rs. 40,000 crores (USD 10 billion) in 2007-08. Today, it is the leader in commercial vehicles segment and controls 60 percent of India’s truck and bus market. It is also the second largest in passenger vehicles market, midsize car and utility vehicle segments after the market leaders Maruti and Toyota India. The company is the world's fifth largest medium and heavy commercial vehicle manufacturer, and the world's second largest medium and heavy bus manufacturer. Currently about 18% of its revenues are from international business. OPERATIONS Tata Motors recently received the Balanced Scorecard Collaborative Hall of Fame Award for having achieved a significant turnaround of its overall performance. A comprehensive quality improvement and cost cutting
initiative in September 2000, has played an important role in the company's turnaround, from a loss of Rs 500 crores in the year ended March 2001 to a profit of Rs 28 crores in the first quarter of 2002-2003. The Ariba Spend Management platform has delivered rapid results in helping the company introduce new suppliers, rationalize its supply base, and run on-line markets. This has led to significant savings and development of an effective supply chain. This new agreement reflects a rapidly growing move by many industry leaders, including in the automotive industry, to use spend management as a key element in their strategic plans. Supply chain and value chain?? Standardization – well known for Inter-usability of chassis, suspensions and power-trains. Use of latest technology for completely automated assembly lines – reduces rework, improves accuracy and speed. Results in quicker time to market – focus on streamlined production. Vehicles well known for ruggedness, reliability, not keen on comfort, fit and finish.
2.3Channel Partners/Suppliers A Supplier Relationship Management program and Dealer Management System are in place and the Management Committee reviews the program from time to time. The key indicators of review are the Supplier coverage and the efficiency of the transactions with the Company. The Company also organizes Supplier’s day/Vendor meets/Channel partner meets where suppliers can touch base with the Board members and share their thoughts and inputs. 2.4 Manufacturing Tata Motors owes its leading position in the Indian automobile industry to its strong focus on indigenisation. This focus has driven the Company to
set up world-class manufacturing units with state-of-the-art technology. Every stage of product evolution-design, development, manufacturing, assembly and quality control, is carried out meticulously. The manufacturing plants are situated at Jamshedpur in the East, Pune in the West and Lucknow in the North. Another reason that Tata Motors is looking outwards is cost advantage. Until now Indian companies, manufacturers in particular, have been protected by high duty structures and a generally depreciating rupee. But sometime in the near future, if import restrictions are relaxed or the rupee begins to gain ground, India may not continue to have the low-cost manufacturing advantage it has enjoyed thus far. In that scenario, a presence in countries that offer greater cost advantages for manufacturing will pay off. Tata Motors had all along believed in developing strong in house design, engineering, and manufacturing capabilities. Tata Motors performed a large part of its manufacturing activities in-house. It had installed facilities to manufacture engines, gearboxes and transmission mechanisms, body panels, castings and forgings and important components & subassemblies. It even manufactured its own machine tools, dies and fixtures, in its machine tools division. Moolgaokar, Chairman Tata Motors, from 1970 to 1988, had played an important role in shaping Tata Motors's R&D philosophy. Moolgaokar once commented:"We spend a lot of money, Rs.10 to Rs.12 Crores (US$7 to 8 million at prevailing exchange rates) on R & D. It is our strong point...in a manufacturing industry research and development is a series of mistakes by which you benefit. It gives our people excitement and real knowledge. My singular contribution has been to build a team. We regard our whole operation as one big training facility" In 1997, Tata Motors promoted Tata Autocompsystems Limited (TACO) with the objective of forming joint ventures with international auto component development manufacturers and giving a special thrust to vendor
Strategies for international expansion :
As part of its plans, the company has plotted four routes to international expansion. The first is the traditional method of export, at which the company has been quite successful, notching up export revenue of Rs 969 crore in the first nine months of FY 2004-05, recording a growth of 41 per cent from sales in Europe, Africa, the Middle East and Asia. The second is setting up assembly operations abroad. This does not necessarily involve establishing a full-scale manufacturing unit, but an operation where kits are sent in semi knocked down or completely knocked down assemblies, or as a fully assembled vehicles and sold in that market. Tata Motors worked this into its strategy when it set up its first assembly operation in Malaysia in 1974. Since then the company has similarly expanded in Malaysia, Bangladesh, Senegal, South Africa and Ukraine. All these assembly operations are set up by the distributors of Tata Motors for these countries. The third scenario would be actual acquisition, the route Tata Motors took with Daewoo South Korea. Here, Tata Motors bought the full-fledged heavy vehicle-manufacturing unit and, in the process, gained not just a manufacturing asset base, but access to the market through an already strong brand identity. The company was also presented a wide choice in terms of the markets in which it could use the Daewoo brand and, more importantly, access to R&D capability in the area of commercial vehicles. The fourth, an independent international effort, will call for the company to dig deep into its pockets. "The automobile business is a resource-intensive one," explains Mr Kadle. "There needs to be consistent profitability and a proven track record. Businesses have to contribute, on an ongoing basis, a significant amount of cash for their survival and future growth. You need this winning combination: a track record of profitability, cost competitiveness, global sourcing for components/aggregates, effective capital-base management, and the ability to raise resources from international capital markets at the right time." 2.5 Customers
The Company is also in the midst of implementing a very comprehensive customer relationship management program which is reviewed by the Management Committee and the Board Sub-Committees from time to time. This program is to ensure that the Customers are treated in a fair manner by the channel members of the Company. Their needs are also captured and responded through this programme.
3
SWOT Analysis Strengths Weaknesses
? Strong market position ? Able Leadership of Ratan Tata ? Focused Research & Development Wing ? Strong revenue growth ? Brand Image ? Forward integration (Good Distribution Network) ? Skilled human resource ? Engineering Orientation ? Backward Integration ( Channel partnership with vendors for raw materials) Opportunities
? Crunch of financial resources (due to high cash-buy deal of Jaguar & Land Rover acquisition) ? Overdependence on Indian market
Threats
? Diversification in to the lower segment ? Operating in Sellers Market ? Territorial Expansion
? Global competition
? Diesel fuel issues
? Government regulations ? Social, Political and Ecological Barriers (Singur SEZ issue)
4
Key Business Strategies The ERM Process has been initiated in the Company as a tool to strengthen the Strategic Planning process. It aims at sustaining desired operational performance and providing a platform for rational allocation of capital across SBUs (Strategic Business Units). The process maps the Strategic, Operational, Financial and Governance Risks related to the Business strategy on account of the weaknesses in the internal processes.
5
Financial Performance Tata Motors reported a 14.4% increase in revenues as compared to the
corresponding
quarter last year. It was Rs.6928.44 crores for the quarter
ended June 30, 2008. The bottom line of the company is looking quite unimpressive owing to higher inflationary pressure, spiralling input cost mainly steel, global negative demand and losses due to currency fluctuations (appreciation of rupee). After accounting for these adverse extraneous factors, Profit after Tax for the quarter was Rs.326.11 crores, a decline of 30.13% as compared to Rs. 466.76 crores in the corresponding quarter last year. The sales volume for the quarter (including exports) at 1,33,079 vehicles grew by 3.9% over 1,28,095 vehicles in the corresponding period last year. Domestic sales of commercial vehicles increased by 15.9% to 71,049 units, while domestic sales of passenger vehicles remained unchanged.
While higher interest rates and reduction in overall vehicle financing continue to affect retails, the company is posting good growth and also improving market shares in segments where it has already introduced new Indigo CS has made a significant thrust products. For example, the launch of
contribution to increase in market share in the entry mid- size segment to 38.6% during the quarter. The company will also continue to accord a special on vehicle finance to facilitate better retail sales. New initiatives of cost reduction, now under development, will continue to be implemented vigorously. Also cost of acquiring the business of Jaguar and Land Rover on June 2, 2008 for $2.3 • • billion has put lot of pressure on company’s financials. Financial Performance (Annex 3) Major Share holders (Annex 4)
6
Competitive Landscape
6.1 Competitors Competition is hotting up in the sports utility vehicle segment (SUV) in India once again. Even as Mahindra & Mahindra Ltd is in the process of rolling out an integrated marketing plan to announce the relaunch of Scorpio, Tata Motors is drawing up an aggressive marketing strategy to popularise its recently-launched petrol variant of Tata Safari • Mahindra and Mahindra: M & M has done a joint venture with leader in heavy trucks. M&M has formed a 51:49 JV International with ITEC, USA (parent
Navistar
ITEC, North American
called
Mahindra
International),
to manufacture commercial vehicles and to bolster its
position in the commercial vehicle business. • Ashok Leyland: Ashok Leyland recently acquired the truck unit of Czech Republic-based Avia for US$35m. The acquisition has given Ashok Leyland direct access to an entire range of Avia trucks, Avia’s press shop with dies and tools, welding lines, state-of-the-art paint shop and R&D facilities. Ashok Leyland 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.
DIRECT COMPETITOR COMPARISON
TTM
F
GM
MU 4.90B
H 12.58 M
Indust ry 10.43B
Market Cap:
3.67B 10.43B
5.79B
Employees: Qtrly Rev Growth (yoy): Revenue (ttm):
33,202
229,00 266,00 0 12.80% 0 -1.70%
N/A 55629 178.96 K 1.029 9.35% % 7.70%
7.00%
8.45B
163.16 180.41 4.465 67.5 M 157.53 B B B 13.05 % 20.11 % B 18.70%
Gross Margin (ttm): 28.91% 8.23% 7.67%
EBITDA (ttm): Operating Margins (ttm): Net Income (ttm):
1.03B
4.97B
5.58B
0.542 8.10% B 14.88 4.12% % 1.55B
5.58B
10.01% -4.74% -2.11% 511.58 -
6.04%
- 0.434 B 1.50
M 11.77B 46.51B 1.22 -6.270 7.80 0.43 N/A 0.07 74.284 N/A 0.03
12.17M
EPS (ttm): P/E (ttm): P/S (ttm):
2.48
1.02 48.77 0.44
8.37 N/A
10.8 N/A
http://finance.yahoo.com/q/co?s=TTM
F = Ford Motor Co. twelve months GM = General Motors Corporation H = Hyundai MU = Maruti Udyog Earnings Ratio Industry = Auto Manufacturers – Major Ratio
ttm = trailing B = Billion Dollars M = Million Dollars P/E = Price to P/S = Price to Sales
Tata Motors (TTM) showed surprising strength in December, gaining 13.12% in a single month despite facing protests against the site it chose to build its revolutionary small car. The stock benefited from very strong November sales numbers with total vehicle sales increasing a whopping 43.1% year-over-year. December sales were also strong with vehicle sales up 33% year-over-year. This compares with a 13% drop in December 2006 sales for both Ford (F) and General Motors (GM).
7
Future Opportunities Automobile sector offers exciting opportunities to all the current players and Tata Motors has enough ammunition in its armoury to be among the top 3 global players in next decade. Future looks quite optimistic with the company planning aggressive launching of its vehicles in South and Central America, European markets, Spain, Canada, Thailand and emerging Asian economies. It can also grab significant market in third world economies with its brand new cost efficient Nano. Tata can take advantage of brands (Jaguar and Land Rover), U.K. plants, executives and labour to help build Tata Motors, which had $7.2 billion sales in fiscal 2007, into a global car company. The years ahead are expected to be a watershed years with major challenges too. Heightened competition, higher fuel prices, inflation, high interest rates, and political, social and ecological issues present great challenges for the company in the near future.
Taking into account the rising fuel prices, company is gearing to enter the segment of fuel efficient hybrid cars with new range of eco-friendly electric cars. Also there is a huge demand in domestic markets due to infrastructure developments and rising income levels and this offers great opportunities for the company in Indian and global car segment.
8
Corporate Social Responsibility and Environment Concerns
Being a global player, Tata Motors has ensured that its corporate governance practices are compatible with the international standards. Tata Motors has adopted the Tata Business Excellence Model (TBEM) as a means of driving excellence. In order to track process on long term strategic goals, a Balanced Score Card methodology is used. This enables the Company to go beyond financial performance to incorporate considerations of environment and society, as well.
Few initiatives taken by Tata Motors: • • • • • Gram Vikas Kendra(1978) Parivar Kalyan Sansthan(1984) Nav Jagrat Manav Samaj(1981) Siksha Prasar Kendra(1980) Adivasi Affairs(1985)
Environment Concerns A challenge for any automobile company is to ensure that their products will not have any
adverse impact on the environment during their usage. Several measures have been taken by Tata Motors to mitigate these impacts through environment friendly technologies. Environment friendly technologies: • • • • • • Hybrid Electric Car Hybrid bus Electric Bus Bio- diesel Engine CNG Buses LNG Trucks
ANNEXURES
Annex 1: List of joint venture, subsidiary and associate companies • • • • • • • • • • • • • • • •
Jaguar Land Rover Tata Technologies Ltd. (TTL) and its subsidiaries Telco Construction Equipment Co. Ltd. (Telcon) HV Axles Ltd. (HVAL) HV Transmissions Ltd. (HVTL) TAL Manufacturing Solutions Ltd. (TAL) Sheba Properties Ltd. (Sheba) Concorde Motors (India) Ltd. (Concorde) Tata Daewoo Commercial Vehicle Company Ltd (TDWCV) Hispano Carrocera S. A. (HC) Tata Motors Insurance Broking & Advisory Services Ltd (TMIBASL) Tata Motors European Technical Centre plc Tata Motors Finance Limited Tata Motors Thailand Tata Marcopolo Motors Ltd (TMML) Tata Motors(SA) Proprietary Ltd (TMSA)
Annex 2: Management Hierarchy
Annex – 3: Companies Financial Performance Profitability Profit Margin (ttm): Operating Margin (ttm): 6.05% 10.01%
Management Effectiveness Return on Assets (ttm): Return on Equity (ttm): 7.37% 26.40%
Income Statement Revenue (ttm): Revenue Per Share (ttm): Qtrly Revenue Growth (yoy): EBITDA (ttm): Net Income Avl to Common (ttm): Diluted EPS (ttm): Qtrly Earnings Growth (yoy): 8.42B 21.83 7.00% 1.03B 509.41M 1.21 -31.50%
Balance Sheet Total Cash (mrq): Total Cash Per Share (mrq): Total Debt (mrq): Total Debt/Equity (mrq): Current Ratio (mrq): Book Value Per Share (mrq): 900.79M 2.337 2.72B 1.332 1.02 0
Cash Flow Statement Operating Cash Flow (ttm): Levered Free Cash Flow (ttm): 1.31B 276.38M
For the annual report: http://ir.tatamotors.com/performance/a_reports/pdf/2008/TML-2007-08.pdf
Annex - 4
TOP INSTITUTIONAL HOLDERS
Holder MORGAN STANLEY DEUTSCHE BANK AKTIENGESELLSCHAFT Newgate Capital Management LLC WELLINGTON MANAGEMENT COMPANY, LLP RENAISSANCE TECHNOLOGIES CORP JARISLOWSKY, FRASER LTD HSBC HOLDINGS PLC BARCLAYS PLC Credit Suisse ADAMS EXPRESS COMPANY
Shares 2,693,467 2,487,390
% Out
Value*
Reported
.70 $42,071,954 31-Mar-08 .65 $38,853,031 31-Mar-08
1,716,121
.45 $26,805,810 31-Mar-08
1,531,834
.40 $23,927,247 31-Mar-08
1,295,500 1,035,907 1,009,988 884,300 764,520 750,000
.34 $20,235,710 31-Mar-08 .27 $10,410,865 30-Jun-08
.26 $15,776,012 31-Mar-08 .23 $13,812,766 31-Mar-08 .20 $11,941,802 31-Mar-08 .19 $11,715,000 31-Mar-08
References:
http://finance.google.com/finance?q=NYSE:TTM
http://finance.yahoo.com/q/pr?s=TTM http://www.moneycontrol.com/stocks/companydetails/hist_graph.php
http://www.moneycontrol.com/india/stockpricequote/tatamotors/autolcvshcvs/18/ 20/pric echartquote/marketprice/TM03
http://www.sinletter.com/archives/SINLetterDecember2005.aspx http://www.thehindubusinessline.com/2007/01/18/stories/2007011805081000.htm http://www.blonnet.com/2008/07/25/stories/2008072551810200.htm
file:///F:/Business%20Today%20-%20The%20India%20Today%20Group %20qr.htm
http://www.business-standard.com/stockpage/stock_details.php?stk_id=532500
http://news.moneycontrol.com/mccode/news/article/news_article.php? autono=344012 http://finance.aol.com/quotes/hyundai-motor-co-ltd/hymtf/nao? from=lookup http://investing.businessweek.com/research/stocks/financials/ratios.asp? symbol=HYMTF.PK
doc_328824465.doc
The doc describes automobile giants Tata motors tells about passenger and commercial vehicles, alliances, subsidaries, market products, position, channels, partners suppliers, SWOT, business strategies etc.
TATA MOTORS
Introduction Tata Motors is a leading Indian automobile company with its presence across the globe. Today, it is the only fully integrated automobile manufacturer that offers the entire range units: • • Commercial Vehicle Business Unit (CVBU) Passenger Car Business Unit (PCBU). Tata Motors Limited is a public limited company listed on 4 stock exchanges (BSE, NSE, MPSE and CSE) in India and internationally listed at Luxembourg Stock Exchange and Singapore Stock Exchange. Company’s Depositary Receipt in more than 70 Programme is listed on the New York Stock Exchange. Tata Motors has major operations in India with sales and marketing operations countries. 7.35 % revenue is earned through exports of its vehicles. of commercial, passenger and defence vehicles for transportation of goods and passengers through its two major business
1
Corporate Overview 1.1 Company History In 1945, JamshedJi Tata established Tata Locomotive and Engineering Company to manufacture steam locomotives. In 1954, after 9 years of R & D, first Tata Mercedez Benz Truck was launched. Tata had a fruitful collaboration with Daimler Benz for few years which ended in 1969. The company was renamed as TELCO - Tata Engineering Locomotive Company in the year 1960 and in year 2002-03 it was again renamed as Tata Motors. Tata Motors had presence only in the commercial vehicles segment till the 1990s. It first entered the utility vehicle (SUV) segment in 1994 with Tata Sumo, which was a runaway success. In 1999, it entered into the
passenger car (compact car) segment with the launch of ‘Indica’ followed by entry into the midsize segment with ‘Indigo’ in 2003. Company has its presence in Central American, South American and European markets; also company has manufacturing and assembly units in Argentina, Spain, Thailand and South Korea. Today it has achieved leadership position in commercial vehicles segment; it is also the second largest in the passenger vehicles market with, midsize car and utility vehicle segments. The company is the world's fifth largest medium and heavy commercial vehicle manufacturer, and the world's second largest medium and heavy bus manufacturer. The company's Engineering Research Centre was established in 1966, and has facilities in Pune, Jamshedpur and Lucknow. It is also credited to develop India’s first totally indigenous passenger car, Tata Indica. It is India’s second largest passenger car manufacturer and it’s under various variants of Tata Indica, Tata Indigo and also handles the distribution of FIAT in India.
1.2 Key Facts
• • • •
One of India’s largest private sector companies. The leading commercial vehicle manufacturer. Annual turnover of over Rs 108 billion. Has a strong client following not only in India but also in Europe.
1.3 Key Subsidiaries/Alliances Tata Motors in international markets is collaborating with local players such as Daewoo in Korea and Hispano Carrocera in Spain to launch its new product. It markets these products as fuel efficient, reliable, technologically advanced yet stylish and luxurious. It is specially targeting the markets of Russia, Central and South America, Europe, Canada, Thailand, Spain and Korea. Company has already entered in to partnership with local players for assembly and distribution of its vehicles. Recently it has acquired the world’s most stylish brands Jaguar and Land Rover to target the growing and lucrative high end market
segment. The company is now planning to launch it in India to target growing number of rich urban Indians. Tata Motors has several companies (Annexure – 1): joint venture, subsidiary and associate
1.4 Recent Developments • Tata Motors Net Revenue grows to Rs.6928.44 crores in 1st Qtr 2008-09. • • Launch of “Tata Nano” – The Peoples’ Car. Tata Motors is the Official Vehicle Provider to the Youth Baton Relay which is part of the 3rd Commonwealth Youth Games Pune 2008 (CYG). • Tata Motors has introduced a new range of Super Milo bus chassis across the country. • Tata Motors completes the acquisition of the Jaguar Land Rover businesses from Ford Motor Company for a net consideration of US $2.3 billion. Ford has contributed about US $600 million to the Jaguar Land Rover pension plans.
2
Business Description 2.1 Market Products Company is in the business of heavy and light commercial vehicles like trucks, mini-trucks, buses, small commercial vehicle, medium size passenger cars, sports utility and military vehicles.
Passenger cars • Tata Fiat • Tata Indica
• Tata Indigo • Tata Nano (September 2008) Utility Vehicles • • Safari Dicor Sumo
Commercial vehicles • • • • Medium and Heavy Commercial Vehicle – Tata Novus, Tata 1613 Intermediate Commercial Vehicle – Tata 1109, Tata Starbus Light Commercial Vehicle – TL 4x4 Small Commercial Vehicle – Tata Ace, Tata 709 ex
Military vehicles
• •
Tata LSV (Light Specialist Vehicle) Tata 407 Troop Carrier, available in hard top, soft top, 4x4, and 4x2 versions Tata LPTA 713 TC (4x4) Tata SD 1015 TC (4x4)
• •
2.2Market Position Tata Motors Limited is India's largest automobile company, with revenues close to Rs. 40,000 crores (USD 10 billion) in 2007-08. Today, it is the leader in commercial vehicles segment and controls 60 percent of India’s truck and bus market. It is also the second largest in passenger vehicles market, midsize car and utility vehicle segments after the market leaders Maruti and Toyota India. The company is the world's fifth largest medium and heavy commercial vehicle manufacturer, and the world's second largest medium and heavy bus manufacturer. Currently about 18% of its revenues are from international business. OPERATIONS Tata Motors recently received the Balanced Scorecard Collaborative Hall of Fame Award for having achieved a significant turnaround of its overall performance. A comprehensive quality improvement and cost cutting
initiative in September 2000, has played an important role in the company's turnaround, from a loss of Rs 500 crores in the year ended March 2001 to a profit of Rs 28 crores in the first quarter of 2002-2003. The Ariba Spend Management platform has delivered rapid results in helping the company introduce new suppliers, rationalize its supply base, and run on-line markets. This has led to significant savings and development of an effective supply chain. This new agreement reflects a rapidly growing move by many industry leaders, including in the automotive industry, to use spend management as a key element in their strategic plans. Supply chain and value chain?? Standardization – well known for Inter-usability of chassis, suspensions and power-trains. Use of latest technology for completely automated assembly lines – reduces rework, improves accuracy and speed. Results in quicker time to market – focus on streamlined production. Vehicles well known for ruggedness, reliability, not keen on comfort, fit and finish.
2.3Channel Partners/Suppliers A Supplier Relationship Management program and Dealer Management System are in place and the Management Committee reviews the program from time to time. The key indicators of review are the Supplier coverage and the efficiency of the transactions with the Company. The Company also organizes Supplier’s day/Vendor meets/Channel partner meets where suppliers can touch base with the Board members and share their thoughts and inputs. 2.4 Manufacturing Tata Motors owes its leading position in the Indian automobile industry to its strong focus on indigenisation. This focus has driven the Company to
set up world-class manufacturing units with state-of-the-art technology. Every stage of product evolution-design, development, manufacturing, assembly and quality control, is carried out meticulously. The manufacturing plants are situated at Jamshedpur in the East, Pune in the West and Lucknow in the North. Another reason that Tata Motors is looking outwards is cost advantage. Until now Indian companies, manufacturers in particular, have been protected by high duty structures and a generally depreciating rupee. But sometime in the near future, if import restrictions are relaxed or the rupee begins to gain ground, India may not continue to have the low-cost manufacturing advantage it has enjoyed thus far. In that scenario, a presence in countries that offer greater cost advantages for manufacturing will pay off. Tata Motors had all along believed in developing strong in house design, engineering, and manufacturing capabilities. Tata Motors performed a large part of its manufacturing activities in-house. It had installed facilities to manufacture engines, gearboxes and transmission mechanisms, body panels, castings and forgings and important components & subassemblies. It even manufactured its own machine tools, dies and fixtures, in its machine tools division. Moolgaokar, Chairman Tata Motors, from 1970 to 1988, had played an important role in shaping Tata Motors's R&D philosophy. Moolgaokar once commented:"We spend a lot of money, Rs.10 to Rs.12 Crores (US$7 to 8 million at prevailing exchange rates) on R & D. It is our strong point...in a manufacturing industry research and development is a series of mistakes by which you benefit. It gives our people excitement and real knowledge. My singular contribution has been to build a team. We regard our whole operation as one big training facility" In 1997, Tata Motors promoted Tata Autocompsystems Limited (TACO) with the objective of forming joint ventures with international auto component development manufacturers and giving a special thrust to vendor
Strategies for international expansion :
As part of its plans, the company has plotted four routes to international expansion. The first is the traditional method of export, at which the company has been quite successful, notching up export revenue of Rs 969 crore in the first nine months of FY 2004-05, recording a growth of 41 per cent from sales in Europe, Africa, the Middle East and Asia. The second is setting up assembly operations abroad. This does not necessarily involve establishing a full-scale manufacturing unit, but an operation where kits are sent in semi knocked down or completely knocked down assemblies, or as a fully assembled vehicles and sold in that market. Tata Motors worked this into its strategy when it set up its first assembly operation in Malaysia in 1974. Since then the company has similarly expanded in Malaysia, Bangladesh, Senegal, South Africa and Ukraine. All these assembly operations are set up by the distributors of Tata Motors for these countries. The third scenario would be actual acquisition, the route Tata Motors took with Daewoo South Korea. Here, Tata Motors bought the full-fledged heavy vehicle-manufacturing unit and, in the process, gained not just a manufacturing asset base, but access to the market through an already strong brand identity. The company was also presented a wide choice in terms of the markets in which it could use the Daewoo brand and, more importantly, access to R&D capability in the area of commercial vehicles. The fourth, an independent international effort, will call for the company to dig deep into its pockets. "The automobile business is a resource-intensive one," explains Mr Kadle. "There needs to be consistent profitability and a proven track record. Businesses have to contribute, on an ongoing basis, a significant amount of cash for their survival and future growth. You need this winning combination: a track record of profitability, cost competitiveness, global sourcing for components/aggregates, effective capital-base management, and the ability to raise resources from international capital markets at the right time." 2.5 Customers
The Company is also in the midst of implementing a very comprehensive customer relationship management program which is reviewed by the Management Committee and the Board Sub-Committees from time to time. This program is to ensure that the Customers are treated in a fair manner by the channel members of the Company. Their needs are also captured and responded through this programme.
3
SWOT Analysis Strengths Weaknesses
? Strong market position ? Able Leadership of Ratan Tata ? Focused Research & Development Wing ? Strong revenue growth ? Brand Image ? Forward integration (Good Distribution Network) ? Skilled human resource ? Engineering Orientation ? Backward Integration ( Channel partnership with vendors for raw materials) Opportunities
? Crunch of financial resources (due to high cash-buy deal of Jaguar & Land Rover acquisition) ? Overdependence on Indian market
Threats
? Diversification in to the lower segment ? Operating in Sellers Market ? Territorial Expansion
? Global competition
? Diesel fuel issues
? Government regulations ? Social, Political and Ecological Barriers (Singur SEZ issue)
4
Key Business Strategies The ERM Process has been initiated in the Company as a tool to strengthen the Strategic Planning process. It aims at sustaining desired operational performance and providing a platform for rational allocation of capital across SBUs (Strategic Business Units). The process maps the Strategic, Operational, Financial and Governance Risks related to the Business strategy on account of the weaknesses in the internal processes.
5
Financial Performance Tata Motors reported a 14.4% increase in revenues as compared to the
corresponding
quarter last year. It was Rs.6928.44 crores for the quarter
ended June 30, 2008. The bottom line of the company is looking quite unimpressive owing to higher inflationary pressure, spiralling input cost mainly steel, global negative demand and losses due to currency fluctuations (appreciation of rupee). After accounting for these adverse extraneous factors, Profit after Tax for the quarter was Rs.326.11 crores, a decline of 30.13% as compared to Rs. 466.76 crores in the corresponding quarter last year. The sales volume for the quarter (including exports) at 1,33,079 vehicles grew by 3.9% over 1,28,095 vehicles in the corresponding period last year. Domestic sales of commercial vehicles increased by 15.9% to 71,049 units, while domestic sales of passenger vehicles remained unchanged.
While higher interest rates and reduction in overall vehicle financing continue to affect retails, the company is posting good growth and also improving market shares in segments where it has already introduced new Indigo CS has made a significant thrust products. For example, the launch of
contribution to increase in market share in the entry mid- size segment to 38.6% during the quarter. The company will also continue to accord a special on vehicle finance to facilitate better retail sales. New initiatives of cost reduction, now under development, will continue to be implemented vigorously. Also cost of acquiring the business of Jaguar and Land Rover on June 2, 2008 for $2.3 • • billion has put lot of pressure on company’s financials. Financial Performance (Annex 3) Major Share holders (Annex 4)
6
Competitive Landscape
6.1 Competitors Competition is hotting up in the sports utility vehicle segment (SUV) in India once again. Even as Mahindra & Mahindra Ltd is in the process of rolling out an integrated marketing plan to announce the relaunch of Scorpio, Tata Motors is drawing up an aggressive marketing strategy to popularise its recently-launched petrol variant of Tata Safari • Mahindra and Mahindra: M & M has done a joint venture with leader in heavy trucks. M&M has formed a 51:49 JV International with ITEC, USA (parent
Navistar
ITEC, North American
called
Mahindra
International),
to manufacture commercial vehicles and to bolster its
position in the commercial vehicle business. • Ashok Leyland: Ashok Leyland recently acquired the truck unit of Czech Republic-based Avia for US$35m. The acquisition has given Ashok Leyland direct access to an entire range of Avia trucks, Avia’s press shop with dies and tools, welding lines, state-of-the-art paint shop and R&D facilities. Ashok Leyland 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.
DIRECT COMPETITOR COMPARISON
TTM
F
GM
MU 4.90B
H 12.58 M
Indust ry 10.43B
Market Cap:
3.67B 10.43B
5.79B
Employees: Qtrly Rev Growth (yoy): Revenue (ttm):
33,202
229,00 266,00 0 12.80% 0 -1.70%
N/A 55629 178.96 K 1.029 9.35% % 7.70%
7.00%
8.45B
163.16 180.41 4.465 67.5 M 157.53 B B B 13.05 % 20.11 % B 18.70%
Gross Margin (ttm): 28.91% 8.23% 7.67%
EBITDA (ttm): Operating Margins (ttm): Net Income (ttm):
1.03B
4.97B
5.58B
0.542 8.10% B 14.88 4.12% % 1.55B
5.58B
10.01% -4.74% -2.11% 511.58 -
6.04%
- 0.434 B 1.50
M 11.77B 46.51B 1.22 -6.270 7.80 0.43 N/A 0.07 74.284 N/A 0.03
12.17M
EPS (ttm): P/E (ttm): P/S (ttm):
2.48
1.02 48.77 0.44
8.37 N/A
10.8 N/A
http://finance.yahoo.com/q/co?s=TTM
F = Ford Motor Co. twelve months GM = General Motors Corporation H = Hyundai MU = Maruti Udyog Earnings Ratio Industry = Auto Manufacturers – Major Ratio
ttm = trailing B = Billion Dollars M = Million Dollars P/E = Price to P/S = Price to Sales
Tata Motors (TTM) showed surprising strength in December, gaining 13.12% in a single month despite facing protests against the site it chose to build its revolutionary small car. The stock benefited from very strong November sales numbers with total vehicle sales increasing a whopping 43.1% year-over-year. December sales were also strong with vehicle sales up 33% year-over-year. This compares with a 13% drop in December 2006 sales for both Ford (F) and General Motors (GM).
7
Future Opportunities Automobile sector offers exciting opportunities to all the current players and Tata Motors has enough ammunition in its armoury to be among the top 3 global players in next decade. Future looks quite optimistic with the company planning aggressive launching of its vehicles in South and Central America, European markets, Spain, Canada, Thailand and emerging Asian economies. It can also grab significant market in third world economies with its brand new cost efficient Nano. Tata can take advantage of brands (Jaguar and Land Rover), U.K. plants, executives and labour to help build Tata Motors, which had $7.2 billion sales in fiscal 2007, into a global car company. The years ahead are expected to be a watershed years with major challenges too. Heightened competition, higher fuel prices, inflation, high interest rates, and political, social and ecological issues present great challenges for the company in the near future.
Taking into account the rising fuel prices, company is gearing to enter the segment of fuel efficient hybrid cars with new range of eco-friendly electric cars. Also there is a huge demand in domestic markets due to infrastructure developments and rising income levels and this offers great opportunities for the company in Indian and global car segment.
8
Corporate Social Responsibility and Environment Concerns
Being a global player, Tata Motors has ensured that its corporate governance practices are compatible with the international standards. Tata Motors has adopted the Tata Business Excellence Model (TBEM) as a means of driving excellence. In order to track process on long term strategic goals, a Balanced Score Card methodology is used. This enables the Company to go beyond financial performance to incorporate considerations of environment and society, as well.
Few initiatives taken by Tata Motors: • • • • • Gram Vikas Kendra(1978) Parivar Kalyan Sansthan(1984) Nav Jagrat Manav Samaj(1981) Siksha Prasar Kendra(1980) Adivasi Affairs(1985)
Environment Concerns A challenge for any automobile company is to ensure that their products will not have any
adverse impact on the environment during their usage. Several measures have been taken by Tata Motors to mitigate these impacts through environment friendly technologies. Environment friendly technologies: • • • • • • Hybrid Electric Car Hybrid bus Electric Bus Bio- diesel Engine CNG Buses LNG Trucks
ANNEXURES
Annex 1: List of joint venture, subsidiary and associate companies • • • • • • • • • • • • • • • •
Jaguar Land Rover Tata Technologies Ltd. (TTL) and its subsidiaries Telco Construction Equipment Co. Ltd. (Telcon) HV Axles Ltd. (HVAL) HV Transmissions Ltd. (HVTL) TAL Manufacturing Solutions Ltd. (TAL) Sheba Properties Ltd. (Sheba) Concorde Motors (India) Ltd. (Concorde) Tata Daewoo Commercial Vehicle Company Ltd (TDWCV) Hispano Carrocera S. A. (HC) Tata Motors Insurance Broking & Advisory Services Ltd (TMIBASL) Tata Motors European Technical Centre plc Tata Motors Finance Limited Tata Motors Thailand Tata Marcopolo Motors Ltd (TMML) Tata Motors(SA) Proprietary Ltd (TMSA)
Annex 2: Management Hierarchy
Annex – 3: Companies Financial Performance Profitability Profit Margin (ttm): Operating Margin (ttm): 6.05% 10.01%
Management Effectiveness Return on Assets (ttm): Return on Equity (ttm): 7.37% 26.40%
Income Statement Revenue (ttm): Revenue Per Share (ttm): Qtrly Revenue Growth (yoy): EBITDA (ttm): Net Income Avl to Common (ttm): Diluted EPS (ttm): Qtrly Earnings Growth (yoy): 8.42B 21.83 7.00% 1.03B 509.41M 1.21 -31.50%
Balance Sheet Total Cash (mrq): Total Cash Per Share (mrq): Total Debt (mrq): Total Debt/Equity (mrq): Current Ratio (mrq): Book Value Per Share (mrq): 900.79M 2.337 2.72B 1.332 1.02 0
Cash Flow Statement Operating Cash Flow (ttm): Levered Free Cash Flow (ttm): 1.31B 276.38M
For the annual report: http://ir.tatamotors.com/performance/a_reports/pdf/2008/TML-2007-08.pdf
Annex - 4
TOP INSTITUTIONAL HOLDERS
Holder MORGAN STANLEY DEUTSCHE BANK AKTIENGESELLSCHAFT Newgate Capital Management LLC WELLINGTON MANAGEMENT COMPANY, LLP RENAISSANCE TECHNOLOGIES CORP JARISLOWSKY, FRASER LTD HSBC HOLDINGS PLC BARCLAYS PLC Credit Suisse ADAMS EXPRESS COMPANY
Shares 2,693,467 2,487,390
% Out
Value*
Reported
.70 $42,071,954 31-Mar-08 .65 $38,853,031 31-Mar-08
1,716,121
.45 $26,805,810 31-Mar-08
1,531,834
.40 $23,927,247 31-Mar-08
1,295,500 1,035,907 1,009,988 884,300 764,520 750,000
.34 $20,235,710 31-Mar-08 .27 $10,410,865 30-Jun-08
.26 $15,776,012 31-Mar-08 .23 $13,812,766 31-Mar-08 .20 $11,941,802 31-Mar-08 .19 $11,715,000 31-Mar-08
References:
http://finance.google.com/finance?q=NYSE:TTM
http://finance.yahoo.com/q/pr?s=TTM http://www.moneycontrol.com/stocks/companydetails/hist_graph.php
http://www.moneycontrol.com/india/stockpricequote/tatamotors/autolcvshcvs/18/ 20/pric echartquote/marketprice/TM03
http://www.sinletter.com/archives/SINLetterDecember2005.aspx http://www.thehindubusinessline.com/2007/01/18/stories/2007011805081000.htm http://www.blonnet.com/2008/07/25/stories/2008072551810200.htm
file:///F:/Business%20Today%20-%20The%20India%20Today%20Group %20qr.htm
http://www.business-standard.com/stockpage/stock_details.php?stk_id=532500
http://news.moneycontrol.com/mccode/news/article/news_article.php? autono=344012 http://finance.aol.com/quotes/hyundai-motor-co-ltd/hymtf/nao? from=lookup http://investing.businessweek.com/research/stocks/financials/ratios.asp? symbol=HYMTF.PK
doc_328824465.doc