Analysis
Tata Motors
Prepared by
Santonu; Swastayan; Bharat;
Shreerang;
Saurabh; Prakash; Mayank
Roadmap
• Company History
• Product range & Organization
• Macro environment
• Variables
• Market structure
• Risk identification
• Trends in Industry
• Recent Performance of Tata Motors
• Value Chain Analysis
• Identification of Financial & Non Financial Indicators
• Analysis of the indicators
• Final Comments
• References
Company history
• India’s Largest Automobile company
• Consolidated Revenues of USD 14 billion (2008-09)
• Leader in commercial vehicle ( Market share:63.8%)
• Top Three in Passenger vehicle(Market share:13%)
• 4th Largest Truck Manufacturer & 3 largest bus manufacturer
• Manufacturing units:
• Jamshedpur, Pune, Lucknow, Pantnagar, Dharward .
• Nano Plant : Sanand (Gujarat)
• 3500 touch points
• Made history when world’s cheapest car “Nano” was unveiled
• Some major Acquisitions:
• Hispani Carrocera (2009) [Spanish bus manufacturer]
• Jaguar and Land Rover (2008) [prestigious brand]
• Daweeo Commercial vehicles, Korea (2004)
• JV with Marco Polo (Brazil), & Thonburi Auto Plant (Thailand)
Product Range
Organization Structure
Organization Structure
• Domestic Operations
• Commercial Vehicle business unit
• Medium and Heavy Commercial vehicles
• Light & Small Commercial Vehicles
• Buses & Passenger vehicles
• Spare parts, AMC, and RECON( Reconditioned Business)
• Passenger Business unit
• India’s first indigenously designed compact car Indica
(Market Share:10%)
• Bought iconic brands Jaguar and Land Rover in 2008
• Product Range from one lakh people’s car to high end
luxury models
Macro Environment
Trends
• Political and Legal Factors
• Emission
• Safety
• Government Policy
• Economic Availability
• Availability of Loans
• Socio-Economic
• Technological
• Infrastructure
• Demographic
• Market Competition
Political Factors
Pre-1998 1998-2008 2008 onwards
First stage emission Increasingly Stringent Emission norms as of
norms Emission & Safety 2000:
introduced. Regulations e.g. Bharat Bharat Stage IV (EURO
Stage II etc IV) in Metros
Central Motor Vehicle Alignment of Indian No major change
Rules (CMVR) came regulations
into force from 1989 (AIS/ BIS) with European
and regulations was
Serious enforcement attempted.
of
Regulations came
into
effect.
Market started Foreign Players set up their Cut throat competition in the
opening up plats, market.
Increasing for example Ford, Mercedes,
competition. Skoda, Toyota, Hyundai,
Market Structure
• The Automobile
market both in
India and abroad
is extremely
competitive
• The customers
are very powerful
• Threat of
substitute
products is very
high as well
Sources of Strategic &
Business Risk
• Interest Rates & Credit Availabilty
• Upward movement in Input costs
• Exchange Rate Risk:
• Exports are 9.8% of the turnover
• imports constitute 4.6% of material consumption
• Freight Rates: Slowdown in freight movement & increase in fuel
price
• Railways as competition
• Overseas Acquisition of Jaquar and Land Rover operations
• Volatility in Oil Prices
• Domestic Markets affected by cyclicity of Automobile industry &
slowdown of economy
• New Competition like Daimler, Volvo, Scannia, Ashok Leyland
• Investments in New projects like Nano & World Truck
• Environmental Regulations
Automobile Industry: Trends
• Macro trends:
• focus on energy prices & energy efficiency
• Environmentally conscious consumers attracted to new technologies
• Cost pressures due to growing competition between international
and domestic car manufacturers
• Employment of contract employees over permanent staff
• Market trends & Forecast:
• The Big Three U.S. automakers approx 76 % of U.S. passenger
vehicle; Japanese automakers 18%; European 2%
• hybrid market will top out at 3 percent by 2010 (JD Power)
• Currently 800 million cars in active use. By 2050, a projected 3.25
billion cars in India & China
• Bigger investment in technology
• Innovations at process level and big consolidations
• operating profit of the industry as a whole may go southward
Financial Performance
2007-2008
2008-2009
• GDP growth to 9% in FY 07-08
• GDP growth down to 6.7% • Commercial vehicle industry which
• Sales volume 13.5 % lower than grew by over 33% in FY 06-07 posted
2007-08 an 8.1% growth this fiscal.
• Domestic commercial vehicles • The passenger vehicle industry
declined by 15.2 % managed to grow by 11.1 %
• Passenger vehicles volumes
declined by 4.8 % • Vehicle exports also grew at a lower
rate of 11.9% as compared to 14.8%
• Exports declined 38.6 % (global
meltdown and currency previous year
fluctuations) • Profit after Tax (PAT) increased by
• Profit after Tax (PAT) decreased 6.03%
by 50.7% • Basic Earnings per Share (EPS)
• Basic EPS dropped to 22.70 increased by 5.79% to Rs.52.64
• Balance Sheet size of the • Balance Sheet size of the Company
Company increased to Rs. increased to Rs. 15,095.74 crores in FY
26,425.64 crores as on March
2009 2007-08 from Rs. 11,665.72 crores in
• Gross debt (total of secured and FY 2006-07.
unsecured loans) increased to • Gross debt (total of secured and
Rs. 13,165.56 crores unsecured loans) increased to Rs.
6,280.52 crores as on March 31, 2008
as compared to Rs. 4,009.14 crores as
on March 31, 2007
Non Financials
Pre -1998 1998-2009 2009 onwards
•Jamshedpur Expansion •Enhancing production
plant(1945) Continued capabilities at its 3
existing plants
Area Ratio
SCM Creditors P
SCM Creditors T
SCM Debtors Co
SCM Debtors Tu
Financial & Non-financial
indicators…
Risk
Indicators
• Degree of Operating Leverage
• Degree of Financial leverage
Indicator Ratio
Profitability Operating