TATA’s JAGUAR & LANDROVER ACQUISITION

SOLD

TATA MOTORS, JAGUAR & LAND ROVER OVERVIEW

TATA MOTORS OVERVIEW

TATA GROUP is 150 year old, Previously Tata Engineering and Locomotive Company, Telco.

India's largest passenger automobile and commercial vehicle. Tata Motors was established in 1945 Listed on the New York Stock Exchange in 2004. It is the 5th largest medium and heavy commercial vehicle

manufacturer in the world. listed in BSE, NSE & NYSE.Subsidiaries- JAGUAR CARS LAND ROVER TATA DAEWOO COMMERCIAL

JAGUAR OVERVIEW JLR was a part of Ford's Premier Automotive Group (PAG) and

were considered to be British icons. Jaguar was involved in the manufacture of high-end luxury cars Jaguar Cars Ltd. ( better known simply as Jaguar) is an automaker

from England, United Kingdom that manufactures luxury and executive motor

car. Sir William Lyons founded jaguar as the Swallow Sidecar Company

in 1922, originally making motorcycle sidecars before switching to passenger cars.

The name was changed to Jaguar after the second world war due to the unfavorable connotations of the SS initials.

LAND ROVER OVERVIEW

British car manufacturer founded in 1948 as a marquee of the Rover Company.

Known for superior off-road and road performance 1976 – 1 million cars running on the road In 1994 Rover Group is taken over by BMW sold to FORD MOTORS for $ 2.75 b in 2000. Used by military for projects and expeditions, Safe but less

reliable, Makeover in recent times Land Rover manufactured high-end SUVs.

Why did Ford sell?

Reports said losses at Jaguar stood at USD 715 million in 2006.

Jaguar was not able to provide any profit for ford because of the high manufacturing costs provided in the United Kingdom.

The strong boy Land Rover's profit, on the other hand, was driven by the record sale of 2.26 lakh vehicles, an 18% YoY growth in 2007.

Ford was combining both the brands since the products and manufacturing of vehicles for Land Rover and Jaguar was so intertwined.

Why did Tata’s acquire?

Long term strategic commitment to automotive sector. Opportunity to participate in two fast growing auto

segments. Increased business diversity across markets and

products. Land rover provides a natural fit for TML’s SUV

segment. Jaguar offers a range of “performance/luxury” vehicles

to broaden the brand portfolio. Benefits from component sourcing, design services and

low cost engineering

THE DEAL PROCESS

12/06/2007- Announcement from Ford that it plans to sell Land Rover and Jaguar. August 2007 - Major bidders are identified Likely buyers: Tata Motors, M&M, Ceribrus capital Management, TPG Capital, Apollo Management India’s Tata Motors and M&M arrive as top bidders ($ 2.3b & $ 1.9b) 03/01/2008 – Ford announces Tata’s as the preferred bidders 26/03/2008 - Ford agreed to sell their Jaguar Land Rover operations to Tata Motors. 02/06/2008 – The acquisition is complete

What Tata had got???100% stake in Jaguar & land Rover Business

TAMO has acquired the business & initially they will be operated independently of the partner.

3 Plants in UK These are well invested plants2 advanced design & engineering center

4-5000 engineers engaged in testing ,prototype design & powertrainEngineering , development & integration

26 National sales company

Both existing national sales companies of jaguar/land rover & also those that are carved out of current Ford operation

Intellectual property rights

This covers all key technologies to be transferred to JLR & perpetual royalty free license on technologies shared with Ford

Capital Allowance A minimum guaranteed amount of $1.1 bn which will help managing in Tax going forward

Support from Ford Motor Credit

Ford Motor Credit will continue to support the sales of JLR for around next 12 months

Pension Contributed by Ford

Ford will contribute $ 600 mn of the Pension Fund

FUNDING

Plans To Raise Funds for J-LR DealAuto major Tata Motors planned to raise nearly Rs 4,000 crore by selling securities in the domestic and international markets to part finance its imminent acquisition of Jaguar and Land Rover from Ford Motor.

The Tata Motors board approved the fund raising proposal. “The funds were raised to part-finance overall funding requirements to meet some of the strategic plans,”

PLANS• Plans for expanding its position in the domestic and global markets in both the

commercial vehicle and passenger vehicle business. This was achieved by upgrading and enhancing the company’s product portfolio, expanding manufacturing facilities in India and strategic acquisitions and alliances in India and abroad”.

• While the organic growth plan required money over the next 3 to 4 years, the acquisition opportunities were to be financed up front. A source close to the development said Tata Motors would “borrow from financial institutions” to finance the Land Rover-Jaguar deal. The proceeds from the proposed share sale will be utilised to repay the loan, he added.

Tata planned to inject $2 billion in Jaguar, Land Rover…….

The Tata’s - planned to fork out over $2 billion for the acquisition of these marquee brands, which Ford had put on the block to shore up its balance sheet and reduce debt.

ET ReportsOn February 25 : Tata Motors started the process of raising nearly $2.5 billion, mostly from the overseas markets, by giving the mandate to a battery of banks including Citi and JP Morgan, Standard Chartered, BNP Paribas and SBI.

Funds were raised against the balance sheet of Tata Motors. In other words, the borrowing would have an impact on the balance sheets of Jaguar and Land Rover.

Tata and Ford were expected to sign an MoU in the next few weeks. Ford had announced that Tata Motors was the preferred bidder on January 3.

…….Tata planned to inject $2 billion in Jaguar, Land Rover

Jaguar had shown Tata Motors its new model lines and found the Indian automobile giant ‘respectful’ of its plans. It was learnt that Ford managed to convince Unite, the union representing Jaguar and Land Rover workers, on its plan to sell these two brands in their entirety. Unite was earlier of the opinion that Ford should retain minority interest in these brands.

Tata Motors Managing Director Ravi Kant said :• That the company had taken bridge loans of $3 billion to

fund the acquisition of the two British luxury brands.

• He said the company planned to replace the bridge loans with long-term debts and equity contribution with funds to be raised through divestment in group companies.

POST MERGER

Following Cost Rationalization initiatives were taken to improve cash flows:

Single shifts and down time at all three UK assembly plants. Supplier payment terms extended from 45 to 60 days in line with industry standard. Receivables reduced by £133 million from 38 to 27 days. Inventory reduced by £217m between June 2008 and March 2009 from 70 to 50 days . Labor actions –

Voluntary retirement to 600 employees.

Agency staff reduced by 800. Offered leaves to 300 workers of Bromwhich and solihull plant. Additional 450 job cuts including 300 managers.

Agreement with Unions to implement pay freeze and longer working hours (equivalent to approximately 20% reduction in labor costs.)

Engineering and capital spending efficiencies. Fixed marketing and selling costs reduced in line with sales volume. Reduction in all other non-personnel related overhead costs.

POST ACQUISITION PERFORMANCE

JLR’s FINANCIAL PERFORMANCE

Year ending Turnover (£m) EBITDA (£m)Net income /

(loss) before tax (£m)

Net income / (loss)

attributable to shareholders

(£m)

31 March 2009 4,949.5 (83.9) (375.7) (402.4)

31 March 2010 6,527.2 349.1 51.4 23.5

31 March 2011 9,870.7 1,501.7 1,114.9 1,035.9

31 March 2012 13,512 2,027 1,507 1,481

31 March 2013 15,785 2,402 1,675 1,215

SWOT

Strengths:Tata’s strong management capabilityStrong monetary base to invest

Weaknesses:Jaguar’s declining sales recordInexperience of handling such luxury brands

Opportunities:Support from Ford in terms of Technology, Engine, IT, AccountingAdding up of luxury brands in the product lineAccess to European Market

Market is volatile and driven by new productsStrong presence of competitors like Mercedes, BMW, Lexus and Infinity

Tata’s Jaguar Land Rover Acquisition Threats

WORDS OF MR. RATAN TATA

“We have enormous respect for the two brands and will endeavor to preserve and build on their heritage and competitiveness, keeping their identities intact.”