tata motors aquisition of land rover and jaguar

2. INTRODUCTION
 India based TataMotors acquired the ownership of
luxury brands - Jaguar and Land Rover on June
2, 2008
 The deal included the purchase of JLR's
manufacturing plants, two advanced design centers in
the UK, national sales companies spanning across the
world and also licenses of all necessary intellectual
property rights.

3. 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, Apollo
Management 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 Rover
operations to Tata Motors.(2.3b)
 02/06/2008– The acquisition was complete

4. 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

5. POST MERGER IMPACTS
Following 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 .

6.  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.)

9. SHARE PRICE MOVEMENT IN 2008

10. SHARE PRICE MOVEMENT IN 2010

11. Problems
 Share prices declined
 Rights issue failed
 Sales decreased by 35.2%
 Bad industry timing

12.  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

13. Benefits
 Tata wanted to make a global impact and it thinks that
buying these brands at a lower rate now, will give
better value later on.
 This acquisition also eases the entry of Tata in
European market which it has been eyeing for long.
 Reduce the company dependence on the Indian
market which accounted for 90% of its sales
 Increase sales in emerging markets.
 Reduce dependence on mature markets

14.  Opportunity to spread its business across different
customer segment
 At the price staring from 63 lakh and going upto 93
lakh, it seems Tata has just got the right place to
compete 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 3
years, so no much work just profits
 Strong R & D culture and facilities
 Component sourcing, engineering and design benefits

16. 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

17. THANK YOU
Submitted to : Submitted by :
Dr. Taminder Kaur Shifali
Rajat Sharma