tata motors part 1

Group Members:KOK KEAN TEONG CEA070059MOH JIA WEI CEA070084NEO CHING HUP CEA070109ONG KAH HOEY CEA070157TEO SILK KEONG CEA070197

Faculty of Business and Accountancy

India’s largest Automobile company

World’s 2nd largest bus manufacturer

World’s 4th largest truck manufacturer

Revenue of US$8.8 billion in FY2008

Established since 1945

Source: www.advfn.com

Finance acquisition by using Bridge loan of US$3billion

Source: www.advfn.com

Source: www.advfn.com

Are they able to pay the loans?

What are the rationales to buy JLR? What are the problems in financing

acquisition? Does Tata Motors face any problems after

all? How does the global financial crisis

happen?

What are the impacts of global financial crisis on the developing and developed countries as well as the automobile industry?

How does the macro environment and global business environment influence the success of a business?

Is buying JLR to go global a right move?

Want to become a major player in the international automobile market.

Fulfill the ongoing strategy of internationalization

Increased business diversity across markets and products.

Land rover fits the SUV segment

Jaguar -“performance/luxury” vehicles

Benefits ◦ component sourcing◦ design services ◦ low cost engineering (intellectual property rights).

Improved corporation’s image and increased its public reputation.

Main reason:

•Difficult in raising fund•Increase the risk for calling

default

Problem 1: Lack of access to credit to repay the bridge loan of US$3 Billion

Solutions:Option 1>> Merge with Mahindra & Mahindra

Option 2 >> Divestment

Option 3>> Combination of raising funds from public and refinance

Solutions:Option 1>> Merge with Mahindra & Mahindra

Option 2 >> Divestment

Option 3>> Combination of raising funds from public and refinance

Problem 2: Global financial crisis > Sales Dropped

Source: Society of Indian Automobile Manufacturers report and Company Analysis* including Magic and Winger sales # including Fiat branded cars

Problem 2: Global financial crisis > Sales Dropped

Solutions:• Lay off workers and cut productions

•Launch low budget cars in the developing countries

•Focus on new product development and continue to introduce new products in the marketplace

Problem 3: Increasing materials and fuel prices have slow the demand of vehicles

Problem 3: Increasing materials and fuel prices have slow the demand of vehicles

Solutions:• Hedging or Joint Venture with the materials suppliers

•Launch new products with fuel economy

•Continuous R&D in developing vehicles that running on alternative fuels

Problem 4: Share price dropped drastically and affect its global image

Solutions:• Boost sales and increase company’s earnings

•Expose the future strategic strategies through media release

Problem 4: Share price dropped drastically and affect its global image

Solutions: •has no power to control this external factor environment

Problem 5:Relocation of Nano’s factory from West Bengal to Gujerat

Cultural pressure for

home ownership

Buy houses

Homes perceived as

safe investment Low

interest rate

Give more loans

Capital & credit

availability

Bonus

Management bonuses

US government

policy to increase

home ownership

Supply of loan

increases

Demand of houses

increases

Housing boom

House prices

increases

Bank willing to take more

risk

Banks issue

subprime mortgage

loans

Banks issue

adjustable-rate

mortgage