Tata Motors and the Automotive

Industry
The Smart People
Emily Frey, Eric Harmon, Arielle
Hord, Caitlin Kantosky
 Outline
• History and Product offerings
• Tata Group & Corporate Responsibility
• Financial Analysis
• Tata’s Future & what impact, if any, for the
American auto market
 History
• Started in 1945 in
Mumbai, India.
• Original production was
on locomotives.
• 1954
– First car rolled off of the
assembly line.
• Tata’s are a family of
Indian industrialists and
philanthropists.
• The family founded:
– Ironworks
– Steelworks
– cotton mills
– hydroelectric-power
plants
• Are of their endeavors
have been proved to be
crucial to India's
industrial development.
 History
• Tata Motors is India’s
owns the largest
independent company
in India.
• Mercedes and Tata
teamed up to create a
truck line.
– First major business deal
with another firm.
• Together both
companies started their
commercial vehicle
operations in 1960.
• in 1986 the company
created and sold the
first LCV
– LCV = light commercial
vehicle
– Was the Tata 407
 History
• Tata Motors decided to • Began creating new
pursue joint ventures. lines in the late 1990’s
– Cummins Engine Co., and early 2000’s:
Inc., was the first – Compressed natural gas
company to jointly buses
venture with Tata in – 1109 vehicle, used for
1993. commercial purposes.
– Manufactured a diesel – Ex-series
engine that had high
– Newly designed LCV
horsepower and emitted
called the 207 DI
less harmful chemicals.
 Products
• Tata Indigo
– Created in 2002
– Mid-sized sedan.
– Different models run on
either normal gasoline
or diesel fuel.
– Seats 5 people.
– Same luxuries as
American made vehicles.
Products
• Tata Indigo SW
– Station wagon version of
the Indigo.
– Same basic features as
the Indigo.
– Seats 5 people.
– Different models fun on
different fuels.
– Different optional safety
features than other
vehicles.
 Products
• Tata Indica
– Hatchback version of the
Indigo sedan.
– Easily affordable.
– Smallest in the line of
Tata vehicles to date.
– Seats 5 people.
– Same basic features as
the sedan.
Products
• Tata Safari
– Mid-sized SUV.
– Has a special engine
called DICOR.
• Direct Injection Common
Rail.
• Allows the engine to
intercool itself.
– Comes in either a 4x4 or
a 4x2.
– Can seat 7 passangers.
 Products
• Tata Sumo
– Runs off of diesel fuel.
– Seats up to 7
passengers.
– Has a separate rear and
front suspension for an
optimal ride.
– Has two separate air
conditioners for the
front and rear of the
vehicle.
 Tata Group
• 100 companies throughout 7 business sectors
•Engineering, materials, energy, chemicals, services,
consumer products, information systems and
communications
•Tata AutoComp Systems - Automotive
•Tata Steel - Materials
•Tata Power - Energy
•Rallis India - Chemicals
•Tata Realty and Infrastructure - Service
•Tata Tea - Consumer Products
•Tata Technologies - Information Systems and
Communications
 Corporate Social Responsibility

•“A Company that cares about the future”

•Committed to corporate social responsibility
•Signed the United Nations Global Compact
•Plays role in community development
•Environmentally-friendly products and technology
 Corporate Social Responsibility
•Two main concerns:
•Reduction of pollution
•Restoration of ecological balance
•Implemented soil and water conservation
programs
•Cleaner Engines
•Advanced emission-testing labs
•Developing alternate fuel engines
•Sewage treatment facilities
•Encourages tree planting
 Corporate Social Responsibility

•India – Recycling Culture

•Value in discarded products
•Europe – “Throw-away” culture
•European ELV Directive
 Corporate Social Responsibility
•Community Development
•Community Service Division
•Promote economic independence
•“Self-initiated cottage industries”
 Tata Finance: overview
• Stock Trend
• Growth and Expansion
– Sales
– assets
• Financing Operations
• Tata vs. American Companies
 Tata Motors Inc. Stock
• TTM
• NYSE since 2004
• $15.84 as of Friday (Yahoo, 2008)
• Down 8% in last year
Since 2004: TTM
 Growth and Expansion
• large Indian market
– Familiar with market
– Brand loyalty
• Fuel efficiency
• Mahindra & Mahindra- $1.88 billion
 Debt vs. Equity
• Debt growth: $2.3 billion  $4.1 billion
• Equity growth: $1.2 billion  $2.1 billion
– 55 million outstanding shares
– ROE : 19%
• Debt/ equity ratio: .87
– Industry average: .58
– Cash now for growth
 Growth
• Asset growth  doubled since 2005
– Acquisition of Jaguar and Land Rover from Ford
• Sales:
– $7.6 billion and grew 42.2% from 2006
• PROFITS!!
– $.95 billion on 2005  $1.5 billion on 2007
 Cash Management
• Liquidity and solvency are good
• Inventory
• Improved cash management:
– 12% of assets in 2005
– 4% of assets in 2007
 Comparatively Speaking

Brand: Tata Ford GM

Sales: $7.6 billion $172 billion $181 billion

# of employees 33,900 246,000 266,000

Profit Margin 20% 17% 6.7%

 Effects on U.S. Economy

• Slow economy
– High oil prices
– Demand for fuel efficiency
– Cut backs
• Tata’s effect
 Jaguar and Ford
• Purchase from Ford
– Concerns

• Changes or Plans
– More Tata vehicles
– Made in India
• Future
 U.S. Car Companies
• $ 2 Billion in sales

• GM-$50; Ford-$40; Honda- $20

• In the U.S.

• Going overseas
– 75% by 2017 for GM

• Expanding in India
 U.S. Car Companies
• Toyota- 7.5% increase in profits

• Foreign Markets
– No help
– 1. Can’t offset
– 2. India out of reach
 The Next Auto Capital
• Detroit current auto capital

• 21st century belongs to India

• 2050 in India and China

– Labor
– Environment
 Future of the Nano
• Not for the U.S.
– 3rd world countries
– U.S. standards

• Detroit make or buy version

 Summary
• Tata history and products
• Tata Group
• Tata: Social Responsibility
• Tata Motors Finance
• Future
Questions