tata motors part 1
TRANSCRIPT
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