tata jaguar and rover

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TATA JAGUAR AND ROVER

1.1 INTRODUCTION:-

Creating history, Indias top corporate Tatas on Wednesday acquired luxury auto brands-

Jaguar and Land Roverfrom Ford Motors for $ 2.3 billion, stamping their authority as a

takeover tycoon. Beating compatriot Mahindra and Mahindra for the prestigious brands on

2nd June 2008 announced the deal they signed with Ford, which on its part would chip in

$600 million towards JLRS pension plan. We are very pleased at the prospect of Jaguar and

Land Rover being a significant part of our automotive business, Group Chairman Ratan Tata

said after making the deal public. Tata Motors' acquisition of two iconic British brands-

Jaguar and Land Rover - was finally completed. Well, it is true that their immediate previous

owners were American, but the flavour of the two companies continues to be very Brit. Tata

has acquired the two companies for about half the price that Ford paid their original owners

when the latter acquired them in 1989. Though that sounds like a good deal, it is not going to

be all rosy for Tata Motors after the acquisition. The real work starts now for this global

Indian, trying to pull together the two brands and making them more profitable while still

being weighed down by their historical issues. Jaguar and Land Rover are both special, super

premium brands that have a huge fan following. The ownership of the two brands has

changed hands, but the brands themselves will remain untarnished. And Tata Motors itself

has just become more global. Calls to separate the passenger car business from the rest of the

company will only get shriller now. Tata Motors is now officially the proud parent of the

Jaguar, and its sister Land Rover. The deal is a fulfillment of Mr. Tatas personal vision and

is intended to catapult Tata Motors, the owner of the Nano, into the global big league of auto

majors. It will also reinforce the global perception of India Inc as a leader in international

business, and not just in IT. Yet, the final lap of Group Tatas long-drawn-out bid to acquire


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Jaguar-Land Rover (JLR) from Ford for $2.3 billion in cash was a bit of an anti-climax.

Compared with the Corus deal, this was almost hush-hush. In open-for-business Britain, the

headlines are already calling the Tatas the Corus owners, and not the Indian auto

company. The key challenge for the new owner of Jaguar and Land Rover will be to grow

and maintain sales of the two brands in a global downturn and credit crunch. Tata Motors will

have to commit significant managerial and financial resources to engineer a turnaround. It

will have to significantly step up its R&D budget as well as increase operating expenditure

and capital expenditure to meet JLRs requirements. Auto analysts tracking the development

say the acquisition was just the first step; the real challenge lies in running JLR. The

acquisition cost of $2.3 billion is financed by a bridge loan, which will be raised through a

syndicate of banks. The bridge money will be replaced by a combination of long-term debt

and equity at an appropriate time. The company will raise funds to finance its equity

contribution by selling a portion of its stake in some of its subsidiaries in the next few

months. Largest cross-border auto takeover SOURCES indicate that initially two joint

ventures with Hitachi for axles and transmission - HVAL and HVTL- and auto component

maker TACO are some of the subsidiary companies Tata Motors is looking to divest.

Citigroup and JPMorgan are the lead advisors to the deal, which is the largest cross-border

auto acquisition by an Indian company. The deal is expected to close by the end of June

2008, subject to regulatory approvals and the achievement of financial closure. The

transaction is significant for a number of reasons. Coming as it does amidst a global freeze in

credit markets; it shows that top-notch Indian companies have the ability to raise large

amounts of money at reasonably low rates of interest. Besides the two US banks, the bridge

loan is being underwritten by a consortium of eight banks State Bank of India, Bank of

Tokyo-Mitsubishi UFJ, BNP Paribas, ING, Mizuho and Standard Chartered. The loan has

been structured in the form of step-up financing: for the first six months, the interest charge


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would be Libor (London Inter-Bank Offered Rate) plus 70 basis points and for the next six

months, it would be 140 basis points over the benchmark rate. The six-month Libor is

currently at 2.63%. The bridge loan is being raised by a special purpose vehicle Tata

Motors UK, which will own these two brands, banking sources said. Tata Motors UK is

100% owned by Tata Motors.


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1.2 OBJECTIVE OF THE STUDY

To discuss the form of mergers and acquisitions.

To highlight the real motives of merger and acquisitions.

Understand the advantages and disadvantages of cross-border acquisitions.

Understand the need for growth through acquisitions in foreign countries.


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1.3 Limitations of the study

The information collected is limited by the authenticity and accuracy of theinformation as these are mostly collected from secondary source. The data collected

from the websites are limited and certain information is not available in the website

The study is limited to analyze short term performance of the acquisition.

No company visits are possible so assumptions are based on secondary data, currentscenario and statistics.

Limited information was available from company side.


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INTRODUCTION OF THE TOPIC

2.1 Mergers and Acquisition

Business combinations which may take forms of merger, acquisitions, amalgamation and

takeovers are important features of corporate structural changes. They have played an

important role in the financial and economic growth of a firm. Merger is a combination of

two or more companies into one company. One or more companies may merge with an

existing company or they may merge to form a new company. Laws in India use the term

amalgamation for merger. For example, Section 2(1A) of the Income Tax Act, 1961 defines

amalgamation as the merger of one or more companies with another company or the merger

of two or more companies (called amalgamating company or companies) to form a new

company (called amalgamated company) in such a way that all assets and liabilities of the

amalgamated company and shareholders holding not less than nine-tenths in value of the

shares in the amalgamating company or companies become shareholders of the amalgamated

company.

Merger or amalgamation may take two forms:

Merger through absorption Merger through consolidation

Absorption:

In absorption, one company acquires another company. All companies except one lose

their identity in merger through absorption.


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Consolidation:

In a consolidation, two or more companies combine to form a new company. In this form

of merger, all companies are legally dissolved and a new entity is created. In

consolidation, the acquired company transfers its asset, liabilities and shares to the

acquiring company for cash or exchange of shares.

Acquisition:

A fundamental charectaristic of merger (either through absorption or consolidation) is

that the acquiring company (existing or new) takes over the ownership of other

companies and combine their operations with its own operations. In an acquisition two or

more companies may remain independent, separate legal entity, but there may be change

in control of companies.

Takeover:

A takeover may also define as obtaining of control over management of a company by

another. Under the Monopolies and Restrictive Trade Practices Act, takeover means

acquisition of not less than 25% of the voting power in a company. If a company wants to

invest in more than 10% of the subscribe capital of another company, it has to be

approved in the shareholders general meeting and also by the central government. The

investment in shares of another companies in excess of 10% of the subscribed capital can

result into their takeover.


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2.2 Types of Merger

There are three major types of mergers they can be explain as follows:

1 Horizontal Merger:

This is a combination of two or more firms in similar type of production, distribution or area

of business.

2 Vertical Mergers:

This is a combination of two or more firms involved in different stages of production or

distribution. Vertical merger may take the form of forward or backward merger. Backward

merger: When a company combines with the supplier of material, it is called backward

merger. Forward merger: When it combines with the customer, it is known as forward

merger.

3 Conglomerate Mergers:

This is a combination of firms engaged in unrelated lines of business activity. Example is

merging of different business like manufacturing of cement products, fertilizers products,

electronic products, insurance investment and advertising agencies.


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Advantages of Merger and Acquisitions

1 Maintaining or accelerating a companys growth.2 Enhancing profitability, through cost reduction resulting from economies of scale.3 Diversifying the risk of company, particularly when it acquires those business whose

income streams are not correlated.

4 Reducing tax liability because of the provision of setting-off accumulated losses andunabsorbed depreciation of one company against the profits of another.

5 Limiting the severity of competition by increasing the companys market power.

2.3 Motives behind the Merger

Motives of merger can be broadly discussed as follows:

1 Growth:

One of the fundamental motives that entice mergers is impulsive growth.

Organizations that intend to expand need to choose between organic growth or acquisitions

driven growth. Since the former is very slow, steady and relatively consumes more time the

latter is preferred by firms which are dynamic and ready to capitalize on opportunities.

2 Synergy:

Synergy is a phenomenon where 2 + 2 = 5. This translates into the ability of a business

combination to be more profitable than the sum of the profits of the individual firms that were

combined. It may be in the form of revenue enhancement or cost reduction.


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3 Managerial Efficiency:

Some acquisitions are motivated by the belief that the acquires management can

better manage the targets resources. In such cases, the value of the target firm will rise under

the management control of the acquirer.

4 Strategic:

The strategic reasons could differ on a case-to-case basis and a deal to the other. At

times, if the two firms have complimentary business interests, mergers may result in

consolidating their position in the market.

5 Market entry:

Firms that are cash rich use acquisition as a strategy to enter into new market or new

territory on which they can build their platform.

6 Tax shields:

This plays a significant role in acquisition if the distressed firm has accumulated

losses and unclaimed depreciation benefits on their books. Such acquisitions can eliminate

the acquiring firms liability by benefiting from a merger with these firms.


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2.4 Benefits of Mergers

1 Limit competition

2 Utilize under-utilized market power

3 Overcome the problem of slow growth and profitability in ones own industry

4 Achieve diversification

5 Gain economies of scale and increase income with proportionately less investment

6 Establish a transnational bridgehead without excessive start-up costs to gain access to a

foreign market.

7 utilize under-utilized resources- human and physical and managerial skills.

8 Displace existing management.

9 Circum government regulations.

10 Reap speculative gains attendant upon new security issue or change in P/E ratio.

11 Create an image of aggressiveness and strategic opportunism, empire building and to

amass vast economic power of the company.


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2.5 Steps of Merger and Acquisitions

There are three important steps involved in the analysis of merger and acquisitions can be

explained as follows:

1 Planning:

The most important step in merger and acquisition is planning. The planning of

acquisition will require the analysis of industry specific and the firm specific information.

The acquiring firm will need industry data on market growth, nature of competition, capital

and labour intensity, degree of regulation etc. About the target firm the information needed

will include the quality of management, market share, size, capital structure, profit ability,

production and marketing capabilities etc,

2 Search and Screening:

Search focuses on how and where to look for suitable candidates for acquisition. Screening

process short lists a few candidates from many available. Detailed information about each of

these candidates is obtained. Merger objectives may include attaining faster growth,

improving profitability, improving managerial effectiveness, gaining market power and

leadership, achieving cost reduction etc. These objectives can be achieved in various ways

rather than through merger alone. The alternatives to merger include joint venture, strategic

alliances, elimination of inefficient operations, cost reduction and productivity improvement,

hiring capable manager etc. If merger is considered as the best alternative, the acquiring firm

must satisfy itself that it is the best available option in terms of its own screening criteria and

economically most attractive.


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3 Financial Evaluations:

Financial evaluation of a merger is needed to determine the earnings and cash flows, area of

risk, the maximum price payable to the target company and the best way to finance the

merger. The acquiring firm must pay a fair consideration to the target firm for acquiring its

business. In a competitive market situation with capital market efficiency, the current market

value is the current market value of its share of the target firm. The target firm will not accept

any offer below the current market value of its share. The target firm in fact, expects that

merger benefits will accrue to the acquiring firm. A merger is said to be at a premium when

the offer price is higher than the target firms pre merger market price. The acquiring firm

may pay the premium if it thinks that it can increase the target firms after merger by

improving its operations and due to synergy. It may have to pay premium as an incentive to

the target firms shareholders to induce them to sell their shares so that the acquiring firm is

enabled to obtain the control of the target firm.


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2.6 Reasons for Merger

The reason of merger can be broadly explain as follows:

1 Accelerated Growth:

Growth is essential for sustaining the viability, dynamism and value enhancing capability of a

firm. Growing operations provide challenges and excitement to the executives as well as

opportunities for their job enrichment and rapid career development. This help to increase

managerial efficiency. Other things being the same, growth leads to higher profits and

increase in the shareholders value. It can be achieve growth in two ways:

Expanding its existing markets Enhancing in new market

A firm may expand and diversify its markets internally or externally. If company cannot

grow internally due to lack of physical and managerial resources, it can grow externally by

combining its operations with other companies through mergers and acquisitions.

2 Enhanced Profitability:

The combination of two or more firm may result in more than the average profitability due to

cost reduction and efficient utilization of resources. This may happen because of the

following reasons:

a) Economies of Scale :When two or more firm combine, certain economies are realized due to the larger volume of

operations of the combined entity. These economies arise because of more intensive

utilization of production capacities, distribution networks, engineering services, research and

development facilities, data processing systems and so on.


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b) Operating Economies :In addition to economies of scale, a combination of two or more firm may result into cost

reduction due to operating economies. A combined firm may avoid or reduce fuctions and

facilities. It can consolidate its management functions such as manufacturing, R & D and

reduce operating costs. For example, a combined firm may eliminate duplicate channels of

distribution or create a centralized training center or introduce an integrated planning and

control system.

c) Strategic Benefits :If a firm has decided to enter or expand in a particular industry, acquisition of a firm engaged

in that industry rather than dependence on internal expansion may offer strategic advantages

such as less risk and less cost.

d) Complementary Resources :If two firms have complementary resources it may make sense for them to merge. For

example, a small firm with an innovative product may need the engineering capability and

marketing reach of a big firm. With the merger of the two firms it may be possible to

successfully manufacture and market the innovative product. Thus, the two firms, thanks to

their complementary resources, are worth more together than they are separately.

e) Tax Shields :When a firm with accumulated losses and unabsorbed tax shelters merges with a profit

making firm, tax shields are utilized better. The firm with accumulated losses and unabsorbed

tax shelters may not be able to derive tax advantages for a long time. However, when it


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merges with a profit making firm, its accumulated losses and unabsorbed tax shelters can be

set off against the profits of the profit making firm and tax benefits can be quickly realized.

Utilisation of surplus funds:A firm in a mature industry may generate a lot of cash but may not have opportunities for

profitable investment. Most managements have a tendency to make further investments, even

though they may not be profitable. In such a situation a merger with another firm involving

cash compensation often represents a more efficient utilization of surplus fund.

Managerial Effectiveness:One of the potential gains of merger is an increase in managerial effectiveness. This may

occur if the existing management team, which is performing poorly, is replaced by a more

effective management team. Another allied benefit of a merger may be in the form of greater

congruence between the interests of managers and the shareholders. A common argument for

creating a favourable environment for mergers is that it imposes a certain discipline on the

management.

Diversification of Risk:A commonly stated motive for mergers is to achieve risk reduction through diversification.

The extent, to which risk is reduced, of course, depends on the correlation between the

earnings of the merging entities. While negative correlation brings greater reduction in risk.

The positive correlation brings lesser reduction in risk.


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Lower Financing Costs:The consequence of large size and greater earnings stability is to reduce the cost of borrowing

for the merged firm. The reason for this is that the creditors of the merged firm enjoy better

protection than the creditor of the merging firms independently.


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Legal, Tax and Financial aspects of Merger

3.1 Legal Procedures for Merger and Acquisition

The following is the procedures for merger or acquisition is fairly long dawn. Normally it

involves the following steps:

Permission for merger:Two or more firm can amalgamate only when amalgamation is permitted under their

memorandum of association. Also, the acquiring firm should have the permission in its object

clause to carry on the business of the acquired company. In the absence of these provisions in

the memorandum of association, it is necessary to seek the permission of the shareholders,

board of directors and the Company Law Board before affecting the merger.

Information to the stock exchange:The acquiring and the acquired companies should inform the stock exchange where they are

listed about the merger.

Approval of board of directors:The boards of the directors of the individual firm should approve the draft proposal for

amalgamation and authorize the managements of companies to further pursue the proposal.


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Application in the High Court:An application for approving the draft amalgamation proposal duly approved by the board of

directors of the individual firm should be made to the High Court. The High Court would

convene a meeting of the shareholders and creditors to approve the amalgamation proposal.

The notice of meeting should be sent to them at least 21 days in advance.

Shareholders and Creditors meetings:The individual firm should hold separate meetings of their shareholders and creditors for

approving the amalgamation scheme. At least 75% of shareholders and creditors in separate

meeting, voting in person or by proxy, must accord their approval to the scheme.

Sanction by the High Court:After the approval of shareholders and creditors on the petitions of the companies, the High

Court will pass order sanctioning the amalgamation scheme after it is satisfied that the

scheme is fair and reasonable. If it deems so, it can modify the scheme. The date of the

courts hearing will be published in two newspapers and also the Regional Director of the

Law Board will be intimated.

Filing of the Court order:After the Court order its certified true copies will be filed with the Registrar of Companies.

Transfer of asset and liabilities:The asset and liabilities of the acquired firm will be transferred to the acquiring firm in

accordance with the approved scheme, with effect from the specified date.


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Payment by cash or securities:As per the proposal, the acquiring firm will exchange shares and debentures and pay cash for

the shares and debentures of the acquired firm. These securities will be listed on the stock

exchange.

3.2 Financial Aspects of Merger

There are many ways in which a merger can result into financial synergy. A merger may help

in:

Eliminating the financial constraint Deploying surplus cash Enhancing debt capacity Lowering the financial cost.

Financial Constraint:A firm may be constrained to grow through internal development due to shortage of fund.

The firm can grow externally by acquiring another firm by the exchange of shares and thus,

release the financial constraints.

Surplus Cash:A firm may be faced by a cash rich firm. It may not have enough internal opportunities to

invest its surplus cash. It may either distribute its surplus cash to its shareholders or use it to

acquire some other firm. The shareholders may not really benefit much if surplus cash is

returned to them since they would have to pay tax at ordinary income tax rate. Their wealth

may increase through an increase in the market value of their shares if surplus cash is used to

acquire another firm. If they sell their shares they would pay tax at a lower, capital gain tax


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rate. The company would also be enabled to keep surplus funds and grow through

acquisition.

Debt capacity:A merger of two firms, with fluctuating, but negatively correlated, cash flows, can bring

stability of cash flows of the combined firm. The stability of cash flows reduces the risk of

insolvency and enhances the capacity of the new entity to service a larger amount of debt.

The increased borrowing allows a higher interest tax shield which adds to the shareholders

wealth.

Financing cost:Does the enhanced debt capacity of the merged firm reduce its cost of capital? Since the

probability of insolvency is reduced due to financial stability and increased protection to

lenders, the merged firm should be able to borrow at a lower rate of interest. This advantage

may, however be taken off partially or completely by increase in the shareholders risk on

account of providing better protection to lenders.

Another aspect of the financing costs is issue costs. A merged firm is able to realize

economies of scale in flotation and transaction costs related to an issue of capital. Issue costs

are saved when the merged firm makes a larger security issue.


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THECOMPANY PROFILE:

4.1 Jaguar and Land Rover Profile

The design for the original Land Rover vehicle was started in 1947 by Maurice Wilks, chief

designer at the Rover Company, on his farm in Newborough, Anglesey. It is said that he was

inspired by an American World War II Jeep that he used one summer at his holiday home in

Wales. The first Land Rover prototype, later nicknamed 'Centre Steer', was built on a Jeep

chassis.

The early choice of colour was dictated by military surplus supplies of aircraft cockpit paint,

so early vehicles only came in various shades of light green; all models until recently feature

sturdy box section ladder-frame chassis.

The early vehicles, such as the Series I, were field-tested at Long Bennington and designed to

be field-serviced; advertisements for Rovers cite vehicles driven thousands of miles on

banana oil. Now with more complex service requirements this is less of an option. The

British Army maintains the use of the mechanically simple 2.5-litre four-cylinder 300TDi-

engined versions rather than the electronically controlled 2.5-litre five-cylinder TD5 to retain

some servicing simplicity. This engine also continued in use in some export markets using

units built at a Ford plant in Brazil, where Land Rovers were built under license and the

engine was also used in Ford pick-up trucks built locally.


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Production of the TDi engine ended in the United Kingdom in 2006, meaning that Land

Rover no longer offers it as an option. International Motors of Brazil offer an engine called

the 2.8 TGV Power Torque, which is essentially a 2.8-litre version of the 300TDi, with a

corresponding increase in power and torque. All power is combined with an All-Terrain

Traction Control which gives active terrain response; Ferrari uses a similar system in race

traction.

During its ownership by Ford, Land Rover was associated with Jaguar. In many countries

they shared a common sales and distribution network (including shared dealerships), and

some models shared components and production facilities.

A Land Rover dealership in San Jose, California

1947: Rover's chief designer Maurice Wilks and his associates create a prototype for anew off-road vehicle

1948: The first Land Rover was officially launched the 30th April, 1948, at theAmsterdam Motor Show

1958: Series II launched 1961: Series IIA began production 1967: Rover becomes part of Leyland Motors Ltd, later British Leyland (BL) as

Rover Triumph

1970: Introduction of the Range Rover 1971: Series III launched 1975: BL collapses and is nationalized, publication of the Ryder Report recommends

that Land Rover be split from Rover and be treated as a separate company within BL

and becomes part of the new commercial vehicle division called the Land Rover

Leyland Group


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1976: One-millionth Land Rover leaves the production line 1978: Land Rover Limited formed as a separate subsidiary of British Leyland 1980: Rover car production ends at Solihull with the transfer of SD1 production to

Cowley, Oxford; Solihull is now exclusively for Land Rover manufacture. 5-door

Range Rover introduced.

1983: Land Rover 90 (Ninety)/110 (One-Ten)/127 (renamed Defender in 1990)introduced

1986: BL plc becomes Rover Group plc; Project Llama started 1988: Rover Group is privatised and becomes part of British Aerospace, and is now

known simply as Rover

1986: Range Rover is introduced to the U.S market in April 1986 1989: Introduction of the Discovery 1994: Rover Group is taken over by BMW. Introduction of second-generation Range

Rover. (The original Range Rover was continued under the name 'Range Rover

Classic' until 1995)

1997: Land Rover introduces the Special Edition Discovery XD with AA Yellowpaint, subdued wheels, SD type roof racks, and a few other off-road upgrades directly

from the factory. Produced only for the North American market, the Special Vehicles

Division of Land Rover created only 250 of these bright yellow SUV's. Official

formation of the Camel Trophy Owners Club by co-founders Neill Browne, Pantelis

Giamarellos and Peter Sweetser.

1997: Introduction of the Free lander 1998: Introduction of the second generation of Discovery 2000: BMW breaks up the Rover Group and sells Land Rover to Ford for 1.8 billion 2002: Introduction of third-generation Range Rover


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2004: Introduction of the third-generation Discovery/LR3 2005: Introduction of Range Rover Sport 2005: Adoption of the Jaguar AJ-V8 engine to replace the BMW M62 V8 in the

Range Rover

2005: Land Rover 'founder' Rover, collapses under the ownership of MG RoverGroup

2006: Announcement of a new 2.4-litre diesel engine, 6-speed gearbox, dash andforward-facing rear seats for Defender. Introduction of second generation of

Freelander (Freelander 2). Ford acquires the Rover trademark from BMW, who

previously licensed its use to MG Rover Group

2007: 4,000,000th Land Rover rolls off the production line, a Discovery 3 (LR3),donated to The Born Free Foundation

2007: Announcement from the Ford Motor Company that it plans to sell Land Roverand also Jaguar Cars

2007: India's Tata Motors and Mahindra and Mahindra as well as financial sponsorsCerberus Capital Management, TPG Capital and Apollo Global Management

expressed their interest in purchasing Jaguar Cars and Land Rover from the Ford

Motor Company.

2008: Ford agreed to sell their Jaguar Land Rover operations to Tata Motors. 2008: Tata Motors finalised their purchase of Jaguar and Land Rover from Ford.


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THE COMPANY PROFILE:

4.2 TATA

Tata Motors Limited is Indias largest automobile company, with revenues of Rs. 35651.48

crores (USD 8.8 billion) in 2007-08. It is the leader in commercial vehicles in each segment,

and among the top three in passenger vehicles with winning products in the compact, midsize

car and utility vehicle segments. The company is the worlds fourth largest truck

manufacturer, and the worlds second largest bus manufacturer.

The companys 23,000 employees are guided by the vision to be best in the manner in which

we operate best in the products we deliver and best in our value system and ethics.

Established in 1945, Tata Motors presence indeed cuts across the length and breadth of

India. Over 4 million Tata vehicles ply on Indian roads, since the first rolled out in 1954. The

companys manufacturing base in India is spread across Jamshedpur (Jharkhand), Pune

(Maharashtra), Lucknow (Uttar Pradesh) and Pantnagar (Uttarakhand). Following a

strategic alliance with Fiat in 2005, it has set up an industrial joint venture with Fiat Group

Automobiles at Ranjangaon (Maharashtra) to produce both Fiat and Tata cars and Fiat

power trains. The company is establishing two new plants at Dharwad (Karnataka) and

Sanand (Gujarat). The companys dealership, sales, services and spare parts network

comprises over 3500 touch points; Tata Motors also distributes and markets Fiat branded cars

in India.


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Tata Motors, the first company from Indias engineering sector to be listed in the New York

Stock Exchange (September 2004), has also emerged as an international automobile

company. Through subsidiaries and associate companies, 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. 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, with an option to acquire the remaining stake as well.

Hispanos presence is being expanded in other markets. 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. In 2006,

Tata Motors entered into joint venture with Thonburi Automotive Assembly Plant Company

of Thailand to manufacture and market the companys pickup vehicles in Thailand. The new

plant of Tata Motors (Thailand) has begun production of the Xenon pickup truck, with the

Xenon having been launched in Thailand at the Bangkok Motor Show 2008.

Tata Motors is also expanding its international footprint, established through exports since

1961. The companys commercial and passenger vehicles are already being marketed in

several countries in Europe, Africa, the Middle East, South East Asia, South Asia and South

America. It has franchisee/joint venture assembly operations in Kenya, Bangladesh, Ukraine,

Russia and Senegal. The foundation of the companys growth over the last 50 years is a deep

understanding of economic stimuli and customer needs, and the ability to translate them into

customer-desired offerings through leading edge R&D. With over 2,500 engineers and


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scientists, the companys Engineering Research Centre, established in 1966, and has enabled

pioneering technologies and products. The company today has R&D centers in Pune,

Jamshedpur, Lucknow, in India, and in South Korea, Spain, and the UK. It was Tata Motors,

which developed the first indigenously developed Light Commercial Vehicle, Indias first

Sports Utility Vehicle and, in 1998, the Tata Indica, Indias first fully indigenous passenger

car. Within two years of launch, Tata Indica became Indias largest selling car in its segment.

In 2005, Tata Motors created a new segment by launching the Tata Ace, Indias first

indigenously developed mini-truck

In January 2008, Tata Motors unveiled its Peoples Car, the Tata Nano, which India and the

world have been looking forward to. A development, which signifies a first for the global

automobile industry, the Nano brings the comfort and safety of a car within the reach of

thousands of families. When launched in India later in 2008, the car will be available in both

standard and deluxe versions. The standard version has been priced at Rs.100,000 (excluding

VAT and transportation cost).

Designed with a family in mind, it has a roomy passenger compartment with generous leg

space and head room. It can comfortably seat four persons. Its mono-volume design will set a

new benchmark among small cars. Its safety performance exceeds regulatory requirements in

India. Its tailpipe emission performance too exceeds regulatory requirements. In terms of

overall pollutants, it has a lower pollution level than two-wheelers being manufactured in

India today. The lean design strategy has helped minimize weight, which helps maximize

performance per unit of energy consumed and delivers high fuel efficiency. The high fuel

efficiency also ensures that the car has low carbon dioxide emissions, thereby providing the

twin benefits of an affordable transportation solution with a low carbon footprint. The years

to come will see the introduction of several other innovative vehicles, all rooted in emerging


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customer needs. Besides product development, R&D is also focusing on environment-

friendly technologies in emissions and alternative fuels. Through its subsidiaries, the

company is engaged in engineering and automotive solutions, construction equipment

manufacturing, automotive vehicle components manufacturing and supply chain activities,

machine tools and factory automation solutions, high-precision tooling and plastic and

electronic components for automotive and computer applications, and automotive retailing

and service operations. True to the tradition of the Tata Group, Tata Motors is committed in

letter and spirit to Corporate Social Responsibility. It is a signatory to the United Nations

Global Compact, and is engaged in community and social initiatives on labor and

environment standards in compliance with the principles of the Global Compact. In

accordance with this, it plays an active role in community development, serving rural

communities adjacent to its manufacturing locations.

tata jaguar and rover

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