A

PROJECT REPORT ON
JAGUAR: CASE STUDY
SUBJECT: MANAGERIAL ECONOMICS
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SUBMITTED BY
AKSHAY JOSHI
HIRAL MISTRY
AKHILESH YADAV
MUBIN PARKAR
SUMEDH PITALE

SUBMITTED TO
Prof. T.G. ROY

H.K.INSTITUE OF MANAGEMENT STUDIES AND

RESEARCH.
2015-2016

ACKNOWLEDGMENT

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We take this opportunity to thank H.K.INSTITUTE OF MANAGEMENT STUDIES

AND RESEARCH for giving us this opportunity to work on such an experiential
project.

We express our sincere gratitude to PROF. T.G. ROY for his constant support help and
motivation in completing this project. We felt motivated and encouraged every time.
Without your encouragement and guidance this project would not have materialized.
Without his innovative style of teaching and sharing immense knowledge we would
have not been able to know and learn and work on this project.

The guidance and support received from all the people, who contributed their knowledge
to this project, was vital for the success for the project. We are greatful for their constant
support and help.
Thank you.

INDEX
Sr.No.
1

Particulars
Introduction to Jaguar

Page No.
6

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Introduction to Tata Motors

Stages of Jaguar

Reason why Ford sold Jaguar

Deal process of acquisition

11

Acquisition of Jaguar by Tata motors

12

Problems faced while acquisition

16

Is Jaguars success helping Tata Motors to be a

global brand

19

Conclusion

21

10

Annexure

22

11

Bibliography

23

Executive Summary
This is the case study on Jaguar automobile company.
Jaguar was under Ford motors, but later Tata acquired JLR.
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This project explains the history of Jaguar, post-acquisition by Tata motors.

The main objective of this project is to study Jaguar automobile, & understand why Tata
acquired Jaguar from Ford and what are the reasons.
For this project Financial Statements was analyzed and secondary research
was also done.
The purpose was to know the economic factors of Tata motors for acquiring
Jaguar.

INTRODUCTION TO JAGUAR

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Jaguar Cars is a brand of Jaguar Land Rover, a British multinational car headquartered in Whitley,
Coventry, England, owned by the Indian company Tata Motors since 2008.
Jaguar's business was founded as the Swallow Sidecar Company in 1922, originally making
motorcycle sidecars before developing bodies for passenger cars. Under the ownership of S. S. Cars
Limited the business extended to complete cars. The name S. S. Cars was changed to "Jaguar" in 1945.
A merger with the British Motor Corporation followed in 1966, the resulting enlarged company now
being renamed as British Motor Holdings (BMH), which in 1968 merged with Leyland Motor
Corporation and became British Leyland, itself to be nationalized in 1975.
Jaguar was de-merged from British Leyland and was listed on the London Stock Exchange in 1984,
becoming a constituent of the FTSE 100 Index until it was acquired by Ford in 1990. Jaguar has, in
recent years, manufactured cars for the British Prime Minister, the most recent delivery being an XJ in
May 2010. The company also holds royal warrants from Queen Elizabeth II and Prince Charles.
Jaguar cars today are designed in Jaguar Land Rover's engineering centers at the Whitley plant in
Coventry and at their Gaydon site in Warwickshire, and are manufactured in Jaguar's Castle Bromwich
assembly plant in Birmingham with some manufacturing expected to take place in the Solihull plant.

Introduction to TATA Motors

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Founded in 1945 as a manufacturer of locomotives, the company manufactured its first commercial
vehicle in 1954 in a collaboration with Daimler-Benz AG, which ended in 1969.
Tata Motors Limited (formerly TELCO, short for Tata Engineering and Locomotive Company) is an
Indian multinational automotive manufacturing company headquartered in Mumbai, Maharashtra, India
and a subsidiary of the Tata Group. Its products include passenger cars, trucks, vans, coaches, buses,
construction equipment and military vehicles. It is the world's 17th-largest motor
vehicle manufacturing company, fourth-largest truck manufacturer, and second-largest bus
manufacturer by volume.
Current CEO of Tata Motors is Cyrus Mistry. Tata Motors has vehicle assembly operations in India, the
United Kingdom, South Korea, Thailand, Spain and South Africa. It plans to establish plants in Turkey,
Indonesia, and Eastern Europe.
Tata Motors are also into following company acquisition:

Tata Daewoo

Tata Hispano

Jaguar Land Rover

TML Drivelines

Tata Marcopolo

Fiat-Tata

Tata Hitachi Construction Machinery Etc.

STAGES OF JAGUAR
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JAGUAR AUTOMOBILE WHEN IT WAS UNDER FORD

Ford made offers to Jaguar's US and UK shareholders to buy their shares in November 1989; Jaguar's
listing on the London Stock Exchange was removed on 28 February 1990. In 1999 it became part of
Ford's new Premier Automotive Group along with Aston Martin, Volvo Cars and, from 2000, Land
Rover. Under Ford's ownership, Jaguar never made a profit.
Under Ford's ownership Jaguar expanded its range of products with the launch of the S-Type in 1999
and X-type in 2001. Since Land Rover's May 2000 purchase by Ford, it has been closely associated
with Jaguar. In many countries they share a common sales and distribution network (including shared
dealerships), and some models now share components, although the only shared production facility
was Halewood Body & Assembly, for the X-Type and the Freelander 2. However operationally the two
companies were effectively integrated under a common management structure within Ford's PAG.
Before the sale was announced, Anthony Bamford, chairman of British excavator
manufacturer JCB had expressed interest in purchasing the company in August 2006, but backed out
upon learning that the sale would also involve Land Rover, which he did not wish to buy. On Christmas
Eve of 2007, Mahindra and Mahindra backed out of the race for both brands, citing complexities in the
deal.

JAGUAR AUTOMOBILE UNDER TATA MOTORS

On 1 January 2008, Ford formally declared that Tata was the preferred bidder. Tata Motors also
received endorsements from the Transport And General Workers Union (TGWU)-Amicus combine as
well as from Ford. According to the rules of the auction process, this announcement would not
automatically disqualify any other potential suitor. However, Ford (as well as representatives of Unite)
would now be able to enter into detailed discussions with Tata concerning issues ranging from labour
concerns (job security and pensions), technology (IT systems and engine production) and intellectual
property, as well as the final sale price. Ford would also open its books for a more comprehensive due
diligence by Tata.On 18 March 2008, Reuters reported that American bankers Citigroup and JP
Morgan would finance the deal with a USD 3 billion loan.
On 26 March 2008, Ford announced that it had agreed to sell its Jaguar and Land Rover operations to
Tata Motors of India, and that they expected to complete the sale by the end of the second quarter of
2008.Included in the deal were the rights to three other British brands, Jaguar's own Daimler, as well as
two dormant brands Lanchester and Rover.On 2 June 2008, the sale to Tata was completed at a cost of
1.7 billion.

REASONS WHY FORD SOLD JAGUAR

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PROBLEMS FACED BY FORD MOTORS:

In 2006, reports said that losses at Jaguar stood at USD 715 million. Jaguar was not performing well as
it was unable to provide any profit to Ford due to high manufacturing costs in United Kingdom. The
wellbeing of Land Rovers 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. It was a test that Ford failed. Ford is
combining both the brands since the products and manufacturing of vehicles for Land Rover and Jaguar
is so intertwined.
The US auto major put the two marquees on the market in 2007 after positing losses of $12.6 billion in
2006- the heaviest in its 103- year history.

A DIFFICULT RELATIONSHIP BETWEEN THE UK FIRM AND ITS US

OWNERS

Jaguar fell into heavy losses whilst owned by Ford (reaching up to $600million per year)

The development of a new engine manufacturing plant at Wolverhampton (1,400) costing

500m will reduce dependence on Ford for engines but JLR risks over stretching itself and
the engineering world by adding another vehicle assembly plant without a considerable
addition to the labour pool.

Ford has been investing in Jaguar and Land Rover. Land Rover actually sells at a pretty
good margin

Jaguar is more financially troubled. Ford is selling not so much because these brands are in
the worst trouble that theyve ever been in, but simply because Fords overall crisis and
Mulallys desire for focus is pushing them towards just concentrating on the core business.

Numbers

2005

2006

2007

Jaguar

86,651

72,680

57,578

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Percentage

Western Europe

46,789

41,367

33,024

57%

America

32,131

22,136

16,836

29%

Rest of the world

7,731

9,177

7,718

13%

Land Rover

1,70,156

1,74,940

2,02,609

Western Europe

97,303

95,399

1,09,785

54%

America

51,634

53,639

57,092

28%

Rest of the world

21,219

25,903

35,732

18%

Total

2,56,807

2,47,620

2,60,187

Wester Europe

1,44,092

1,36,766

1,42,809

55%

America

83,765

75,774

73,928

28%

Rest of the world

28,950

35,080

43,450

17%

From the table, we may see that: The sales of Jaguar are decreasing dramatically from 2005 until 2007.
After intertwined Jaguar and Land Rover, sales from year to year
fluctuated without certainty of growth.

This is one of the reasons that lead Fords decision to sell JLR to Tata
motor.

DEAL PROCESS OF ACQUISITION

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On 12/06/2007- Announcement from ford that it plans to sell Land Rover and Jaguar.

1.
2.
3.
4.
5.

On August 2007- Major bidders were identified such as

TATA MOTORS
M&M
Ceribrus Capital Management
TPG capital
Apollo management

Indias TATA Motors and M&M arrived as the top bidders ($2.05billion &$1.9billion)

On 03/01/2008- Ford announces TATA as the preferred bidder.26/03/2008-Ford agreed to sell

their Jaguar Land Rover operations to TATA Motors ($2.3billion)

On 2/06/2008- The acquisition was complete.

ACQUISITION OF JAGUAR BY TATA MOTORS

WHY TATA MOTORS ACQUIRED JAGUAR:
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 Tata Motors wanted to expand its product portfolio and diversify its market base. The

acquisition gave the company access to premium cars, a chance to add two iconic luxury
brands to its stable and a global footprint. It gave struggling Ford a chance to rid itself of two
loss-making vehicle units. Tata had already acquired Tetley, South Korea based Daewoos
commercial vehicle unit , and Anglo Dutch Steel maker Corus. Also acquired are Campton
Place Hotel, Ritz-Carlton hotel Starwood group, The Pierre Regent Hotel (renamed Taj Lands
End), Good Earth Corporation & FMali Herb Inc, Eight O' Clock Coffee Company, BT Group's (BT)
Mosaic business.
Another reason was to take revenge from Ford. Nine years after the humiliation, the clock

turned a full circle and the salt-to-software conglomerate humbled the mighty Ford which
was on the verge of bankruptcy after the 2008 global financial meltdown by taking over the
iconic Jaguar Land-Rover brands for USD 2.3 billion

HOW TATA MOTORS ACQUIRED JAGUAR:

The Tata Group, led by Mr. Ratan Tata, was determined to make the deal work and put to use
the group's management skills, financial resources and credibility.

To staunch the hemorrhage at the British unit, Tata's management focused on reducing costs,
improving efficiencies and managing cash flow lessons that Tata Motors had learned during
the downturn in 2001.

Tata also infused $1 billion to fund operations and new product launches.

When the market turned, the premier car maker was well poised to reap the benefits and turned
profitable during the quarter ended Dec. 31, 2009, with a net profit of 55 million pounds ($90.6
million).

Tata secures a 340million loan from the European Investment Bank to support JLR through
recession.

Tata announces 5b five year investment programme in JLR - focused on new product
development & new equipment at JLR three UK plants + investment in a planned factory in
China. JLR also to link closer with Tata Steel to provide new lightweight steel alloys for new
car models.

JLR announces 1,000 new jobs a Land Rover plant in Solihull boosted by rising demand for
SUVs in China, Russia, India and Brazil.

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Soaring sales of Jaguar and Land Rover cars have helped Indian firm Tata Motors to a huge rise
in profits (up 41% on 2010). JLR arm saw sales rise 37%, helped by selling 32,000 of its new
Range Rover Evoque. China overtakes the UK as JLRs biggest market.

JLR and Chery Automobile agree a joint venture that should pave the way for production of
Jaguar and Land Rover cars in China.

JLR announces that it will build a successor to its previous sports cars called the F-type at its
factory in Birmingham.

BENEFITS OF ACQUISITION:

The acquisition would help the company acquire a global footprint and enter the high-end
premier segment of the global automobile market. After the acquisition, Tata Motors would own
the world's cheapest car - the US$ 2,500 Nano, and luxury marquees like the Jaguar and Land
Rover.

Tata also got two advance design studios and technology as part of the deal.

This deal provided Tata an instant recognition and credibility across globe which would have
otherwise have taken years.

The cost competitive advantage was as Corus was the main supplier of automotive high grade
steel to JLR and other automobile industry in US and Europe. This would have provided a
synergy for TATA Group on a whole. The whole cost synergy that can be created can be seen in
the following diagram.

In the long run TATA Motors will surely diversify its present dependence on Indian markets.
Along with it due to TATAs footprints in South East Asia will help JLR do diversify its
geographic dependence from US and Western Europe.

Tata wanted to make a global impact and it thinks that buying these brands at a lower rate now,
will give better value in future.

Reduced the companies dependency on the Indian market which accounted for 90%of its sale.

Increased sales in emerging markets.

Reduced dependency on mature markets.

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At the price starting from 63lakh and going up to 93lakh it seems TATA had just got the right
place to compete with the current markets leaders- BMW, Audi, Mercedes.

JLR had many new models lined up for next 3 years, so no much work was needed just profits.

Component sourcing, engineering and design benefits.

COMPETITIVE ADVANTAGE

Tata Motors was vulnerable to greater competition at home.

Foreign vehicle makers including Daimler, Nissan Motor, Volvo and MAN AG had struck local
alliances for a bigger presence.

Tata Motors, which had a joint venture with Fiat for cars, engines and transmissions in India,
was also facing heat from top car maker Maruti Suzuki India Ltd, Hyundai Motor, Renault and
Volkswagen

the Tata group had led the growing appetite among Indian companies to acquire businesses
overseas in Europe, the United States, Australia and Africa - some even several times larger - in
a bid to consolidate operations and emerge as the new age multinationals.

Tata Motors was India's largest automobile company, with revenues of $7.2 billion in 200607.With over 4 million Tata vehicles plying in India, it was the leader in commercial vehicles
and the second largest in passenger vehicles.

MARKET CAPITILISATION
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Two months before it acquired Jaguar And Land rover (JLR) in

M a r c h 2008, Tata Motors had a market capitalization of Rs 24,000 crore.
Five months after the deal, it had plunged to Rs 6,500 crore. The market as whole d u r i n g
that time negated the acquisition as both the companies JLR
h a d b e e n m a k i n g l o s s e s u n d e r t h e i r f o r m e r o w n e r F o r d motors, however
there was an opportunity hidden in exploring the
strongb r a n d v a l u e a n d r e s e a r c h a n d d e v e l o p m e n t h i d d e n b e h i n d
b o t h t h e companies and eventually this opportunity was utilized to the fullest extent by
Tata Motors and its market capitalizations now stands at 71500 crore which is more than a
tenfold rise from the initial post acquisition low.

BRAND VALUE

R e c e n t l y T ATA M O T O R S d r o v e p a s t Reliance Industries t o t o p t h e

2 0 1 0 e d i t i o n o f I n d i a s M o s t Val u a b l e B r a n d s s u r v e y
with a valuation of $8.45billion. A major part of this success can
b e a t t r i b u t e d t o t h e J L R brands. Jaguar and land rover both have been part of a larger
conglomerate for a long time, however their potential was not unlocked then, TATA MOTORS
succeeded in doing that. Jaguar and land rover steadily started r e g a i n i n g t h e i r r h yt h m i n
t h e m a r k e t a n d c o n t r i b u t e d t o w a r d s c r e a t i n g a good brand value for TATA
MOTORS.

TATA MOTORS-JLR brand soared 172%in one year to $8.45 billion from only $3.1 billion in
2008-09.

Problems faced while acquisition

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AS THERE WAS A RECESSION PERIOD TATA MOTORS FACED MANY

PROBLEMS WHILE ACQUISITION

Drop in the share prices.

Failure of right issue

Huge debt burden

Sales volume decreased by 35.2%.

Lack of consumer loans

Issue of timing.

Operational freedom slow pace of change.

Depressed state of global premium car market.

Jaguar Land Rover lost 306 million pounds ($504million) for the fiscal year ending
march2009.

TATA Motors reported a net loss of Rs3.29billion ($67million) for the quarter to endJune.

TATAs core commercial vehicle market in India was also suffering from slower sales.

Extremely high manufacturing cost in Britain.

Eliminated more than 2200 jobs.

At its worst, Tata Motors' stock dropped to 126.45 rupees, decimating its market
capitalization to 65 billion rupees ($1.45 billion), about a fraction of what it paid for
Jaguar Land Rover. Before the deal, the stock had traded at 700 rupees per share

Investment drive

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Bought by Tata for $2.3 billion from Ford in 2008, JLR has defied those skeptical of its future
under Indian ownership to roar back into profit over the past three years as the main growth
driver for its now-struggling parent.

Continued growth in emerging markets such as India and China, which accounted for 22.3
percent of its sales in the December quarter, is key for JLR as it embarks on an expensive
overhaul of its production and product clout. The carmaker is investing $1.7 billion with local
partner Chery Automobile Co in a factory in China.

JLR lags rivals BMW AG, Volkswagen AG's Audi and Daimler AG's Mercedes-Benz in
assembling cars in India, where the luxury market is expected to swell by around six times by
2020 to 300,000 cars a year, according to business consultancy Frost & Sullivan.

JLR, with sleek sedans favored by British prime ministers and luxury SUVs born of desert and
jungle combat, has factories working around the clock in England to meet demand, bucking the
trend of sluggish demand for European automakers.

The company has repeatedly stressed that its overseas ambitions will not lead to job losses in
Britain. JLR employed close to 24,000 people at the end of March last year.

Earlier this year JLR started the assembly of the 2.2-liter (0.58 gallon) diesel version of the
Jaguar XF sedan at a plant in Pune, west India, tucked away in a corner of a sprawling
production site where Tata builds its heavy duty trucks and hatchbacks.

Screwed together using engines and components shipped from JLR's Castle Bromwich plant in
Birmingham, central England, the company has also been assembling its Land Rover Freelander
2 in Pune since May 2011.

The XF and the Freelander 2 are JLR's best-selling models in India, where it sold 2,288 cars in
the year to March 2012, up 157 percent from the previous year.

The carmaker, which warned in January of negative free cash flow next year as it invests in
production facilities, is also exploring the feasibility of a factory in Saudi Arabia. After the
signing of a deal with JLR in December, the Saudi commerce and industry ministry said the
$1.2 billion plant would start making vehicles by 2017.
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"At the moment, we've signed a letter of intent to do a study," Kenneth Gregor, JLR chief
financial officer, said last month. "That is and remains a study."

Is Jaguar Success Making Tata Motors As Global Brand ?

JAGUAR PLAYED A MAJOR ROLE IN MAKING TATA MOTORS AS

GLOBAL BRAND
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Mergers and acquisitions seek to enhance as well as develop long-term profitability, by

expanding the companys operations.
In the JLR Tata case, both companies managed to obtain important benefits. On one side, Tata
gained access to the global market. This would allow it to diversify its operations also outside
of India, and help it get out of the recession it had entered since the economic slowdown.
On the other side, Jaguar managed to obtain important investments that would help it regain its
ancient splendor. Tata invested heavily on research and innovation, and gave Jaguar a welldefined image again.
Furthermore, with Jaguars technology, Tata benefitted of the ability to launch products at lower
costs than competitors, also thanks to synergies with other businesses. In addition, Tata would
reduce the overdependence on the Indian market which is estimated to have accounted for about
90 percent of its sales.
Also, the acquisition of Jaguar would enable Tata to gain complementary capabilities. The
acquisition would broaden the level of diversification of the business portfolio both
geographically and product wise.
Furthermore, Tata would benefit from the fact that it would enjoy low cost of both design and
the engineering. In fact, Tata Motors would move its design centers directly at Jaguars. It would
also gain new distribution channels without having to merge TAMO with JLR.
With the deal Tata also acquired three UK plants. Also, centers for advanced design and
engineering were now at Tatas disposal. Apart from this, the move made it possible for Tata to
gain access to 26 sales companies together with their IP rights. Furthermore, Tata would acquire
$1.1 billion in capital allowances for taxes.

TATA: THE INDIAN POWERHOUSE BEHIND JAGUAR LAND

ROVER SUCCESS

Sales at Jaguar Land Rover have surged annually since the two ailing British brands were
united under the ownership of the Tata Group in 2008.
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The purchase by Tata of both Land Rover and Jaguar from Ford for just over 1bn was
described as reverse colonialism almost six years ago, but manufacturing at its West Midlands
bases has thrived ever since.

Losses in 2009 were reversed as turnover trebled by 2013, and Jaguar Land Rover has recorded
billion pound-plus annual profits for the last three years, adding around nine thousand
employees to date with plans to recruit 1,700 more.

While Tata's takeover was seen a shift in power from west to east, the firm's historical roots and
tradition of employment rights sit alongside those of the most enlightened Victorian British
industrialists.

The Tata family, of the Parsee religion, started on the path to owning today's industrial giant by
opening a textile mill in 1868, where workers were offered pensions and compensated for
accidents.

The multinational conglomerate whose divisions spread across IT, energy, communications,
materials and chemicals has assets worth around 50bn, is headquartered in Mumbai, and
with two-thirds of its shares owned by charitable trusts.

CONCLUSION

This study has showed the key important factors for success of any mergers and acquisition that
is financial benefits by researching in detail the acquisition of Jaguar by Tata motors.
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This present study has only covered the financial factors and it has not covered the culture and
human issues.
The study has concluded that the Tata has not able to achieve the strategic financial objectives
after the acquisitions of Jaguar in 2009.
The successful mergers can only be declared if the companies achieve the maximization of
shareholders wealth, revenue enhancement, cost reductions, and process improvement but in the
case of Tata-Jaguar the company has not able to achieve any strategic financial benefits other
than the sales growth increase but the company has planning to reduce the cost by
manufacturing in-house engines and shifting the production to China and India and also it is
planning to achieve the maximization of shareholders wealth by reducing the debts through
fund raising, and good profits globally.
The ultimate motive in handling the financial issues, cultural issues or human issues in the
merger process is to increase the profitability of the company.

ANNEXURE

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Bibliography
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http://www.nytimes.com/1989/11/03/business/ford-to-buy-jaguar-for-2.38-billion.html
http://economictimes.indiatimes.com/industry/auto/news/industry/when-humiliated-ratan-tata-didfavour-to-ford-with-jlr-buyout/articleshow/46572012.cms
http://www.tatamotors.com/investors/financials/pdf/volume2/2.%20Jaguar%20Land%20Rover
%20Limited.pdf
http://www.kenfolios.com/a-must-read-story-of-ratan-tata-buying-jaguar-to-take-revenge-from-ford/

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