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TATA acquires  Jaguar & Land Rover Team Mates Ajay Singh Gaurav Shahare Gourav Palit Krishnan Lakshmikanthan Maninder Bisen
Jargons defined Bridge Loan > A short-term loan that is used until a person or company secures permanent financing or removes an existing obligation. This type of financing allows the user to meet current obligations by providing immediate cash flow. The loans are short-term (up to one year) with relatively high interest rates and are backed by some form of collateral such as real estate or inventory Debt Free Cash Free > Cash-free, debt-free transaction refers to the amount the buyer would pay if the seller had no debt and no cash on the balance sheet of the company Special purpose vehicle > Also referred to as a "bankruptcy-remote entity" whose operations are limited to the acquisition and financing of specific assets. The SPV is usually a subsidiary company with an asset/liability structure and legal status that makes its obligations secure even if the parent company goes bankrupt.  A corporation can use such a vehicle to finance a large project without putting the entire firm at risk.
Tata Motor’s Growth Story 1984: India’s 1st LCV (407 truck) Growth Strategy 	To consolidate position in thedomestic market and expand  international footprint through development of new products by ,[object Object]
Acquisitions and strategic collaborations to gain complementary capabilities1996: India’s 1st SUV (Safari) 1998: India’s 1st Passenger Car (Indica) 2004: Acquisition of Tata Daewoo, Korea 2005: India’s 1st mini-truck (Ace) 2005: Acquisition of stake in Hispano, Spain	 2007: Formed an international JV with Fiat  2007: JV in India with Marcopolo of Brazil 2007: JV in Thailand with Thonburi 2008: People’s car – Tata Nano 2008: Acquisition of Jaguar Land Rover Source – Tata motors
The Land Rover 4x4 SUV -  a premium all-terrain vehicle, with portfolio of 5 brands 1 2 3 4 Ford acquired LR from BMW in 2000 for $2.75bn Recorded highest volume sells in 2007 with 18% growth Increasing global presence with success of Rover-Sport 5 Land Rover working with Jaguar for sharing common technologies like engine, manufacturing facility, etc. Source – ENAM Securities Pvt. Ltd
The Jaguar The premium luxury car brand with portfolio of 5 models 1 2 3 4 Acquired by Ford in 1989 for $2.5bn Ford is believed to have invested over $10bn to improve production facilities Jaguar has been struggling to find a mass market model over the last few years Source – ENAM Securities Pvt. Ltd
Why FORD Sold JLR? 1 2 3 4 Losses at JLR stood at $12.6bn in 2006 High manufacturing costs in the UK EU emission norm change in 2012 - a major hurdle for all manufacturers With a slowdown, the luxury car and SUV  markets are expected to soften 5 Expected R&D spend of JLR to be in excess of USD 1.5bn over the next two years Source – WSJ, Economist
Chronology of Events ,[object Object]
June 3rd 2008: Ford Motor Co. officially sold jaguar and land rover to Tata Motors with about $2.3 billion.
Jun 4th 2008: Global credit ratings agency Moody's downgraded Tata Motors Ltd from Ba1 to Ba2.
Jul 31st 2008: Tata motors quarterly profit fell by 30% due to increase in the input costs.
Dec 24th 2008: Tata Motors pumped tens of millions of pounds of emergency funding into jaguar land rover to save it from liquidity crisis during downturn. ,[object Object]
SPV Structure Corporate Guarantee Equity Funding – TML Cash Resources SPV 1 (Singapore) Equity Funding Acquisition Debt $3bn SPV 2 (UK) $2.3bn 100% ownership of JLR    $0.7bn working capital $600mn JLR pension funds Source: Tata Motors
Re-Financing Plan US $3bn Bridge loan USD 1.8bn  through rights issue USD 500mn equity overseas USD 700mn balance through debt  + + USD 550mn rights issue of equity share USD 500mn rights issue of ‘A’ equity share USD 750mn rights issue of 5yr 0.5% CPS ,[object Object]
 In 2009, Tata Motors and Jaguar Land Rover tied up $250 million in distribution financing from GE Capital, in a unique financing deal, a first of its kind in Europe. This arrangement was for working capital and is not linked to refinancing of debt raised to acquire JLR.As a result Source: Tata Motors, Enam.com
What has TAMO Paid for
Valuation of JLR TAMO + JLR Based on EV of 2.3 Bn$ Source : Deutsche Bank  Research
TAMO : Global Peer group Valuation Comparison TAMO + JLR EV/Sales : 0.48 EV/EBIDTA: 5.5 Source : Deutsche Bank  Research
TAMO + JLR : Leverage and Valuation Ratios Source : Deutsche Bank  Research
TAMO + JLR : Pro forma P&L 50bps improvement in JLR’s operating margin in CY2009 Source : Deutsche Bank  Research
TAMO + JLR : Pro forma Balance Sheet Source : Company, Deutsche Bank  Research
Cost Synergies
Cost Synergies TATA Technologies:- ,[object Object],TCS:- ,[object Object]
Automotive division account for 15% revenues.TATA Steel – Corus:- ,[object Object]
Enjoys “Q1” supplier status with Ford.TATA Auto Component:- ,[object Object]
Expert in Manufacturing , Engineering, Supply Chain management. ,[object Object]

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Tata jlr

  • 1. TATA acquires Jaguar & Land Rover Team Mates Ajay Singh Gaurav Shahare Gourav Palit Krishnan Lakshmikanthan Maninder Bisen
  • 2. Jargons defined Bridge Loan > A short-term loan that is used until a person or company secures permanent financing or removes an existing obligation. This type of financing allows the user to meet current obligations by providing immediate cash flow. The loans are short-term (up to one year) with relatively high interest rates and are backed by some form of collateral such as real estate or inventory Debt Free Cash Free > Cash-free, debt-free transaction refers to the amount the buyer would pay if the seller had no debt and no cash on the balance sheet of the company Special purpose vehicle > Also referred to as a "bankruptcy-remote entity" whose operations are limited to the acquisition and financing of specific assets. The SPV is usually a subsidiary company with an asset/liability structure and legal status that makes its obligations secure even if the parent company goes bankrupt.  A corporation can use such a vehicle to finance a large project without putting the entire firm at risk.
  • 3.
  • 4. Acquisitions and strategic collaborations to gain complementary capabilities1996: India’s 1st SUV (Safari) 1998: India’s 1st Passenger Car (Indica) 2004: Acquisition of Tata Daewoo, Korea 2005: India’s 1st mini-truck (Ace) 2005: Acquisition of stake in Hispano, Spain 2007: Formed an international JV with Fiat 2007: JV in India with Marcopolo of Brazil 2007: JV in Thailand with Thonburi 2008: People’s car – Tata Nano 2008: Acquisition of Jaguar Land Rover Source – Tata motors
  • 5. The Land Rover 4x4 SUV - a premium all-terrain vehicle, with portfolio of 5 brands 1 2 3 4 Ford acquired LR from BMW in 2000 for $2.75bn Recorded highest volume sells in 2007 with 18% growth Increasing global presence with success of Rover-Sport 5 Land Rover working with Jaguar for sharing common technologies like engine, manufacturing facility, etc. Source – ENAM Securities Pvt. Ltd
  • 6. The Jaguar The premium luxury car brand with portfolio of 5 models 1 2 3 4 Acquired by Ford in 1989 for $2.5bn Ford is believed to have invested over $10bn to improve production facilities Jaguar has been struggling to find a mass market model over the last few years Source – ENAM Securities Pvt. Ltd
  • 7. Why FORD Sold JLR? 1 2 3 4 Losses at JLR stood at $12.6bn in 2006 High manufacturing costs in the UK EU emission norm change in 2012 - a major hurdle for all manufacturers With a slowdown, the luxury car and SUV markets are expected to soften 5 Expected R&D spend of JLR to be in excess of USD 1.5bn over the next two years Source – WSJ, Economist
  • 8.
  • 9. June 3rd 2008: Ford Motor Co. officially sold jaguar and land rover to Tata Motors with about $2.3 billion.
  • 10. Jun 4th 2008: Global credit ratings agency Moody's downgraded Tata Motors Ltd from Ba1 to Ba2.
  • 11. Jul 31st 2008: Tata motors quarterly profit fell by 30% due to increase in the input costs.
  • 12.
  • 13. SPV Structure Corporate Guarantee Equity Funding – TML Cash Resources SPV 1 (Singapore) Equity Funding Acquisition Debt $3bn SPV 2 (UK) $2.3bn 100% ownership of JLR $0.7bn working capital $600mn JLR pension funds Source: Tata Motors
  • 14.
  • 15. In 2009, Tata Motors and Jaguar Land Rover tied up $250 million in distribution financing from GE Capital, in a unique financing deal, a first of its kind in Europe. This arrangement was for working capital and is not linked to refinancing of debt raised to acquire JLR.As a result Source: Tata Motors, Enam.com
  • 16. What has TAMO Paid for
  • 17. Valuation of JLR TAMO + JLR Based on EV of 2.3 Bn$ Source : Deutsche Bank Research
  • 18. TAMO : Global Peer group Valuation Comparison TAMO + JLR EV/Sales : 0.48 EV/EBIDTA: 5.5 Source : Deutsche Bank Research
  • 19. TAMO + JLR : Leverage and Valuation Ratios Source : Deutsche Bank Research
  • 20. TAMO + JLR : Pro forma P&L 50bps improvement in JLR’s operating margin in CY2009 Source : Deutsche Bank Research
  • 21. TAMO + JLR : Pro forma Balance Sheet Source : Company, Deutsche Bank Research
  • 23.
  • 24.
  • 25.
  • 26.
  • 27. Revenue Synergies In the Long run, TATA Motors’ footprint in South East Asia Will help JLR diversify their geographic dependence from US(28% of volumes) & Western Europe(55% of volumes).
  • 28.
  • 29. Jul 19th 2011: Tata plans to start assembly line in China.
  • 30. Jul 20th 2011: Tata JLR eyes joint engine development . Tata’s Pune plant started building the land rover freelander. So far , the engines were produced by Ford.
  • 31.
  • 32. Also more funds will be dispensed to bring about a renovation over the management of the firms.
  • 33. TATA had already incurred huge debt in-order to develop Nano the Rs. 1 Lac Car. Singur Crisis had drained about $300 Million.
  • 34. The amount of loan needed would ask for multiple banks to lend significant amount.
  • 35. The economic downturn was anticipating the deal to be non-profitable in near future.
  • 36. Future technology will have to incorporate alternative energy such a Hybrid Engines as part of Green Technology. Tata owned none such technologies.
  • 37.
  • 38. After Acquisition, TAMO posted a loss of $67 million for the quarter, which was $147M profit, for the same quarter, last year.
  • 39. Tata has sunk almost $2billion for operations, R & D of Jaguar and Land Rover
  • 40. Land Rover though a fast moving automobile had its demerits. These machines were massive gasoline guzzlers. To contain the expulsion of CO2 (Should be less than 120 g/km) was a huge expense in itself.
  • 41. TATA has already an existing debt of $6Billion in its books of accounts.
  • 42. Portfolio has the cheapest car even made in the history of Automobile. The speculation was that this would damage the brand name of Jaguar and LR.
  • 43.
  • 44. In Jun 2011, 80 percent or $1.7 billion of its bumper $2.04 billion annual profits came from the JLR unit alone.
  • 45. TATA has successfully made its mark in Luxury car segment with a global presence with high technology automobile.
  • 46. Almost $1.1 Billion invested on R & D for lining up the fleet for 2011 spectacular launches of Luxury Segment car.
  • 47. 4 New models rolled out from Land Rover in 2010 with latest technology .
  • 48.
  • 49.

Notas del editor

  1. GE Caps has undertaken to finance all new production of JLR cars from the time the cars leave the factory for up to 90 days, while the cars are in transit to dealers. Says Sean Neville, European business development director at GE Capital, who structured the deal for GE Caps: “While the cars are sitting in trucks, highways, and ships on their way to markets all over the world, they soak up cash like a sponge. We will squeeze the cash out and make it available to JLR.” A Tata Motors spokesperson said the proposed arrangement was for working capital and not linked to refinancing of debt raised by the Mumbai-based company for the acquisition of JLR. “This deal (with GE Caps) is for working capital.  Source: Tata.com