tata motors and the automotive industry the smart people emily frey, eric harmon, arielle hord,...
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Tata Motors and the Automotive Industry
The Smart People Emily Frey, Eric Harmon, Arielle
Hord, Caitlin Kantosky
Outline• History and Product offerings• Tata Group & Corporate Responsibility• Financial Analysis• Tata’s Future & what impact, if any, for the
American auto market
History
• Started in 1945 in Mumbai, India.
• Original production was on locomotives.
• 1954– First car rolled off of the
assembly line.• Tata’s are a family of
Indian industrialists and philanthropists.
• The family founded:– Ironworks– Steelworks– cotton mills– hydroelectric-power
plants • Are of their endeavors
have been proved to be crucial to India's industrial development.
History• Tata Motors is India’s
owns the largest independent company in India.
• Mercedes and Tata teamed up to create a truck line.– First major business deal
with another firm.
• Together both companies started their commercial vehicle operations in 1960.
• in 1986 the company created and sold the first LCV– LCV = light commercial
vehicle – Was the Tata 407
History
• Tata Motors decided to pursue joint ventures.– Cummins Engine Co.,
Inc., was the first company to jointly venture with Tata in 1993.
– Manufactured a diesel engine that had high horsepower and emitted less harmful chemicals.
• Began creating new lines in the late 1990’s and early 2000’s:– Compressed natural gas
buses– 1109 vehicle, used for
commercial purposes.– Ex-series– Newly designed LCV
called the 207 DI
Products
• Tata Indigo– Created in 2002– Mid-sized sedan.– Different models run on
either normal gasoline or diesel fuel.
– Seats 5 people.– Same luxuries as
American made vehicles.
Products
• Tata Indigo SW– Station wagon version of
the Indigo.– Same basic features as
the Indigo.– Seats 5 people.– Different models fun on
different fuels.– Different optional safety
features than other vehicles.
Products
• Tata Indica– Hatchback version of the
Indigo sedan.– Easily affordable.– Smallest in the line of
Tata vehicles to date. – Seats 5 people.– Same basic features as
the sedan.
Products• Tata Safari– Mid-sized SUV.– Has a special engine
called DICOR.• Direct Injection Common
Rail.• Allows the engine to
intercool itself.
– Comes in either a 4x4 or a 4x2.
– Can seat 7 passangers.
Products
• Tata Sumo– Runs off of diesel fuel.– Seats up to 7
passengers.– Has a separate rear and
front suspension for an optimal ride.
– Has two separate air conditioners for the front and rear of the vehicle.
Tata Group• 100 companies throughout 7 business sectors•Engineering, materials, energy, chemicals, services, consumer products, information systems and communications•Tata AutoComp Systems - Automotive•Tata Steel - Materials•Tata Power - Energy•Rallis India - Chemicals•Tata Realty and Infrastructure - Service•Tata Tea - Consumer Products•Tata Technologies - Information Systems and Communications
Corporate Social Responsibility
•“A Company that cares about the future”•Committed to corporate social responsibility•Signed the United Nations Global Compact
•Plays role in community development•Environmentally-friendly products and technology
Corporate Social Responsibility•Two main concerns:•Reduction of pollution•Restoration of ecological balance•Implemented soil and water conservation programs
•Cleaner Engines•Advanced emission-testing labs•Developing alternate fuel engines
•Sewage treatment facilities•Encourages tree planting
Corporate Social Responsibility
•India – Recycling Culture•Value in discarded products
•Europe – “Throw-away” culture•European ELV Directive
Corporate Social Responsibility•Community Development•Community Service Division•Promote economic independence•“Self-initiated cottage industries”
Tata Finance: overview
• Stock Trend• Growth and Expansion– Sales– assets
• Financing Operations• Tata vs. American Companies
Tata Motors Inc. Stock
• TTM• NYSE since 2004• $15.84 as of Friday (Yahoo, 2008)• Down 8% in last year
Growth and Expansion
• large Indian market– Familiar with market– Brand loyalty
• Fuel efficiency • Mahindra & Mahindra- $1.88 billion
Debt vs. Equity
• Debt growth: $2.3 billion $4.1 billion• Equity growth: $1.2 billion $2.1 billion– 55 million outstanding shares– ROE : 19%
• Debt/ equity ratio: .87 – Industry average: .58– Cash now for growth
Growth
• Asset growth doubled since 2005– Acquisition of Jaguar and Land Rover from Ford
• Sales:– $7.6 billion and grew 42.2% from 2006
• PROFITS!!– $.95 billion on 2005 $1.5 billion on 2007
Cash Management
• Liquidity and solvency are good• Inventory• Improved cash management:– 12% of assets in 2005– 4% of assets in 2007
Comparatively Speaking
Brand: Tata Ford GM
Sales: $7.6 billion $172 billion $181 billion
# of employees 33,900 246,000 266,000
Profit Margin 20% 17% 6.7%
Effects on U.S. Economy
• Slow economy– High oil prices– Demand for fuel efficiency– Cut backs
• Tata’s effect
Jaguar and Ford• Purchase from Ford– Concerns
• Changes or Plans– More Tata vehicles– Made in India• Future
U.S. Car Companies• $ 2 Billion in sales
• GM-$50; Ford-$40; Honda- $20
• In the U.S.
• Going overseas– 75% by 2017 for GM
• Expanding in India
U.S. Car Companies
• Toyota- 7.5% increase in profits
• Foreign Markets– No help– 1. Can’t offset– 2. India out of reach
The Next Auto Capital
• Detroit current auto capital
• 21st century belongs to India
• 2050 in India and China– Labor– Environment
Future of the Nano
• Not for the U.S.– 3rd world countries– U.S. standards
• Detroit make or buy version
Summary
• Tata history and products• Tata Group• Tata: Social Responsibility• Tata Motors Finance• Future