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What are Mergers and acquisitions About TATA MOTORS About Ford Motor Company About Jaguar Land Rover Why is Ford Selling? The Reasons Behind Decision To Acquire THE DEAL PROCESS Analysis Valuation of deal Approach to acquisition Evaluation Fund Raising Problems faced Benefits SWOT Recommendations Business transformed over last five years

Mergers and acquisitions The phrase mergers and acquisitions (abbreviated M&A) refers to the aspect of corporate strategy, corporate finance and management dealing with the buying, selling and combining of different companies that can aid, finance, or help a growing company in a given industry grow rapidly without having to create another business entity. What Does Merger Mean? The combining of two or more companies, generally by offering the stockholders of one company securities in the acquiring company in exchange for the surrender of their stock Investopedia explains Merger Basically, when two companies become one. This decision is usually mutual between both firms What Does Acquisition Mean? A corporate action in which a company buys most, if not all, of the target company's ownership stakes in order to assume control of the target firm. Acquisitions are often made as part of a company's growth strategy whereby it is more beneficial to take over an existing firm's operations

and niche compared to expanding on its own. Acquisitions are often paid in cash, the acquiring company's stock or a combination of both. Investopedia explains Acquisition Acquisitions can be either friendly or hostile. Friendly acquisitions occur when the target firm expresses its agreement to be acquired, whereas hostile acquisitions don't have the same agreement from the target firm and the acquiring firm needs to actively purchase large stakes of the target company in order to have a majority stake. In either case, the acquiring company often offers a premium on the market price of the target company's shares in order to entice shareholders to sell. For example, News Corp.'s bid to acquire Dow Jones was equal to a 65% premium over the stock's market price.

TATA MOTORS

Tata Motors is India's largest automobile company, with consolidated revenues of Rs 92,519 crore ($20 billion) in 2009-10. Through subsidiaries and associate companies,

Tata Motors has operations in the UK, South Korea, Thailand and Spain. Among them is Jaguar Land Rover, the business comprising the two iconic British brands. It also has an industrial joint venture with Fiat in India. Tata Motors is the country's market leader in commercial vehicles and among the top three in passenger vehicles. It is also the world's fourth largest manufacturer of medium / heavy commercial vehicles, and the second largest bus manufacturer. Tata cars, buses and trucks are being marketed in several countries in Europe, Africa, the Middle East, South Asia, South East Asia and South America. The company, formerly known as Tata Engineering and Locomotive Company, began manufacturing commercial vehicles in 1954 with a 15-year collaboration agreement with Daimler Benz of Germany. It has, since, developed Tata Ace, India's first indigenous light commercial vehicle, Tata Safari, India's first sports utility vehicle, Tata Indica, India's first indigenously manufactured passenger car, and the Nano, the world's cheapest car. Tata Motors has over 1,400 engineers and scientists in six R&D centres in India, South Korea, Spain and the UK.

Areas of business Tata Motors makes passenger cars, multi-utility vehicles and light, medium and heavy commercial vehicles.

Passenger cars: The company launched the compact Tata Indica in 1998, the sedan Indigo in 2002 and the

station wagon Indigo Marina in 2004. Tata Motors also distributes Fiats cars in India. Utility vehicles: The Tata Sumo was launched in 1994 and the Tata Safari in 1998. Commercial vehicles: The commercial vehicle range extends from the light two-tonne truck to heavy dumpers and multi-axled vehicles in the above 40tonne segment. Passenger buses: The company also manufactures and sells passenger buses, 12-seaters to 60-seaters, in the light, medium and heavy segments.

Joint ventures, subsidiaries, associates Tata Motors has joint ventures with Marcopolo, the Brazilbased maker of bus and coach bodies, and with Fiat Auto (to build a commercial vehicle at Fiat's facilities in Crdoba, Argentina).

Other associates include:

Tata Daewoo Commercial Vehicle Company, a 100-per cent subsidiary of Tata Motors in the business of heavy commercial vehicles. Tata Motors European Technical Centre is a UK-based, 100-per cent subsidiary engaged in design engineering and development of products.

Telco Construction Equipment Company makes construction equipment and allied services. Tata Motors has a 60 per cent holding; the rest is held by Hitachi Construction Machinery Company, Japan Tata Technologies provides specialised engineering and design services, product lifecycle management and product-centric information technology services Tata Motors (Thailand) is a joint venture between Tata Motors (70 per cent) and Thonburi Automotive Assembly Plant Co (30 per cent) to manufacture and market the companys pickup vehicles in Thailand . Tata Cummins manufactures high horsepower engines used in the companys range of commercial vehicles . HV Transmissions and HV Axles are 100-per cent subsidiaries that make gearboxes and axles for heavy and medium commercial vehicles. TAL Manufacturing Solutions is a 100-per cent subsidiary that provides factory automation solutions and designs and manufactures a wide range of machine tools . Hispano Carrocera is a Spanish bus manufacturing company in which Tata Motors has a 21-per cent stake . Concorde Motors is a 100 per cent subsidiary retailing Tata Motors range of passenger vehicles . Tata Motors Finance is a 100 per cent subsidiary in the business of financing customers and channel partners of Tata Motors . Location Tata Motors' plants are located at Jamshedpur (eastern India), Pune and Sanand (west), and Lucknow and Pantnagar (north). Tata Motors and Fiat have set up a common manufacturing facility at Ranjangaon, near Pune.

Tata Motors is a part of the Tata Group manages its shareholding through Tata Sons. Tata Motors is the largest multiholding automobile company in India and it is the fourth largest truck producer in the world. In addition, Tata Motors is also the second largest bus producer in the world, with the revenues of US$ 8.8 billion in the financial year 2008. Since its establishment in 1945, Tata Motors has grown significantly in the past 60years with the strategies of joint venture, acquisition and launched new products in different market segments (i.e. passenger cars, commercial vehicles and utility vehicles). A significant breakthrough for Tata was the development and commercialization of the truly Indian cars and they are Tata Indica (1998) and Tata Indigo (2002). Tata Motors has experienced many joint ventures with Daimler Benz, Cummis Engine Co. Inc., and Fiat and successfully acquired Daewoo Commercial Vehicle Co. Ltd. In the year 2008, there were two most significant events which have had a momentous impact on the scale of the Companys operations and its global image. The launching of Tata Nano, the world cheapest car and the acquisition of Jaguar and Land Rover, the two iconic British brand have made Tata Motors well known to the people in the world.

TATA MOTORS A SNAPSHOT

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.

TATA MOTORS Company Profile

 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 COMMERCIA

Ford Motor Company Ford Motor Company (NYSE: F) is an American multinational automaker based in Dearborn, Michigan, a suburb of Detroit. The automaker was founded by Henry Ford and incorporated on June 16, 1903. In addition to the Ford and Lincoln brands, Ford also owns a small stake in Mazda in Japan and Aston Martin in the UK. Ford's former UK subsidiaries Jaguar and Land Rover were sold to Tata Motors of India in March 2008. In 2010 Ford soldVolvo to Geely Automobile.[2] Ford discontinued the Mercury brand at the end of 2010.

Jaguar Land Rover:

A core subsidiary of Tata Motors

A core subsidiary of TML

A core subsidiary of TM

*Represents approximately two-thirds of TMLs revenues

*Chairman, Vice-Chairman and CEO of TML sit on Jaguar Land Rovers board of directors.

*TML and Tata Group have supported JLR during the downturn

Synergies

*Access to a wider pool of financing banks and sources of funding as part of TML *Access to long-established operational and sales expertise of TML in India *JLR has established a product development operation in India *Since April 2011, Freelander vehicle kits have been assembled by TML in a complete knock down facility in India.

A growing technical capability *Comprehensive vehicle Product Development capability (5 new models in last 5 years) * Petrol engine engineering and powertrain application capability for petrol and diesel * Product Development staff c.3,400 * Flexibility to balance resources across product portfolios at different stages of their life cycles * An industry leader in aluminium body structure and allterrain technolog * Leveraging architectures for multiple vehicles * Growing advanced research capability

* Winners of 2008 Queens Award for Innovation for Land Rover Terrain Response System

Jaguar and Land Rover Jaguar Land Rover is a business built around two great British car brands with exceptional design and engineering capabilities. Jaguar Land Rovers manufacturing facilities are in the UK. Areas of business Jaguar Cars, founded in 1922, is one of the worlds premier manufacturers of luxury saloons and sports cars. Land Rover has been manufacturing 4x4s since 1948. Its products have defined the segments in which they operate. Jaguar Land Rovers manufacturing facilities are in the UK. The Jaguar Land Rover business employs over 16,000 people, predominantly in the UK, including some 3,500 engineers at two product development centres, in Whitley in Coventry and Gaydon in Warwickshire. The Jaguar XF, XJ and XK models are manufactured at the company's Castle Bromwich plant in Birmingham, UK, while

the Jaguar X-TYPE is produced alongside the Land Rover Freelander 2 at the Halewood plant in Liverpool, UK. Land Rover's Defender, Discovery 3, Range Rover Sport and Range Rover models are all built at Solihull, UK. The business is a major wealth generator for the UK, with 78 per cent of Land Rovers exported to 169 countries and 70 per cent of Jaguars exported to 63 countries. Sales to customers are conducted principally through franchised dealers and importers. Location Jaguar Land Rover is based in the UK.

Jaguar Land Rover:

JAGUAR

History

Jaguar and Land Rover, two of the most iconic British brands, were sold by Ford to Tata Motors in 2008. Here is a potted history of both:

1922 - Jaguar Cars Limited, a luxury car manufacturer based in Coventry, is founded as the Swallow Sidecar Company by two motorcycle enthusiasts.

1945 - Swallow Sidecars changes its name to Jaguar, and the first Jaguars with high-performance engines are produced.

1947 - Land Rover, a British all-terrain vehicle manufacturer, rolls out its first vehicle, apparently based on an American jeep from the Second World War. The Land Rover's distinctive bodies were lightweight and rustproof, and designed to be field-serviced, giving the vehicles a reputation for longevity in tough conditions.

Although Land Rover became famous for bringing 4x4 capabilities to civilian vehicles, since the company's beginning all Series and Defender models have been used in a military capacity as well.

1950s - Jaguar makes its name with a series of elegant sports cars and premium saloons, such as the XK 150. 1961 - Arguably the most famous sports car of all time, the Jaguar E-type, first hit the road. 1968 - Jaguar merges with British Motor Corporation, subsequently taken over by Leyland, which itself was later nationalised as British Leyland. 1970 - Land Rover launches the Range Rover. 1984 - Jaguar is split off from British Leyland and listed on the London Stock Exchange. 1988 - Land Rover launches the Discovery. 1989 - Jaguar is acquired by Ford. 1997 - Land Rover launches the Freelander. 1990s - Jaguar undergoes a programme of modernisation and expansion that ensured the broadest product range in the company's history. 2000 - Ford buys Land Rover. The brand then beomes closely linked with Jaguar, with some models sharing components and production facilities. 2008 - Ford sells Jaguar Land Rover to Tata Motors, India's biggest vehicle maker, for $2.3bn (1.5bn), after almost ten months of negotiations. It never made a profit from Jaguar. 2009 - As car sales tumbled around the world, Jaguar Land Rover was forced to seek state loan guarantees from then

Business Secretary Lord Mandelson. It later walked away from negotiations after the Government demanded control over the company's strategy. 2010 - In the final quarter of 2010, sales of Jaguar Land Rover cars rise 11pc to 63,155, with particularly strong performances in North America, Russia, and China. Company drives towards a 1bn annual profit.

JAGUAR The ups and downs 1922 - Founded in Blackpool as Swallow Sidecar company 1975 - Nationalized in due to financial difficulties 1984 - Floated off as a separate co in the stock market 1990 - Taken over by Ford

A statement of ultra luxury, Holds Royal warrants, Rarely advertised, Fords formula one entry since 1990s

Ford acquired Jaguar for $2.5 billion

LAND ROVER

Founded in 1948 as a marquee of the Rover Company.

Known for superior off-road performance, Used by military for projects and expeditions, Safe but less reliable, Makeover in recent times

In 1994 Rover Group is taken over by BMW & sold to FORD MOTORS for 2.75 bn$ in 2000.

Key issues: Ford acquired Jaguar for $2.5 billion in 1989. Ford acquired Land Rover for $2.75 billion in 2000.

 But the US auto major put the two marquees on The market in 2007 after posting losses of $12.6 billion in 2006

THE LAND ROVER STORY

The original 1948 Land Rover was ingeniously designed and engineered for extreme capability and strength. With extremely robust construction and characteristics such as short front and rear overhangs, it drove off the production line ready to take on some of the worlds toughest terrain. Today these qualities are as significant a part of what makes a Land Rover vehicle unique as they were 60 years ago.

The Land Rover was the product of continuous evolution and refinement throughout the 1950s and 1960s with improved stability and a tighter turning circle. It was a period in which Land Rover took the lead in the emerging market for fourwheel drive vehicles. As a tough, reliable mobility platform, countless organisations came to depend on Land Rover vehicles to get personnel and equipment into the most challenging situationsand then safely out again. From organisations such as Born Free Foundation to The Royal Geographical Society and Biosphere Expeditions - we enter the second decade of the 21st century with them still relying on Land Rover.

Heritage In keeping with the forward-thinking philosophy that founded Land Rover, a radical, entirely new product was introduced in 1970 and created its very own vehicle category. This overnight sensation was the original Range Rover. It had all the capability of a Land Rover with the comfort and performance of an on-road car.

This culture of innovation has developed ever since with both Land Rover and Range Rover vehicles: new models, more refinement, more innovative technology, more efficiency and fewer emissions. And it continues with initiatives such as e_Terrain Technologies (which improves the environmental performance of vehicles by reducing CO2 emissions), Sustainable Manufacturing and CO2 Offsetting. Land Rover will remain at the forefront of advanced design the new small Range Rover is a testament to the vision that takes the company forward and keeps it at the cutting edge of technology and engineering.

KEY ISSUES Ford acquired Jaguar for $2.5 billion in 1989. Ford acquired Land Rover for $2.75 billion in 2000. But the US auto major put the two marquees on the market in 2007 after posting losses of $12.6 billion in 2006 - the heaviest in its 103-year history.

Ford close to announcing sale of Jaguar and Land Rover

Ford Motor Co., eager to raise cash starting a difficult 2008, is in final discussions with one bidder, the Indian conglomerate Tata Group, to sell its Jaguar and Land Rover brands and a sale is expected to be completed soon. Tata has 98 companies in a variety of industries and has been rumoured to be the front-runner for some time.

Ford Motor Co., eager to raise cash starting a difficult 2008, is in final discussions with one bidder, the Indian conglomerate Tata Group, to sell its Jaguar and Land Rover brands and a sale is expected to be completed soon. Tata has 98 companies in a variety of industries and has been rumoured to be the front-runner for some time. There is still a considerable amount of work to do and, while no final decision has been made, we will proceed with further substantive discussions with Tata Motors over the forthcoming weeks with a view to securing an agreement that is in the best interests of all parties concerned," Lewis Booth, executive vice president of Ford of Europe and the Premier Automotive Group, said in a statement. The Premier Automotive Group, created in 1999 to serve as the automaker's luxury vehicle division, would essentially be dissolved by a sale of the two legendary luxury brands. Former Ford Chief Executive Officer Jacques Nasser, who was one of the bidders for Jaguar and Land Rover as head of One Equity Partners, assembled most of PAG during his reign from 1999 to 2001.

At one time, Ford's Premier Automotive Group controlled Aston Martin, Jaguar, Land Rover and Volvo. Lincoln was also part of the division for a brief time, before Dearborn reclaimed control of it in 2002, amid concerns of neglect.

But Ford sold Aston Martin in March 2007 for 430 million, and it was clear Jaguar and Land Rover would be sold together as Ford decided to raise cash to save its ailing North American business.

Both Jaguar and Land Rover are based in Britain and they share management, engineering, manufacturing and distribution resources. .

Volvo is the only non US brand in the group now retained by Ford, and it is widely expected that Ford will work to further integrate with the company. For example, the new Taurus relied substantially on engineering work done by the Volvo team.

While some analysts have speculated Jaguar and Land Rover could fetch as much as 4 billion in a sale, other estimates, from Merrill Lynch & Co., are more conservative for the combined sale, from 0.7 billion to 0.8 billion.

That would be substantially less than Ford paid for the two brands, which were acquired during more financially healthy times. Ford bought Jaguar for 1.3 billion in 1989 and Land Rover for 1.4 billion in 2000.

But Ford has made it clear that it would shed noncore assets in an effort to raise cash as it tries to restore profits to its troubled North American operations by 2009. That moneylosing division for the United States, Canada and Mexico, caused Ford to post a record loss of .6 billion in 2006.

Ford's so-called Way Forward turnaround plan calls for closing 10 plants, eliminating more than 40,000 jobs and revamping the company's lineup of Ford, Mercury and Lincoln products.

. Tata Motors has proven excellence over the years through continuous strong financial results, market expansion, acquisition, joint ventures and improvement and introduction of new products, it seems to have a promising future. But it failed the expectation as the company was in trouble right after the acquisition of Jaguar and Land Rover (JLR) in June 2008 due to the arrival of global financial crisis. The bridge

loan of US$ 3 billion which used to fund the acquisition of JLR was due on June 2009 and yet at the end of the year 2008, Tata was only able to repay the US$ 1billion. The declining revenues and a tight credit conditions was hurting the companys cash flow.

The questions arise is That whether Tata Motors able to repay the bridge loan? Will it be able to build up investors confidence and increase sales in the future? Could Tata Motors survive or going under bankruptcy?

Let us take a look on what makes Ford Motors to make the decision to sell JLR to Tata Motors.

Why is Ford Selling? *Reports said that losses at Jaguar stood at USD 715 million. *Jaguar was not performing well as it was unable to provide any profit for Ford due to high manufacturing costs in United Kingdom *The wellbeing of Land Rover's profit, on the other hand, was boost up by the record sale of 226,000 vehicles, an 18% year over year growth in 2007 *"Bringing down production costs and turning around the company successfully will be the challenge, analysts said *that Ford failed to reduce production costs as major proportion of cost is material cost and they unable to bought cheaper materials from suppliers *This however is very different if Tata Motor takes the ownership because they are utilizing countrys vast natural resources. The rationale to acquire JLR

Below are the reasons behind Tata Motorss decision to acquire JLR

1. Long term strategic commitment to automotive sector.

2.

Opportunity to participate in two fast growing auto segments (premium and small cars) and to build a comprehensive product portfolio with a global footprint immediately. Increased business diversity across markets and product segments.

3.

4. Unique opportunity to move into premium segment with access to world class iconic brands 4.a. Land Rover provides a natural fit above TMLs Utility Vehicles/SUV/Crossover offerings for the 4x4 premium category 4.b. Jaguar offers a range of Performance/Luxury vehicles to broaden the brand portfolio

5. Sharing of best practises between Jaguar, Land Rover and Tata Motors in the future

6. Long-term benefits from component sourcing, low cost engineering and design services.

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

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

03/01/2008 Ford announces Tatas 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

Jaguar-Land Rover officially sold (2008)

Jaguar and Land Rover are now officially Indian-owned. The sale of the two iconic British brands was completed today, and ownership has now passed from Ford to Tata in exchange for $2.3bn in cash (1.17bn). The sale means Jag/LR is debt-free, with none of the money used to fund the purchase being offset against the pairs worth. The sale gives Tata the ownership of Jaguar and Land Rover, all the necessary intellectual property rights, the manufacturing plants, two design centres and the sales chain. Agreements have also been signed for long-term use of Ford engines and future co-operation on hybrids and other powertrain developments. Ford has also coughed up around $600m for Jag/LRs pension coffers. The official handover ceremony took place at Gaydon, with Ratan Tata and new Jag/LR CEO David Smith present. David Smith had been acting CEO of the company since Geoff Polites passed away in April 2008. Smith leaves his full time position as Jag/LRs chief financial officer. At today's ceremony, he said: We are very pleased with the association with Tata Motors. We look forward to a sustained bright future for the company and its stakeholders. The Real Picture.. Consumer demand plummeted Credit lines were frozen

 Automotive sector in India suffered contraction in deman Launch of Nano delayed Tata Motors reeling under a huge debt burden

Problems in the Domestic Market The profits for the first quarter for the year 2008-09 were at 3.26 billion Q3 the sales of passenger vehicles went down to 41,287 units a drop of 14.14% Tata Motors cut production across different categories

Analysis Strategic logic Long term strategic commitment to automotive sector. Opportunity to participate in two fast growing auto segments- Luxury cars and all terrain vehicles. Enhanced human capital and managerial talent.

Improvement in global market position through a combination of resources and strengths. Sharing of best practices in manufacturing and quality assurance systems and processes Benefits from component sourcing, design services and low cost engineering

COMPETITIVE ADVANTAGE Tata Motors is vulnerable to greater competition at home. Foreign vehicle makers including Daimler, Nissan Motor, Volvo and MAN AG have struck local alliances for a bigger presence. Tata Motors, which has a joint venture with Fiat for cars, engines and transmissions in India, is also facing heat from top car maker Maruti Suzuki India Ltd, Hyundai Motor, Renault and Volkswagen

Valuation of deal A] Cost synergies 1] Material costs and not manpower key to better margins. Purchasing basket offers bigger opportunity for cost reduction It is more important to manage the material & sourcing costs to improve margins Material Cost is 46x the wage cost for high-end products such as Land Rover.

2] Tata Group has multiple levers Tata Auto Comp (TACO) - TATA group has a a rich ecosystem of JVs with leading players in Auto ancillary space held through TACO. TCS, Corus and Incat have varied competencies in the Auto space B] Revenue synergies - A long-term possibility

In the long-run Tata Group and Tata Motors footprint in South-East Asia should help Jaguar/Land Rover diversify their geographic dependence from US (30% of volumes) and Western Europe (55% of volumes)

COST SYNERGIES
Tata auto component Flagship company of TAMOs ancillary biz Manufacturing, Engineering and Supply chain management Customers include Global OEMs like Ford, Daimler, Chrysler, FIAT Tata Steel - Corus Leader in automotive grade steel in the European markets 16% of revenue from auto steel division Enjoys Q1 supplier status with Ford to supply steel for Jaguar and Land Rover

JLR
Tata Consultancy Services Provides services like engineering design, manufacturing solutions and sourcing services Automotive division accounted for 15% revenues Major customers are Chrysler, Ford, GM INCAT Provides services like supplier programs, consulting services and global sourcing Major customers are Chrysler, Ford, GM, Honda and Nissan

Approach to acquisition 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 arrived as top bidders ($ 2.05b & $ 1.9b) 03/01/2008 Ford announces Tatas as the preferred bidders Tata motors raised a bridge loan of US $ 3 billion through syndicate of banks. Additional amount of US $ 0.7 billion was for engine and component supply, contingencies and working capital. The amount was repaid in following manner Rs 1.92 billion Underwriting agreement with JM financial consultants Rs 1.75 billion was raised through a deposit scheme from the public Additional subscriptions by promoter companies- Tata sons, Tata capital and Tata Investment Ltd. 1 billion aid package by British Government .( out of total 2.3 billion )

Post merger Following Cost Rationalisation initiatives were taken to improve cash flows: 1] Single shifts and down time at all three UK assembly plants. 2] Supplier payment terms extended from 45 to 60 days in line with industry standard. 3] Receivables reduced by 133 million from 38 to 27 days. 4] Inventory reduced by 217m between June 2008 and March 2009 from 70 to 50 days 5] 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. 6] Agreement with Unions to implement pay freeze and longer working hours (equivalent to approximately 20% reduction in labor costs.) 7] Engineering and capital spending efficiencies. 8] Fixed marketing and selling costs reduced in line with sales volume. 9] Reduction in all other non-personnel related overhead costs.

Evaluation

THE DEAL 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 plants 2 advanced design & engineering center -4-5000 engineers engaged in testing , prototype design & powertrain Engineering , 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

Fund Raising

(7200 Crore) Ordinary Equity Shares Full Voting Right (2200 Crore) A-Class Equity Shares

 1 Vote for every 10 A-Class Equity Shares (2000 Crore) This is the first time a major Indian Co. is raising money by issuing shares with differential voting rights 5 Year 0.5% Convertible Preference Shares Optionally convertible into A equity shares after 3years but before 5years from the date of allotment (3000 Crore)

Problems Drop in share prices Failure of rights issue Huge debt burden Sales volume decreased by 35.2% Lack of consumer loans

 Issue of timing Operational freedom slows pace of change 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 Tatas core commercial vehicles market in India is also suffering from slower sales Extremely high manufacturing costs in Britain Eliminated 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 give better value later on. This acquisition also eases the entry of Tata in European market which it has been eyeing for long. A previous JV with FIAT took place, this will further help them penetrate EU market

 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 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 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

SWOT Strengths: Tatas strong management capability Strong monetary base to invest Weaknesses: Jaguars declining sales record Inexperience of handling such luxury brands

Opportunities: Support from Ford in terms of Technology,Engine, IT, Accounting Adding up of luxury brands in the product line Access to European Market Threats Market is volatile and driven by new products Strong presence of competitors like Mercedes, BMW, Lexus and Infinity

Recommendations Partnering Keep acquisition structurally separate Maintain its identity

Hunt for synergies in selected areas Procurement synergies

Prevent their own antecedents from clouding established brands Share operational Know-how Operational Autonomy Business transformed over last five years Jaguar

Cessation of vehicle assembly operations at Browns Lane Halewood shared with Land Rover Workforce rationalisation (c.1,900 employees 2004-2007) Working capital actions (stock reductions dealer and company) Back-office integration with Land Rover SG&A efficiencies Residual value management Engineering efficiencies Material cost reductions Launched new range of diesel engines Refocused marketing and communications around Beautiful Fast Cars Launch of XK & XF and more in pipeline Significant improvement in underlying results, net revenues and cost structure Jaguar sales for the month were 4,794, higher by 5%,

Land Rover

Improved efficiency and quality at Solihull Workforce rationalization (c.2,200 employees 2004-2007 ) Working capital actions (stock reductions dealer and company) Engineering efficiencies Material cost reductions Adoption of Jaguar petrol engines and new range of diesel engines with Jaguar Launch of new Discovery, Range Rover Sport and new Freelander Growth in new markets Russia, China Quality improvement actions Profitable for the last three years Land Rover sales were 16,340, higher by 45%

Bibliography

Wikipedia http://www.jaguar.in/ http://www.landrover.in/ http://www.tatamotors.com/investors http://www.slideshare.net