tata motors cross border acquisition of jaguar

17

Upload: shifali123

Post on 15-Jul-2015

780 views

Category:

Business


5 download

TRANSCRIPT

INTRODUCTION India based TataMotors acquired the ownership of

luxury brands - Jaguar and Land Rover on June2, 2008

The deal included the purchase of JLR'smanufacturing plants, two advanced design centers inthe UK, national sales companies spanning across theworld and also licenses of all necessary intellectualproperty rights.

THE DEAL PROCESS 12/06/2007- Announcement from Ford that it plans to sell Land

Rover and Jaguar

August 2007 - Major bidders were identified Tata Motors, M&M, Ceribrus capital Management, TPG Capital, ApolloManagement India’s

Tata Motors and M&M arrived as top bidders ($ 2.05b & $1.9b)

03/01/2008– Ford announces Tata as the preferred bidders

26/03/2008 - Ford agreed to sell their Jaguar Land Roveroperations to Tata Motors.(2.3b)

02/06/2008– The acquisition was complete

MOTIVES OF TAKEOVER Provide significant potential for revenue synergy

including giving TATA greater international distribution broader product range and better customer service skills

Tata gains access to world class engineering capability

Strengthens relationship b/w Tata steel and motoring business

POST MERGER IMPACTSFollowing Cost Rationalisation 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.)

SHARE PRICE MOVEMENT IN 2008

SHARE PRICE MOVEMENT IN 2010

Problems

Share prices declined

Rights issue failed

Sales decreased by 35.2%

Bad industry timing

Depressed state of the global premium car market

Jaguar/Land Rover lost 306 million pounds ($504 million)

for the fiscal year ending March 2009

Tata Motors reported a net loss of Rs3.29bn ($67 million)

for the quarter to end-June

Tata’s core commercial vehicles market in India is also

suffering from slower sales

Extremely high manufacturing costs in BritainEliminated

more than 2,200 jobs

Benefits Tata wanted to make a global impact and it thinks that

buying these brands at a lower rate now, will givebetter value later on.

This acquisition also eases the entry of Tata inEuropean market which it has been eyeing for long.

Reduce the company dependence on the Indianmarket which accounted for 90% of its sales

Increase sales in emerging markets.

Reduce dependence on mature markets

Opportunity to spread its business across differentcustomer segment

At the price staring from 63 lakh and going upto 93lakh, it seems Tata has just got the right place tocompete with the current market leaders –BMW, Audi, Mercedes

Publicity on an international scale

Access to large distribution network

JLR had many new models lined up for next 3years, so no much work just profits

Strong R & D culture and facilities

Component sourcing, engineering and design benefits

CONCLUSION The merger seemed poorly timed

Demand for luxury cars collapsed as a result of financial

crisis

Refinancing from CITI group and JP MORGAN

Started making profits in 2010 upto 41 %

Now an example of a successful merger

Entered CHINA in march 2012 with a joint venture with

Chery automobiles

THANK YOUSubmitted to : Submitted by :

Dr. Taminder Kaur Shifali

Rajat Sharma