TATA MOTORS LIMITED

The largest passenger automobile and commercial vehicle manufacturing company of India Tata Motors Limited, was formerly called TELCO (TATA Engineering and Locomotive Company), has its headquarters in Bombay, now Mumbai, India. Established in 1945, listed on the New York Stock Exchange in 2004 has created Rest. 320 billion wealth and was one of the top10 wealth creators in India, With manufacturing facilities in the towns of Jamshedpur, Lucknow,and Pune. Jamshetji Tata founded this company and is run by Ratan Tata under the flagship company known as Tata and sons group. He commands 22000 employees working in three plants as well as other regional and zonal offices across the length and breadth of India. Tata motors passenger cars still need to reach acceptable international requirements. The company commands an imposing 65% share of the domestic commercial vehicle market and is trying to modernize this segment. The financial business of Tata motors was separated into a subsidiary company in Sep. 2006, where it recorded a strong financial performance during the last 5-year period. From year 2003-2007, the profits of the company went up at a CAGR of 36.4%, to attain Rest. 331, 525 million in 2007 from Rest. 95, 731 Million in 2003. By floating two rights issues at the end of Sep 2008 Tata Motors Ltd expected to raise Rest 4, 150 cores. They are offering one ordinary share valued at Rest. 340 every six shares expecting to net Rest. 2.90 Crores, the so called A share would have different voting and dividend rights, for every such 6 shares held at a face value of 305 would raise Rest. 1.960 Crores, these proceed would be utilized for a nearly repayment of the short term funding of 2.3 Billion $ (Rest. 10,189 Crores) Borrowed for Acquisition of jaguar and Land Rover from their principle The Ford Motor Companys. It is also in talks with private equity funds to offload 25% of stake in each of the following 6 unlisted group units, they are Tata Daewoo commercial vehicle company, HV transmissions, Tata motors finance, Tata technologies and TELCO construction equipment, the sales of the stakes would possible conclude by June 2009, helping it to raise further funds for this acquisition, earlier in July it sold 24% stake in an Auto component unit to a group firm and booked a profit of Rest. 110 cores, it also sold 10 million shares or 1.36% of Tata steel for RS.486 cores to Tata Sons, the holding company of whole Tata group firms.

"The Company aims to monetize a part of its funds through a phased divestment of certain investments preferably as inter-group sales wherever possible at current market prices in the coming six to eight months," the money that will be released from these investments will become a part of the capital to be lifted for repayment of the bridging loan taken for the Jaguar-Land Rover acquisition. Taken in March 2008" (Tata Motors Profile) It took a 15 month bridge loan of 3 billion in March from a consortium of banks to finance the JLR accusation and its expansion plans Since the rights issue was announced on 28 the may its share value has fallen more than 30% and fell by 1.82% to Rest. 429.85 on BSE, even though the bench mark index gained 3.8% to end at15, 049.86 points.

The Analysts say that, this is a strategic move taken by Tata Motors because it is allowing the company to make a lot of profit even when the market is in the financial pressure allows Tata sons to raise its wager in group companies. If the company will follow the above mentioned trends then possibly it can raise its finances in allow liquidity and high interest rate set-up.

INDUSTRY OUTLOOK

The Indian Automobile Industry enjoys the advantage of low cost base, high skilledlabour, strong ancillary network coupled with Governments support by way of concessional excise duty of 16% for small cars, ban on overloading and also significant investments proposed for removing infrastructure bottlenecks. The CV industry is directly related to the economic growth and development. The growth in demand for CVs is directly related to the IIP index and any upsurge in economic activities will call for more cargo movement in the economy. The domestic CV market grew at a CAGR of 26.7% during the last 6 years. In FY07, theca segment registered a growth of 32.2% due to Supreme Courts ban on over loading trucks. However, we believe that this is a one-time demand and the CV segment may not witness such kind of growth repeatedly. There is a regulation that restricts the movement of vehicles above certain age (15 years in National Capital Region and 8 years in Mumbai). Though the rule is not being followed strictly at present, in future if this rule is implemented strictly it will result inhume replacement demand. With the Indian economy expected to grow at 8.5% to 9% in coming years, we expect the demand for CVs to be fairly decent except for the fact that the industry is currently experiencing correction due to sharp spurt in demand in the previous years. The CV industry witnessed a change in demand dynamics in last few years. The demand for LCVs in the 35.2 tones is witnessing as urge while demand for semi-trailers in 26.4 to 35.2 tones segment is suffering. This structural shift in demand dynamics is due to the evolution of Hub & Spoke model of distribution, which is now adopted by transportation players because of improved road infrastructure and also the bacon trucks in many cities by the authorities to tackle the traffic congestion issues.

History of TATA Motors

1. Tata Motors launches its first truck in collaboration with Mercedes-Benz.

Tata Motors is a part of the Tata and Sons Group, founded by Jamshedji Nussarwanji Tata and J.Baker. The company was established in 1945 as a locomotive manufacturing unit and later expanded its operations to commercial vehicle sector in 1954 after forming a joint venture withDaimler-Benz AG of Germany.

2. TATA Indica

After years of dominating the commercial vehicle market in India, Tata Motors entered the passenger vehicle market in 1991 by launching the Tata Sierra, a multi utility vehicle. After the launch of three more vehicles, Tata Estate (1992, a stationwagon design based on the earlier 'TataMobile' (1989), a light commercial vehicle), Tata Sumo (LCV, 1994) and Tata Safari (1998, India's first sports utility vehicle). Tata launched the Indica in 1998, the first fully indigenous passenger car of India. Though the car was initially panned by auto-analysts, the car's excellent fuel economy, powerful engine and aggressive marketing strategy made it one of the best selling cars in the history of the Indian automobile industry. A newer version of the car, named Indica V2, was a major improvement over the previous version and quickly became a mass-favourite. A badge engineered version of the car was sold in the United Kingdom as the Rover City Rover. Tata Motors also successfully exported large quantities of the car to South Africa.The success of Indica in many ways marked the rise of Tata Motors.

3. TATA Brads

DAEWOO ACQUISITION

With the success of Tata Indica, Tata Motors aimed to increase its presence worldwide. In 2004, it acquired the Daewoo Commercial Vehicle Company of South Korea.

HISPANO CARROCERA

In 2005, sensing the huge opportunity in the fully built bus segment, Tata Motors becameacquired 21% stake in Hispano Carrocera SA, Aragonese bus manufacturing company giving it controlling rights of the company.

JAGUAR CARS AND LAND ROVER

After the acquisition of British Jaguar Land Rover (JLR) business, which also includes the Rover, Daimler and Lanchester brand names Tata Motors became a major player in the international automobile market.

Products of TATA Motors

[1] Passenger cars and utility vehicles

Tata Sumo Grande Tata Safari Indica Vista Tata Sierra Tata Estate Tata Sumo/ Spacio Tata Indica Tata Indigo Tata Indigo Marina Tata Winger Tata Nano Tata Xenon XT Tata Xover

[2] Concept vehicles

2000 Aria Roadster 2001 Aria Coupe 2002 Tata Indica 2002 Tata Indiva 2004 Tata Indigo Advent 2005 Tata Xover 2006 Tata Cliffrider 2007 Tata Elegant2009 Tata Prima

[3] Commercial vehicles

TATA 1616 STARBUS TATA MARCOPOLO BUSES Tata Ace Tata TL/ Telco line /207 DI Pickup Truck Tata 407 Ex and Ex2 Tata 709 Ex Tata 809 Ex and Ex2 Tata 909 Ex and Ex2 Tata 1109 (Intermediate truck) Tata 1510/1512 (Medium bus) Tata 1610/1616 (Heavy bus) Tata 1613/1615 (Medium truck) Tata 2515/2516 (Medium truck) Tata Globus (Low Floor Bus) Tata Marco polo Bus (Low Floor Bus) Tata 3015 (Heavy truck) Tata 3118 (Heavy truck) (8X2) Tata 3516 (Heavy truck) Tata 4923 (Ultra-Heavy truck) (6X4) Tata Novus (Heavy truck designed by Tata Daewoo)

[4] Military vehicles Tata LSV (Light Specialist Vehicle) Tata 2 Stretcher Ambulance Tata 407 Troop Carrier, available in hard top, soft top, 4x4, and 4x2 versions Tata LPTA 713 TC (4x4) Tata LPT 709 E Tata SD 1015 TC (4x4) Tata LPTA 1615 TC (4x4) Tata LPTA 1621 TC (6x6) Tata LPTA 1615 T

Promoters

Government Policies

Changes in tax, tariff or fiscal policies and regulations: Imposition of any additional taxes and levies designed to limit the use of automobiles could adversely affect the demand for the Company's vehicles and the results of operations. Changes in corporate and other taxation policies as well as changes in export and other incentives given by the various Governments could also adversely affect the results of operations. For example, the Company benefits from excise duty exemptions for manufacturing facilities in the State of Uttarakhand and other incentives in certain states of India either through subsidies or loans from such states where it has manufacturing operations. The Government of India had proposed a comprehensive national goods and services tax, or GST, regime that will combine taxes and levies by the central and state Governments into one unified rate structure. While both the Government of India and other state Governments of India have publicly announced that all committed incentives will be protected following the implementation of the GST, given the limited availability of information in the public domain concerning the GST the Company is unable to provide any assurance as to this and any of the aspect of tax regime following implementation of the GST. The implementation of this rationalized tax structure might be affected by any disagreement between certain state Governments, which could create uncertainty. The timelines of the proposed transition is uncertain at this point of time.The Direct Tax Code Bill 2010, or DTC, proposes to replace the existing Income Tax Act, 1961 and other direct tax laws, with a view to simplify and rationalize the tax provisions into one unified code. The various proposals included in DTC bill are subject to review by Indian parliament and as such impact if any, is not quantifiable at this stage.

Future

NEW DELHI: Homegrown auto major Tata Motors is working on a slew of new products, including alternate fuels, hybrids and electric vehicles, to be launched over seven years, according to Chairman Cyrus Mistry.Addressing shareholders in the annual report for 2012-13, Mistry also said the company's British arm Jaguar Land Rover plans to launch eight new or refreshed products this year, besides exploring further opportunities in other growing markets, including Brazil, India and Saudi Arabia."The company is working on a slew of new products, with a plan running up to 2020; this includes appropriate focus on alternate fuels, hybrids and electric vehicles," he said.Tata Motors had recently announced HORIZONEXT strategy, based on intense product focus, world-class quality and manufacturing, enriched customer purchase experience and a consistent, robust after-sales service, to drive growth."With changes in the organisation structure, the company is determined to improve its customer understanding to better meet market needs, and deliver products swiftly through optimised operational processes," Mistry said.Looking ahead, he admitted that there are challenges but said that "the organisation is resolved to foster a culture of customer centricity and innovation, so that the company's products and services consistently exceed customer expectations".On JLR, Mistry said:"Technical innovation and engineering excellence have stood JLR in good stead for sustained, profitable growth and the company plans to launch eight new or refreshed products this year."Stressing that it is a healthy and vibrant company, he said JLR is "strongly positioned across key global markets for future growth".He said JLR has underlined its commitment to expanding its presence in China, a long-term strategic market where it has partnered Chery Automobile Company and is setting up a new plant to be built at Changshu, in Jiangshu province."JLR also continues to explore further opportunities in other growing markets, including Brazil, India and Saudi Arabia," he added.Describing FY 13 as "a challenging one for Tata Motors", he said "despite difficult economic conditions and increasing competition, the company retained its market leadership in commercial vehicles, on the back of new offerings and introduction of innovative technologies".The mini truck Ace and Magic vehicles crossed the sales mark of one million units, achieved in seven years since these products were first introduced in the market, he said.Tata Motors said that while it has enhanced market share in light commercial vehicles, it has lost market share in the medium and heavy commercial segment due to competitive pricing pressures."The sales performance of the company's passenger vehicles, however, was significantly lower as compared to expectation; rapid changes in customer preferences along with the de-regulation of diesel pricing both took their toll," Mistry said.On the small car Nano, the company said it is continuing with its drive to identify newer markets for the car. Currently it is sold in Nepal and Sri Lanka and is also evaluating other markets in South Asia.

Tata plans for global expansion with new modular platformA new car platform, designed to help Tata improve its global car sales, is claimed to leapfrog VW's current MBQ technology

Tata Motors plans on going global with its future range of vehicles and has planned its portfolio for the next six years, according to company MD Karl Slym.Although the company has more success with its commercial vehicles, Tata wants to build a family of world-class passenger cars, which will all be based on a new, flexible, Volkswagen Group-style architecture dubbed the Advanced Modular Platform (AMP).Replacing todays ageing road car lineup (which includes the Indica hatch,the model that became the City Rover in 2003) is a priority for the maker, which has been suffering in the recent sharp downturn in the Indian market.According to a report in the Australian media, the new platform will leapfrog what the Volkswagen Group has already achieved. Dr Tim Leverton, Tata Motors head of research and development, told the Sydney Morning Herald that VW had gone through six or seven generations of products to get where it was today, but that Tata would go directly to a very interesting solution.The AMP, he said, would not only be flexible in length, but it would also be properly flexible in width. This extra level of flexibility should enable the AMP platform to underpin all sizes of cars from superminis to crossovers.Slym told the Indian press that the planning to send Tata international began last year and that all of the new cars in the development pipeline are designed for sale globally.Tata is likely to focus on fuel efficiency, connectivity and innovation, he said.Performance in the last 2 years

Reference

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