CASE STUDY

The case discusses the problems Iaced by Tata Motors Limited, the largest
automobile company in India in the domestic and international markets. The
company posted a net loss oI Rs. 25.05 billion Ior the Iinancial year ending March
2009, its Iirst loss in eight years. Earlier, in June 2008, Tata Motors had completed
the acquisition oI Jaguar and Land Rover (JLR). Immediately aIter the acquisition
oI JLR, Tata Motors started Iacing problems as the sales oI JLR started decreasing.
The global Iinancial crisis impacted the sales oI luxury vehicles heavily. Against
the expectation oI Tata Motors, JLR could not generate the Iunds Ior working
capital, requiring Tata Motors to pump additional Iunds to keep the operations
going. Things turned Ior the worse by the end oI 2008, with demand shrinking
Iurther.

To Iinance the acquisition oI JLR, Tata Motors took a bridge loan oI US$ 3 billion.
To reIinance bridge loan, Tata Motors came out with two rights issues. When the
rights issues were opened in September-October 2008, the share price oI Tata
Motors Iell drastically, and the rights issue had to be bailed out by the promoters oI
the company. Then Tata Motors called Ior deposits Irom public and issued non-
convertible debentures. However, as oI May 2009, Tata Motors was yet to
reIinance US$ 1 billion oI the bridge loan. With the global economic slowdown
hampering the growth oI global automobile industry, Tata Motors had a tough task
ahead to bring JLR back on the growth track.

Issues:
Evaluate the reasons behind Tata Motors's decision to acquire JLR.

Understand the way oI Iinancing undertaken by Tata Ior acquisition and its
problem.

Analyze the problems Iaced by Tata Motors and suggest probable solutions.

Understand the advantages and disadvantages oI JLR's acquisition Ior Tata
Motors.