A

Project Report ON “TATA MOTORS”

BY
ADITYA ARVIND TINGRE

Under the guidance of

Prof. SHARAD KADAM

In Partial Fulfillment of

Bachelor Degree in Business Administration

(International Business) Submitted To

Alandi (D), Pune

Affiliated to

Savitribai Phule Pune University

Academic Year 2019 - 2020

1
 CERTIFICATE

This is to certify that, the project report entitled “Tata Motors” which is

submitted by Mr.Aditya Arvind Tingre in partial fulfillment of Bachelor

of Business Administration has satisfactorily completed the project work

under our guidance and supervision.

We wish our best wishes for his/her future endeavour.

Prof. Sharad Kadam Prof. Amol Mane Prof. Dr. B. B. Waphare

Project Guide HOD BBA & BBA (IB) Principal

Internal Examiner External Examiner

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 ACKNOWLEDGEMENT

I take this opportunity to express my sincere gratitude to everyone who has directly or
indirectly helped me in completing the project successfully.

I own profound intellectual debt to Mr. Sharad Kadam who notwithstanding his
busy schedule and personnel commitments has been guiding the force and a source of
encouragement and helped me throughout the course of my project & for being an
inspirational force and devoting genuine interest throughout the progress of the
project, interacting with him/her I learnt a few important aspects of professional
management and I am sure the knowledge imparted to me will help me to enrich my
career in the long run.

I am also thankful to Prof. Dr. B. B. Waphare, Principal MIT ACS College Alandi,
and also to Prof. Amol Mane, HOD BBA & BBA IB for providing me with this
opportunity.

I express my gratitude for Prof. Dr. Sharad Kadam (Faculty Guide) for providing me
an opportunity to have his valuable guidance and continuous monitoring.
I take this opportunity to thank my family members, friends without their cooperation I
would not have been able to complete this project.

ADITYA ARVIND TINGRE

T.Y.B.B.A. (IB)

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 DECLARATION

I, hereby declare that the project report on “TATA MOTORS” is written and
submitted by me to MAEER’s MIT ACSC Alandi (D) Pune, towards the partial
fulfillment for the study of B.B.A.(IB) in year 2019-2020 is original work done by
me , which is based on the Primary and Secondary data and it is based on the
knowledge and material gained from the company.

The contents provided are true to the best of my knowledge and belief.

I further declare that, this project report has not been submitted to any other College or
University for any other degree or course earlier.

Place: Alandi, Pune

Date:

ADITYA ARVIND TINGRE

TYBBA (IB)

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 INDEX

CHAPTER
PAGE
CHAPTERS
No. NO.

EXECUTIVE SUMMARY 1-6

1. INTRODUCTION OF PROJECT 8

1.2 History & Background of Tata Motors 9

1.3 Tata’s Global Operations 12

1.4 International Marketing 13

1.5 Opportunities 13

1.6 Risk 18

1.7 Outlook 34

1.8 Internal Control System 36

2. LITERATURE REVIEW 38 - 48

3 COMPANY PROFILE 50

3.1 Production 51

3.2 Domestic Market 52

3.3 Policy 53

3.4 Vision & Mission 54

5
3.5 Product Range 55

3.6 Marketing Strategies 61

3.7 Competitive Advantage 66

4 DATA ANALYSIS & INTERPRETATION

4.0 Strategic Analysis 68

4.1 SWOT Analysis 69

4.2 Michael Porter Analysis 71

4.3 Michael Porter’s Five Forces 75

4.4 Ansoff Analysis 78

4.5 Balanced Score Card Analysis 80

5 FINDINGS 82 - 87
SUGGESTIONS /
6 88 -90
RECOMMENDATIONS

CONCLUSION

REFERENCES (BIBLIOGRAPHY AND

7 91 - 99
WEBLIOGRAPHY etc)

ANNEXURE

6
CHAPTER – 1

INTRODUCTION

7
CHAPTER - 1

INTRODUCTION

1.1 Introduction:

Established in 1945, Tata Motors' presence indeed cuts across the length and
breadth of India. Over 4 million Tata vehicles ply on Indian roads, since the
first rolled out in 1954. The company's manufacturing base in India is spread
across Jamshedpur (Jharkhand), Pune (Maharashtra), Lucknow (Uttar
Pradesh), Pantnagar (Uttarakhand) and Dharwad (Karnataka). The company is
establishing a new plant at Sanand (Gujarat). Tata Motors, the first company
from India's engineering sector to be listed in the New York Stock Exchange
(September 2004), has also emerged as an international automobile company.
Tata Motors is also expanding its international footprint, established through
exports since 1961. The foundation of the company's growth over the last 50
years is a deep understanding of economic stimuli and customer needs, and
the ability to translate them into customer-desired offerings through leading
edge
R&D. With over 2,000 engineers and scientists, the company's Engineering
Research Centre, established in 1966, has enabled pioneering technologies and
products. It was Tata Motors, which developed the first indigenously
developed Light Commercial Vehicle, India's first Sports Utility Vehicle and,
in 1998, the Tata Indica, India's first fully indigenous passenger car. In
January 2008, Tata Motors unveiled its People's Car, the Tata Nano, which
India and the world have been looking forward to the years to come will see
the introduction of several other innovative vehicles, all rooted in emerging

8
customer needs. Besides product development, R&D is also focusing on
environment-friendly technologies in emissions and alternative fuels.

1.2 History and Background of Tata Motors:

Tata Motors Limited is India‘s largest automobile company, with consolidated

revenues of Rs.1, 23,133crores (USD 27 billion) in 2010-11. It is the leader in
commercial vehicles in each segment, and among the top three in passenger
vehicles with winning products in the compact, midsize car and utility vehicle
segments. The Company is the world's fourth largest truck manufacturer, and
the world's third largest bus manufacturer. The Company's over 25,000
employees are guided by the vision to be "best in the manner in which we
operate, best in the products we deliver, and best in our value system and
ethics." Established in 1945, Tata Motors' presence indeed cuts across the
length and breadth of India. Over 5.9 million Tata vehicles ply on Indian
roads, since the first rolled out in 1954. The Company's manufacturing base in
India is spread across Jamshedpur (Jharkhand), Pune (Maharashtra), Lucknow
(Uttar Pradesh), Pantnagar (Uttarakhand), Sanand (Gujarat) and Dharwad
(Karnataka). Following a strategic alliance with Fiat in 2005, it has set up an
industrial joint venture with Fiat Group Automobiles at Ranjangaon
(Maharashtra) to produce both Fiat and Tata cars and Fiat powertrains. The
Company's dealership, sales, services and spare parts network comprises over
3500 touch points; Tata Motors also distributes and markets Fiat branded cars
in India. Tata Motors, the first Company from India's engineering sector to be
listed in the New York Stock Exchange (September 2004), has also emerged
as an international automobile company. Through subsidiaries and associate
companies, Tata Motors has operations in the UK, South Korea, Thailand and
Spain. Among them is Jaguar Land Rover, a business comprising the two
iconic British brands that was acquired in 2008. In 2004, it acquired the
Daewoo Commercial Vehicles Company, South Korea's second largest truck

9
maker. The rechristened Tata Daewoo Commercial Vehicles Company has
launched several new products in the Korean market, while also exporting
these products to several international markets. Today two-thirds of heavy
commercial vehicle exports out of South Korea are from Tata Daewoo. In
2005, Tata Motors acquired a 21% stake in Hispano Carrocera, a reputed
Spanish bus and coach manufacturer, and subsequently the remaining stake in
2009. Hispano's presence is being expanded in other markets. In 2006, Tata
Motors formed a joint venture with the Brazil-based Marcopolo, a global
leader in body-building for buses and coaches to manufacture fully-built buses
and coaches for India and select international markets. In 2006, Tata Motors
entered into joint venture with Thonburi Automotive Assembly Plant
Company of Thailand to manufacture and market the Company's pickup
vehicles in Thailand. The new plant of Tata Motors (Thailand) has begun
production of the Xenon pickup truck, with the Xenon having been launched
in Thailand in 2008.

Tata Motors is also expanding its international footprint, established through

exports since 1961. The Company's commercial and passenger vehicles are
already being marketed in several countries in Europe, Africa, the Middle
East, South East Asia, South Asia and South America. It has franchisee/joint
venture assembly operations in Kenya, Bangladesh, Ukraine, Russia, Senegal
and South Africa. The foundation of the Company's growth over the last 50
years is a deep understanding of economic stimuli and customer needs, and
the ability to translate them into customer-desired offerings through leading
edge
R&D. With over 4,500 engineers and scientists, the Company's Engineering
Research Centre, established in 1966, has enabled pioneering technologies and
products. The Company today has R&D centers in Pune, Jamshedpur,
Lucknow, Dharwad in India, and in South Korea, Spain, and the UK. It was
Tata Motors, which developed the first indigenously developed Light

10
Commercial Vehicle, India's first Sports Utility Vehicle and, in 1998, the Tata
Indica, India's first fully indigenous passenger car. Within two years of launch,
Tata Indica became India's largest selling car in its segment. In 2005, Tata Motors
created a new segment by launching the Tata Ace, India's first indigenously developed
mini-truck.

Vision:

To be a world class corporate constantly furthering the interest of all its stakeholders.

Shareholders:

To consistently create shareholder value by generating returns in excess of

Weighted Average Cost of Capital (WACC) during the upturn and at least
equal to Weighted Average Cost of Capital (WACC) during the downturn of
the business cycle.

Customers:

To strengthen the Tata brand and create lasting relationships with the
customers by working closely with business partners to provide superior
value for money over the life cycle.

Employees:

To create a seamless organization that incubates and promotes innovation,

excellence and the Tata core values.

Vendor and Channel Partners:

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To foster a long-term relationship so as to
introduce a broad range of innovative products and services, that would benefit our
customers and other stakeholders.

Community:

To proactively participate in reshaping the country‘s economic growth

and take a holistic approach towards environmental protection.

1.3 Tata's global operations:

Tata Motors has been in the process of acquiring foreign brands to increase its
global presence. Through acquisition, Tata has operations in the UK, South
Korea, Thailand and Spain. Among these acquisitions is Jaguar Land Rover, a
business comprising two struggling iconic British brands that was acquired
from the Ford Motor Company in 2008. In 2004, Tata acquired the Daewoo
Commercial Vehicles Company, South Korea‘s second largest truck maker.
The re-branded Tata Daewoo Commercial Vehicles Company has launched
several new products in the Korean market, while also exporting these
products to several international markets. Today two-thirds of heavy
commercial vehicle exports out of South Korea are from Tata Daewoo.

In 2005, Tata Motors acquired a 21% controlling stake in Hispano Carrocera, a

Spanish bus and coach manufacturer. Tata Motors continued its market area
expansion through the introduction of new products such as buses
(Starbus&Globus, jointly developed with subsidiary Hispano Carrocera) and
trucks (Novus, jointly developed with subsidiary Tata Daewoo). In May, 2009
Tata unveiled the Tata World Truck range jointly developed with Tata
Daewoo. Debuting in South Korea, South Africa, the SAARC countries and
the Middle-East by the end of 2009, santhosh .In 2006, Tata formed a joint
venture with the Brazil-based Marcopolo to manufacture fully built buses and

12
coaches for India and other international markets. Tata Motors has expanded
its production and assembly operations to several other countries including
South Korea, Thailand, South Africa and Argentina and is planning to set up
plants in Turkey, Indonesia and Eastern Europe. Tata also has franchisee/joint
venture assembly operations in Kenya, Bangladesh, Ukraine, Russia and
Senegal. Tata has dealerships in 26 countries across 4 continents. Though Tata
is present in many countries it has only managed to create a large consumer
base in the Indian Subcontinent, namely India, Bangladesh, Bhutan, Sri Lanka
and Nepal. Tata has a growing consumer base in Italy, Spain and South
Africa. India with Motor vehicle production of 3,536,783 units was one of top
10 motor vehicle producing countries in 2010. Tata Motors with 1,011,343
units was one of top 20 motor vehicle manufacturing companies by volume in
2010.

1.4 International Marketing:

If the exporting departments are becoming successful but the costs of doing
business from headquarters plus time differences, language barriers, and
cultural ignorance are hindering the company‘s competitiveness in the foreign
market, then offices could be built in the foreign countries. Sometimes
companies buy firms in the foreign countries to take advantage of
relationships, storefronts, factories, and personnel already in place. These
offices still report to headquarters in the home market but most of the
marketing mix decisions are made in the individual countries since that staff is
the most knowledgeable about the target markets. Local product development
is based on the needs of local customers.

1.5 Opportunities

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Infrastructure Growth: The Government of India has been focusing on improving road
infrastructure through two main umbrella programs – National Highway Development
Project (NHDP) and PradhanMantri Gram SadakYojna (PMGSY). While National
Highways Authority of India (NHAI) has till date awarded 65% of the projects by road
length (the plan is to upgrade, widen and strengthen 55,000 km of road network), 35%
still remains to be awarded. Of the awarded projects, 36% of the work has been
completed and work on the remaining 29% is underway. The Government has planned
in budget for FY 2012-13, to award a further 8,800 km of projects, higher than
originally planned. Under the PMGSY, the Government aims to develop 368,368 km
of rural roads. Of this, till date about 73% of network has been completed (including
upgradation). This improved connectivity presents a significant opportunity for the
Company with its wide product range in commercial, utility and passenger vehicles.
The emphasis on road development has seen an increase in demand for construction
equipment, including tippers. Also, there is positive effect in terms of demand for both
Cargo and Passenger Small Commercial Vehicles from newly connected rural areas.
Further progress in road development work including sanction of new projects will
help to sustain growth in the Commercial Vehicle industry.

Rural market penetration: In India, growth in FY 2012-13 is expected to

come from reach and penetration in tier 2 and tier 3 markets. With growing
connectivity and increased rural affluence, the demand for automobiles in
rural areas has increased significantly. For FY 2012-13 as well, with
indications of a normal monsoon and a robust growth in agriculture, the
demand from the rural segment is likely to sustain. With a product range
catering to even the buyer of smallest commercial vehicle or a fun-to-drive
yet affordable passenger car offering, the Company is ideally placed to ride
this growth story. Along with the product range, the Company is working on
increasing reach and penetration of the sales and service network to be able to
serve this market better. During FY 2011-12, the Company increased sales
touch points by 35% and service touch points by 26%. With aggressive plans

14
to further increase penetration this year, the Company has potential
opportunity to leverage its wide product range and large distribution network,
to accelerate growth.

Non-cyclical business growth: In order to insulate against the cyclicality of

the automobile industry, specifically in the M&HCV segment, the Company
has focused on lines of business and customer solutions which are inherently
less cyclic in nature. For example, the sale of spares and the aggregate
business, branded TATA GENUINE PARTS which has grown by 21%
CAGR in the last five years and is poised to grow further in FY 2012-13. In
order to maintain the growth, the Company has increased distribution reach
by 50% over last year. The Company has a loyalty program for key brand
decision makers like the mechanics and the retailers. A total of 26,000
mechanics and 19,000 retailers across India participate in these programs.

These efforts also help us to serve our customers and know their needs and
requirements on an ongoing basis. We have also established Rapid Customer
Care centers all over India to deliver aggregates to customer anywhere in 24
hours. We are also focusing on other business avenues like Refurbishing,
AMC, Reconditioning, etc.

The Company is also focusing on the Defence business. With the

Government of India opening up different segments of the Defence sector to
private players, the Company is targeting moving from pure logistics
solutions player to tactical and combat solutions; thus garnering a greater
share of this market. On the back of aggressive plans by the Government in
FY 2012-13, the Company is aiming to achieve both its revenue growth and
profitability from this segment.
Exports from India: India has emerged as a major hub for global

15
manufacturing with its advantage of lower input costs, availability of local
supplier base and qualified and experienced resource base. As an established
domestic manufacturer, the Company is ideally placed to leverage the above
factors and pursue lucrative international markets, through the export of fully
built vehicles export or CKD units. The Company also has the advantage of a
strong in-house design and development team which is capable of developing
solutions for different regulatory and emission norms as per market
specifications in minimal time. Currently, the Company is present in Africa
and ASEAN markets through its manufacturing facilities in some of the
countries. The Company is also actively considering expanding its global
manufacturing footprint in key international markets to take advantage of
import duty differentials and local sourcing benefits.

Grow the business through new products and market expansion: Jaguar Land
Rover offers products in the premium performance car and all-terrain vehicle
segments, and it intends to grow the business by diversifying the product
range within these segments, for example by offering different Powertrain
combinations. The new Range Rover Evoque has helped expansion into a
market segment that is attracted by a smaller, lighter and more "urban"
offroad vehicle than the market segment in which the company's Range
Rover models traditionally compete, while the new 2.2-litre diesel XF caters
for a much wider group of potential customers, particularly company car
drivers.

Transform the business structure to deliver sustainable returns: The

Company plans to strengthen operations by gaining a significant presence
across a select range of products and a wide diversity of geographic markets.
One key component of this strategy, which continues to deliver positive
results, is the
Company's focus on improving the mix of products and the mix of markets.

16
The Company also plans to continue to strengthen business operations in addition to
vehicle sales, such as spare part sales, service and maintenance contracts.

Investment in product development and technology: One of the Company's

principal goals is to enhance its status as a leading manufacturer of
automotive vehicles by investment in products, R&D, quality improvement
and quality control. The Company's strategy is to maintain and improve its
competitive position by developing technologically advanced vehicles. Over
the years, the Company has enhanced its technological strengths through
extensive in-house R&D activities.

The Company considers technological leadership to be a significant factor in

its continued success, and therefore continues to devote significant resources
to upgrading its technological capabilities. In line with this objective, the
company is involved in a number of advanced research consortia that bring
together leading manufacturers, suppliers and specialists.

Products and environmental performance: The Company's strategy is to invest

in products and technologies that position its products ahead of expected
stricter environmental regulations and ensure that it benefits from a shift in
consumer awareness of the environmental impact of the vehicles they drive.
The Company is committed to continued investment in new technologies,
including developing sustainable technologies to improve fuel economy and
reduce CO2 emissions. The Company is the largest investor in automotive
R&D in United Kingdom. The Company's environmental vehicle strategy
focuses on new propulsion technology, weight reduction and reducing
parasitic losses through the driveline. Projects like REEVolution, REHEV
and Range-e are some examples of the Company's research into the
electrification of premium sedan and all-terrain vehicles.

17
China and other developing markets: The Chinese economy is forecast to
grow at above 8% over the next few years. Whilst light vehicles sales are
expected to grow at around 10% p.a. in China, the global light vehicle sales
are expected to grow at 4.2% p.a., with South America, China and South Asia
expected to out-perform the average. With an established network of dealers
in place in these markets and an updated product range, Jaguar and Land
Rovers brands are well placed to benefit from this growth. The Joint Venture
in China with Chery Automotive, currently pending approval by Chinese
authorities, will give Jaguar Land Rover an additional scope to improve our
position in that market.

Engine plant: Jaguar Land Rover is developing a new engine plant, alongside
new, more fuel efficient engines. This will enable Jaguar Land Rover to
improve their offering in terms of more efficient product and give us better
control over engine supply to markets.

1.6 Risk

Deterioration in economic conditions: The impact of the global financial

crisis and European sovereign debt crisis continues to be a cause of concern,
despite concerted efforts to contain the adverse effect of these events on
global recovery.

In addition to India, the Company has automotive operations in the UK,

South Africa, South Korea, Spain, Thailand and in Indonesia (being
commissioned). The Indian automotive industry is affected substantially by
the general economic conditions in India and around the world. The demand
for automobiles in the Indian market is influenced by factors including the
growth rate of the Indian economy, easy availability of credit, and increase in

18
disposable income among Indian consumers, interest rates, freight rates and
fuel prices. During the global financial crisis in FY 2008-09, RBI had eased
its monetary policy stance to stimulate economic activity. Subsequently, as
the Indian economy started recovering from the downturn, inflation pressures
increased substantially, followed by several interest rate hikes by RBI. With
inflation moderating in FY 2011-12, RBI reduced interest rates (repo rate and
reverse repo rate) by 50 basis points in April 2012, however, muted industrial
growth along with higher inflation and higher interest rates still continue to
pose downside risks to overall growth. The automotive industry in general is
cyclical and economic slowdowns in the past, have affected the
manufacturing sector including the automotive and related industries.
Deterioration in key economic factors such as growth rate, interest rates and
inflation as well as reduced availability of financing for vehicles at
competitive rates, may adversely affect our automotive sales in India and
results of operations.

Jaguar Land Rover operations have significant presence in the UK, North
America, Continental Europe and China, as well as sales operations in many
major countries across the globe. The global economic downtown
significantly impacted the global automotive markets, particularly in the
United States and Europe, including the UK, where Jaguar Land Rover
operations have significant presence. The Company's strategy with respect to
Jaguar Land Rover operations, which includes new product launches and
expansion into growing markets such as China, Russia and Brazil, may not be
sufficient to mitigate the decrease in demand for the products in established
markets and this could have a significant adverse impact on the financial
performance. In response to the recent economic slowdown, the Company
further intensified efforts to review and realign our cost structure such as
reducing manpower costs and other fixed costs. Jaguar Land Rover business
is exploring opportunities to reduce cost base through increased sourcing of

19
materials from low cost countries, reduction in number of suppliers, reduction
in number of platforms, reduction in engineering change costs, increased use
of off-shoring and several other initiatives. While the markets in the United
States in FY 2011-12, have begun to show signs of recovery and stability, the
UK and Europe continue to struggle. If industry demand softens because of
the impact of the debt crisis, or low or negative economic growth in key
markets or other factors, the results of operations and financial condition
could be substantially and adversely affected.

Interest rates and other inflationary trends: Due to anti inflationary monetary
policy pursued by the RBI, the interest rates continued to be at higher levels
and affected the growth of EMI-driven products in India throughout FY
2011-12. The impact of high inflation, interest rates, rising wages and raw
material costs, coupled with suppressed aggregate demand in the economy,
severely impacted the rate of industrial growth. As the rate of inflation has
started to show some easing, the RBI has lowered policy rates (i.e. repo and
reverse repo) in April 2012. On April 17, 2012, the RBI reduced the Repo
Rate by 50 basis points from 8.50% to 8.00% and Reverse Repo Rate from
7.50% to 7.00%. The current Repo Rate cut comes after the RBI raised it by
375 basis points during the period of March 2010 - October 2011, presumably
for anchoring inflationary expectations. Although interest rate and inflation
have shown some signs of softening in the recent months, there is an upside
risk to inflation, which could stop further softening of interest rate cycle and
have an adverse impact on the demand and consequently growth in India.

Fuel Prices: The crude oil price continued at about US$110 per barrel (Brent
crude oil) throughout FY 2011-12. There are renewed concerns of rapid
growth in oil demand in emerging economics and downshift in oil supply
trends. As a result, the oil prices are likely to continue at higher levels. The
Indian Government has removed petrol from administered price mechanism.

20
However, diesel and cooking gas continues to be subsidized by the
Government, which has impacted the Government finances due to rising
subsidies. There have been discussions regarding removing diesel from the
administered price mechanism and imposing levy on passenger vehicles
running on diesel. The fuel prices or levies could adversely impact the
demand of automotive vehicles in India, particularly passenger vehicles.
Increases in fuel costs also pose a significant challenge to automobile
manufacturers worldwide, especially in the commercial and premium vehicle
segments where increased fuel prices have an impact on demand. The
Company's product programs initiatives are aimed at improving fuel
efficiency of its products and development of alternate fuel solutions.

Input Costs/Supplies: Prices of commodity items used in manufacturing

automobiles, including steel, aluminum, copper, zinc, rubber, platinum,
palladium and rhodium have become increasingly volatile over the past two
years. While the Company continues to pursue cost reduction initiatives, an
increase in price of input materials could severely impact our profitability to
the extent such increase cannot be absorbed by the market through price
increases and/or could have a negative impact on the demand. In addition,
because of intense price competition and the considering level of fixed costs,
the Company may not be able to adequately address changes in commodity
prices even if they are foreseeable.
In addition, an increased price and supply risk could arise from the supply of
rare and frequently sought raw materials for which demand is high,
especially those used in vehicle electronics such as rare earths, which are
predominantly found in China. In the past, China limited the export of rare
earths from time to time. If the Company is unable to find substitutes for
such raw materials or pass price increases on to customers by raising prices,
or to safeguard the supply of scarce raw materials, the Company's vehicle
production, business and results from operations could be affected.

21
Restrictive covenants in financing agreements: Some of the Company's
financing agreements and debt arrangements set limits on and/or require the
Company to obtain lender consents before, among other things, pledging
assets as security. In addition, certain financial covenants may limit the
Company's ability to borrow additional funds or to incur additional liens. In
the past, the Company has been able to obtain required lender consents for
such activities. If the financial or growth plans require such consents and
such consents are not obtained, the Company may be forced to forego or alter
plans, which could adversely affect our results of operations and financial
condition.

In the event that the Company breaches these covenants, the outstanding
amounts due under such financing agreements could become due and payable
immediately. A default under one of these financing agreements may also
result in cross defaults under other financing agreements and result in the
outstanding amounts under such other financing agreements becoming due
and payable immediately. Defaults under one or more of our financing
agreements could have a material adverse effect on the Company's results of
operations and financial condition.

Environmental Regulations: As an automobile company, the Company is

subject to extensive governmental regulations regarding vehicle emission
levels, noise, safety and levels of pollutants generated by our production
facilities. These regulations are likely to become more stringent and
compliance costs may significantly impact the future results of operations. In
particular, the US and Europe have stringent regulations relating to vehicular
emissions. The proposed tightening of vehicle emissions regulations by the
European Union will require significant costs for compliance. While the
Company is pursuing various technologies in order to meet the required standards in
the various countries in which the Company sell our vehicles, the costs for compliance

22
with these required standards can be significant to the operations and may adversely
impact the results of operations.

To comply with current and future environmental norms, the Company may
have to incur additional capital expenditure and R&D expenditure to upgrade
products and manufacturing facilities, which would have an impact on the
Company's cost of production and the results of operations and may be
difficult to pass through to its customers. If the Company is unable to develop
commercially viable technologies within the time frames set by the new
standards, the Company could face significant civil penalties or be forced to
restrict product offerings drastically to remain in compliance. Moreover,
meeting government mandated safety standards is difficult and costly because
crash worthiness standards tend to conflict with the need to reduce vehicle
weight in order to meet emissions and fuel economy standards.

The Company's product development plan is structured to allow it to develop

vehicles which comply with current and expected future environmental
regulations particularly in the United States covered by the CAFE and in
other countries such as China.

Intensifying Competition: The global automotive industry is highly

competitive and competition is likely to further intensify in view of the
continuing globalization and consolidation in the worldwide automotive
industry. Competition is especially likely to increase in the premium
automotive categories as each market participant intensifies its efforts to
retain its position in established markets while also developing a presence in
emerging markets, such as China. The factors affecting competition include
product quality and features, innovation and product development time,
ability to control costs, pricing, reliability, safety, fuel economy, customer
service and financing terms.

23
Improving infrastructure and robust growth prospects compared to other mature
markets, are attracting a number of international companies to India either through
joint ventures with local partners or through independently owned operations in
India. International competitors bring with them decades of international experience,
global scale, advanced technology and significant financial resources. Consequently,
domestic competition is likely to further intensify in the future.

Exchange and interest rate fluctuations: The Company's operations are

subject to risk arising from fluctuations in exchange rates with reference to
countries in which it operates. These risks primarily stem from the relative
movements of the GBP, the US dollar, the Euro, the Chinese Yuan, the
Russian Ruble and the Indian Rupee.

In India, the Company imports capital equipment, raw materials and

components from, and also sells its vehicles in various countries. These
transactions are denominated primarily in US dollars and Euros. Moreover,
the Company has outstanding foreign currency denominated debt and is
sensitive to fluctuations in foreign currency exchange rates. During the year,
the depreciation of the Indian Rupee against the US dollar adversely impacted
the borrowing cost and consequently, the results of operations. The Company
has experienced and expects to continue to experience foreign exchange
losses and gains on obligations denominated in foreign currencies in respect
of its borrowings and foreign currency assets and liabilities due to currency
fluctuations.

Jaguar Land Rover operations have significant exposure considering the

vehicle sales in the US, Europe and China. In addition, Jaguar Land Rover
sources a significant portion of input material from European suppliers.
Although the Company engages in currency hedging in order to decrease its
foreign exchange exposure, a weakening of the Indian Rupee against the US

24
dollar or other major foreign currencies may have an adverse effect on the
cost of borrowing and consequently may increase the financing costs, which
could have a significant adverse impact on the Company's results of
operations.

The Company also has interest-bearing assets (including cash balances) and
interest-bearing liabilities, which earn interest at variable rates. The
Company is therefore exposed to changes in interest rates in the various
markets in which it borrows.

New products, emissions and technology- Intensifying competition, reducing

product life cycles and breadth of the product portfolio, necessitates the
Company to continuously invest in new products, upgrades and capacity
enhancement programme. Though the Company employs sophisticated
techniques and processes to forecast the demand of new products yet the
same is subject to margin of error.

Further the competitors can gain significant advantages if they are able to
offer products satisfying customer needs earlier than the Company able is to
and this could adversely impact the Company's sales and results of operations.
Unanticipated delays or cost overruns in implementing new product launches,
expansion plans or capacity enhancements could adversely impact the
Company's results of operations. Timely introduction of new products, their
acceptance in the market place and managing the complexity of operations
across various manufacturing locations, would be the key to sustain
competitiveness.
Customer preferences especially in many of the developed markets seem to
be moving in favour of more fuel efficient vehicles. Further, in many
countries there has been significant pressure on the automotive industry to
reduce carbon dioxide emissions. In many markets these preferences are

25
driven by increased government regulation and rising fuel prices. The
Company's operations may be significantly impacted if there is a delay in
developing fuel efficient products that reflect changing customer preferences,
especially in the premium automotive category. The Company endeavors to
take account of climate protection and the ever more stringent laws and
regulations that have been and are likely to be adopted. The Company focuses
on researching, developing and producing new drive technologies, such as
hybrid engines and electric cars. The Company is also investing in
development programs to reduce fuel consumption through the use of
lightweight materials, reducing parasitic losses through the driveline and
improvements in aerodynamics.

In addition, the climate debate and promotion of new technologies are

increasingly resulting in the automotive industry's customers no longer
looking for products only on the basis of the current standard factors, such as
price, design, performance, brand image or comfort/features, but also on the
basis of the technology used in the vehicle or the manufacturer or provider of
this technology. This could lead to shifts in demand and the value added
parameters in the automotive industry.

One of the Company's principal goals is to enhance its status as a leading

manufacturer of premium passenger vehicles by investing in products, R&D,
quality improvement and quality control. The Company's strategy is to
maintain and improve its competitive position by developing technologically
advanced vehicles.These centralize the Company's capabilities in product d
esign and engineering. Further, the Company is pursuing various quality
improvement programmes, both internally and its suppliers' operations, in an
effort to enhance customer satisfaction and reduce future warranty costs.
Underperformance of distribution channels and supply chains: The Company
products are sold and serviced through a network of authorized dealers and

26
service centers across the domestic market, and a network of distributors and
local dealers in international markets. The Company monitors the
performance of its dealers and distributors and provides them with support to
enable them to perform to the expectations. Any under-performance by the
dealers or distributors could adversely affect the Company's sales and results
of operations.

The Company relies on third parties to supply raw materials, parts and
components used in the manufacture of products. Furthermore, for some of
these parts and components, the Company is dependent on a single source.
The Company's ability to procure supplies in a cost effective and timely
manner is subject to various factors, some of which are not within its control.
While the Company manages its supply chain as part of the vendor
management process, any significant problems with supply chain in the future
could affect the results of operations. Impact of natural disasters and man-
made accidents, adverse economic conditions, decline in automobile demand,
lack of access to sufficient financing arrangements could have a negative
financial impact on the Company's suppliers and distributors, in turn
impairing timely availability of components, or increases in costs of
components.

The tragic earthquake and tsunami in Japan in March 2011, shows the vulnerability of
the automotive supply chain to external shocks. Several suppliers to the automotive
industry, including those to the Company, were severely impacted by the earthquake
and tsunami and its after-effects. The Company, however, managed to avoid any
production disruption by working with its overall supply base to temporarily resource
components and help Japanese suppliers to restart production.

In managing a complex supply chain the Company has developed close

relationships with both direct and indirect suppliers. The Company continues

27
to develop long-term strategic relationships with suppliers to support the
development of parts, technology and production facilities.

With respect to Jaguar Land Rover operations, as part of a separation

agreement from Ford, the Company entered into supply agreements with Ford
and certain other third parties for critical components. Any disruption of such
transitional services could have a material adverse impact on the operations
and financial condition.

Changes in tax, tariff or fiscal policies and regulations: Imposition of any

additional taxes and levies designed to limit the use of automobiles could
adversely affect the demand for the Company's vehicles and the results of
operations. Changes in corporate and other taxation policies as well as
changes in export and other incentives given by the various governments,
could also adversely affect the results of operations. The Government of India
had proposed a comprehensive national goods and services tax, or GST,
regime that will combine taxes and levies by the central and state
governments into one unified rate structure. The same was to be effective
from April 1, 2012, but its implementation has been deferred. While both the
Government of India and other state governments of India have publicly
announced that all committed incentives will be protected following the
implementation of the GST, there is no clarity all aspects of the tax regime
following implementation of the GST. The implementation of this
rationalized tax structure might be affected by any disagreement between
certain state governments, which could create uncertainty.

The Direct Tax Code Bill 2010, or DTC, proposes to replace the existing
Income Tax Act, 1961 and other direct tax laws, with a view to simplify and
rationalize the tax provisions into one unified code. The DTC is currently
proposed to come into effect from April 1, 2013. The various proposals

28
included in DTC are subject to review by Indian parliament and as such
impact if any, is not quantifiable at this stage.

Further, Brazil has recently increased import duty for foreign build vehicles
which put pressure on margins. The Company is considering a number of
options to counter this issue, including discussions with the Brazilian
government to exempt a number of imported vehicles from the increased
tariff.

Labour unrest: The Company's permanent employees, other than officers and
managers, in India and most of the permanent employees in South Korea and
the United Kingdom, including certain officers and managers, in relation to
automotive business, are members of labour unions. They are covered by
wage agreements, where applicable, with those labour unions.

In general, the Company considers labour relations with all of employees to

be good. However, in the future the Company may be subject to labour
unrest, which may delay or disrupt the operations in the affected regions,
including the acquisition of raw materials and parts, the manufacture, sales
and distribution of products and the provision of services. If work stoppages
or lock-outs at the facilities or at the facilities of the major vendors occur or
continue for a long period of time, the business, financial condition and
results of operations of the Company may be adversely affected.

Jaguar Land Rover operations in key mature market: Jaguar Land Rover,
which contributes approximately 63% of the Company's consolidated
revenues, has a significant presence in the United Kingdom, North American
and continental European markets. The global economic downturn
significantly impacted the automotive industry in these markets in FY
200809. Even though sales of passenger cars were aided by government-

29
sponsored car-scrap incentives, these incentives primarily benefited the
compact and micro-compact car segments and had virtually no slowing effect
on the sales declines in the premium car or all-terrain vehicle segments in
which we operate. Although demand in these markets has recovered strongly,
any decline in demand for the Company's vehicles in these major markets
may in the future significantly impair the Company's business, financial
position and results of operations. The strategy, which includes new product
launches and expansion into growing markets, such as China, India, Russia
and Brazil, may not be sufficient to mitigate a decrease in demand for the
Company's products in mature markets in the future.

Growing business through mergers and acquisitions: The Company believes

that its acquisitions provide opportunities to grow significantly in the global
automobile markets by offering premium brands and products. The
acquisitions have provided access to technology and additional capabilities
while also offering potential synergies. However, the scale, scope and nature
of the integration required in connection with acquisitions present significant
challenges, and the Company may be unable to integrate the relevant
subsidiaries, divisions and facilities effectively within our expected schedule.
An acquisition may not meet the Company's expectations and the realization
of the anticipated benefits may be blocked, delayed or reduced as a result of
numerous factors, some of which are outside the Company's control.
The Company will continue to evaluate growth opportunities through suitable
mergers and acquisitions in the future. Growth through mergers and
acquisitions involves business risks, including unforeseen contingent risks or
latent business liabilities that may only become apparent after the merger or
acquisition is completed. The key success factors will be seamless integration
and effective management of the merged/acquired entity, retention of key
personnel, and generating cash flow from synergies in engineering and

30
sourcing, joint sales and marketing efforts, and management of a larger
business.

Inability to protect or preserve intellectual property: With respect to Jaguar

Land Rover, the Company owns or otherwise has rights to a number of
patents relating to the products, which have been obtained over a period of
years. In connection with the design and engineering of new vehicles and the
enhancement of existing models, the Company seeks to regularly develop
new technical designs for use in its vehicles. The Company also uses
technical designs which are the intellectual property of third parties with such
third parties' consent. These patents and trademarks have been of value in the
growth of the business and may continue to be of value in the future.
Although the Company does not regard any of its businesses as being
dependent upon any single patent or related group of patents, an inability to
protect this intellectual property generally, or the illegal breach of some or a
large group of our intellectual property rights, would have a materially
adverse effect on the Company's operations, business and/or financial
condition. The Company may also be affected by restrictions on the use of
intellectual property rights held by third parties and it may be held legally
liable for the infringement of the intellectual property rights of others in its
products.
Although the Company does not regard any of its businesses as being
dependent upon any single patent or related group of patents, its inability to
protect this intellectual property generally, or the illegal breach of some or a
large group of the company's intellectual property rights, would have a
materially adverse effect on the Company's operations, business and/or
financial condition.

Manufacturing and engineering: The Company has manufacturing facilities

and design and engineering centres, located in India, the United Kingdom,

31
South Korea, Thailand, Spain and South Africa. The Company could
experience disruption to its manufacturing, design and engineering
capabilities for a variety of reasons, including, among others, extreme
weather, fire, theft, system failures, natural calamities, mechanical or
equipment failures and similar risks. Any significant disruptions could
adversely affect the Company's ability to design, manufacture and sell the
Company's products and, if any of those events were to occur, the Company
cannot be certain that the company would be able to shift its design,
engineering and manufacturing operations to alternative sites in a timely
manner or at all. Any such disruption could therefore materially affect the
Company's business, financial condition or results of operations.

Regulation of production facilities: The Company's production facilities are

subject to a wide range of environmental, health and safety requirements.
These requirements address, among other things, air emissions, wastewater
discharges, accidental releases into the environment, human exposure to
hazardous materials, the storage, treatment, transportation and disposal of
wastes and hazardous materials, the investigation and clean up of
contamination, process safety and the maintenance of safe conditions in the
workplace. Many of the Company's operations require permits and controls to
monitor or prevent pollution. The Company has incurred, and will continue to
incur, substantial on-going capital and operating expenditures to ensure
compliance with current and future environmental, health and safety laws and
regulations or their more stringent enforcement. Other environmental, health
and safety laws and regulations could impose restrictions or onerous
conditions on the availability or the use of raw materials required for the
Company's manufacturing process. The Company's manufacturing process
results in the emission of greenhouse gases such as carbon dioxide.

32
For Jaguar Land Rover operations, the EU Emissions Trading Scheme, an
EU-wide system in which allowances to emit greenhouse gases are issued
and traded, is anticipated to cover more industrial facilities and become
progressively more stringent over time, including by reducing the number of
allowances that will be allocated free of cost to manufacturing facilities. In
addition, a number of further legislative and regulatory measures to address
greenhouse gas emissions, including national laws and the Kyoto Protocol,
are in various phases of discussion or implementation. These measures could
result in increased costs to: (i) operate and maintain the company's
production facilities; (ii) install new emissions controls; (iii) purchase or
otherwise obtain allowances to emit greenhouse gases; and (iv) administer
and manage the company's greenhouse gas emissions programme.

Inability to attract and retain skills: The Company believes that the
Company's growth and future success depend in large part on the skills of the
Company's workforce, including executives and officers, as well as the
designers and engineers. The loss of the services of one or more of these
employees could impair the Company's ability to continue to implement its
business strategy. The Company's success also depends, in part, on the
Company's continued ability to attract and retain experienced and qualified
employees, particularly qualified engineers with expertise in automotive
design and production. The competition for such employees is intense, and
the Company's inability to continue to attract, retain and motivate employees
could adversely affect its business and plans to invest in the development of
new designs and products.

1.7 Outlook:

In India, the current year ended with slow growth in most of the critical
segments, mainly due to anti inflationary monetary policy pursued by the

33
RBI. The current fiscal has started with a positive action by the RBI of easing
of the monetary policy in April 2012, with an expectation of moderating the
inflation. However, a series of such cuts would be required to revive
industrial growth. Liquidity in the banking system which remained in the
deficit for the whole of FY 2011-12, remains a concern. While the situation is
improving in Q1 of FY 2012-13, this remains critical to ensuring sustainable
growth. While there continues to concurrence over deteriorating Government
finances and slowing pace of reforms, there is an expectation of fiscal
consolidation back on track giving fillip to savings and capital formation. The
service sector will continue to contribute positively. On the assumptions of
good monsoon, the growth in agriculture is likely to be rebound. The RBI is
likely to ease the monetary policy based on review of inflation. The Indian
economy is likely to grow moderately at 7.6% (+ –0.25%). These factors
could improve investment outlook on disposable income from Q2 of FY
2012-13.Input costs continue to remain under pressure from increasing
commodity prices. With increased intensity in the competitive scenario,
pricing power remains limited and margins are likely to be under pressure.

Against this backdrop, the Company will continue to focus on providing new
products and solutions to the customer with a view to reduce the Total Cost of
Ownership. Along with initial acquisition price, the focus would be on improving
fuel efficiency and reducing maintenance costs of the vehicles. With a view to
maintain its advantage of reach and penetration, the Company will also deepen its
sales and service network with a focus on up-country markets. Aggressive cost
reduction continues to be a focus area to offset the increased input costs and
continuously improve margins. The Company is also actively pursuing opportunities
in the International markets including the possibility of CKD and SKD assembly to
offset high import costs.

34
The Company will continue its initiative of setting up Nano Specific and UV
Specific dealerships to improve reach and penetration along with providing
an added focus to the products as required. It will continue to work with all
partners as well as multiple financiers to work towards a best-in-class sales
and service experience. The European economy continues to struggle, with
austerity measures in place in a number of countries. The economic situation
and recent national election results continue to create uncertainty around
European zone stability, the Euro and borrowing costs. Credit continues to be
difficult to obtain for customers and the outlook remains volatile. Initial
figures suggest that the UK economy has re-entered recession in the last
three months. Trading conditions in the UK remain difficult.

The Chinese economy has continued to grow strongly throughout FY

201112. GDP growth is likely to slow in future, although may remain above
8%. The Asia Pacific region main markets are Japan, Australia and New
Zealand. These regions were less affected by the economic crisis compared
to western economies and are recovering more favorably, often due to
increased trade with China and other growth economies. The major
constituents in other markets are Russia, South Africa and Brazil, alongside
the rest of Africa and South America. These economies were not as badly
affected by the economic crisis as the western economies and have continued
GDP growth in the last few years, partially on the back of increased
commodity and oil prices.

Jaguar Land Rover will continue to focus on profitable volume growth,

managing costs, improving efficiencies to sustain the growth momentum and
continuous sustainable investments in technology and products. It will also
focus on increasing its presence in the growth markets such as China, Russia,
India and Brazil along with launching new products and variants.

35
1.8 Internal Control Systems and their adequacy:

The Company has an adequate system of internal controls in place. It has

documented procedures covering all financial and operating functions. These
controls have been designed to provide a reasonable assurance with regard to
maintaining of proper accounting controls, monitoring of operations,
protecting assets from unauthorized use or losses, compliances with
regulations and for ensuring reliability of financial reporting. The Company
has continued its efforts to align all its processes and controls with global
best practices in these areas as well.

1.9 Some significant features of the internal control systems are:

Preparation and monitoring of annual budgets for all operating and service
functions;
Relations Management, connect its different locations, dealers and vendors for
efficient and seamless information exchange;
An on-going program for reinforcement of the Tata Code of Conduct.
The Code covers integrity of financial reporting, ethical conduct, and
regulatory compliance, conflict of interests review and reporting of
concerns.
A well-established multi-disciplinary Internal Audit team, which reviews
and reports to management and the Audit Committee about the
compliance with internal controls and the efficiency and effectiveness of
operations and the key process risks. The scope and authority of the
Internal Audit division is derived from the Audit Charter approved by the
Audit Committee;
Audit Committee of the Board of Directors, comprising independent
directors, which is functional since August 1988, regularly reviews the

36
audit plans, significant audit findings, adequacy of internal controls,
compliance with Accounting Standards as well as reasons for changes in
accounting policies and practices, if any;

-
A comprehensive information security policy and continuous upgrades to

IT system.

37
 CHAPTER – 2 REVIEW OF

LITERATURE CHAPTER –

REVIEW OF LITERATURE

Review of literature forms an integral as well as an essential part of modern research

studies. No research study is considered complete unless an extensive literature
review is made by the researcher. The basic purpose of undertaking this exercise is
to find the research gap between, studies conducted so far or literature available, and
also to finalize precisely the topic of research and to get insight into the research
topic selected for study. In this sense this exercise becomes a sort of exploratory
research.

Keeping these facts in view researcher has undertaken an extensive exercise of

literature review and came to the conclusion though some books are available on the
topics related to the research topic chosen by the researcher, but all of these have
been written in some other perspectives and none of these are having direct relation
to the topic of this research. In fact researcher intended to examine the sustainability

38
of small cars in Indian automobile sector, in the light of new developments taking
place in the Indian auto sector like introduction of big cars by number of aut o
manufacturers in Indian market in the recent past, increase in personal and disposable
income, better and improved road conditions, shift in consumer’s behavior from to
save to consume, easy financing and loan facility, installment payment facility, status
symbol, etc. These facts also lead to a query that whether small car will be able to
withstand in the market and will it be the preferred choice of Indian car buyers. None
of the books researcher gone through has been written from this perspective.
Similarly a number of research studies have been conducted on the subject related to
research topic, some of these have studied the consumer/buyer behavior of these cars,
some of the have studied some other aspects, like environmental sustainability or
economic sustainability, but none of them have studied from the angle , researcher
intended to study.

A brief account of the review of literature made by the researcher is being presented
here,
The idea to build small cars for the Indian market is almost as old as India’ s
independence. Already by the late 1950s, the Indian Government established a
Commission with the task to look at costs and prices of motor vehicles produced in
the country and invited proposals for the production of an ‘Economy Car’. In
response, different manufactures submitted proposals. Tata, for example, submitted a
proposal for the license production of a DKW light car. In 1959, it was Premier
Automotive Limited (PAL) that was allowed to enter into collaboration with the Fiat
Motor Company for the production of the Fiat 500 which was later replaced by the
Fiat 1100 (Mohanty et al. 1994). While there were ever few commissions looking
into the question of mass-producing the small cars, there was no real effort to realize
the endeavour before the 1980s. (Venkataramani -1990) argues in this context. From
time to time committees appointed by the Government purported to study the issue of
initiating the manufacture of a small, economical, “people’s car.” But the persistence
of the notion in high Government circles and in the Planning Commission that the

39
passenger car was a luxury item that catered to the needs of a small section of the
population inevitably promoted inaction. (Venkataramani, 1990: p. 12)

India’s entire production of passenger cars and MUVs rose in the 1960s to 1980s
only slowly to around 40.000 vehicles annually. Low production volumes and high
prices put passenger car ownership quite deliberately out of reach of average middle
class consumers. The stagnation was above all related to India’s post independence
Stateled investment regime that favored capital goods production (favoring
commercial vehicle production and busses), restricting market competition through a
licensing system and shielding of the national economy by a protectionist trade and
FDI regime. Thus, while the demand for passenger cars – even for a small car like
the Fiat 500/Padmini – is restricted by stringent price controls and high taxes, the
supply side is equally restricted by a licensing system and protectionism that curb
production, domestic competition and locking out international players (Becker-
Ritterspach & Becker-Ritterspach, 2008).

In the early 1970s the idea of mass producing a small car was taken up again. It was
Sanjay Gandhi, then Prime Minister Indira Gandhi’s son, who revived the idea of
producing a car for the people. On the 16th of November 1970, Sanjay Gandhi
founded a private limited company named ‘Maruti technical services private limited’.
The stated mission of the enterprise was the development of a ‘people’s car’ – an
affordable, cost-effective, low maintenance and fuel efficient car – for India’s middle
class that was indigenously designed and produced. Following Sanjay Gandhi’s
initiative, Prime Minister Indira Gandhi's cabinet proposed the production of a
‘people’s car’ and passed a unanimous resolution for its development and production.
Although Sanjay Gandhi neither had any prior experience in automobile production
nor a clear design proposal or tie-ups with another corporation, he was awarded the
contract and the exclusive production license (Venkataramani, 1990). To produce the
car a second company called ‘Maruti limited’ was incorporated in 1971 under the
Indian Companies Act. Under patronage of Indira Gandhi’s Government the company

40
received land, tax breaks and funds (Shirali, 1984; Shenoy, 2003). However, despite
all government backing and support, Maruti – named after the Hindu God of the
winds – didn’t take off. The young company proved incapable of producing a single
marketable car. A part of the problem lay in the inexperience in automobile
production of the Nehru-Gandhi family members who comprised the company’s top
management. Maruti limited’s problems culminated in the company’s liquidation in
1977 (Becker-Ritterspach, 2007).
Trying to rehabilitate her family name, Indira Gandhi tackled the unresolved Maruti
problem. Eventually the ‘Maruti Scandal’ came to a close when in October 1980 the
Government of India took over Maruti limited and incorporated it in February 1981
by an Act of parliament (Maruti Limited Acquisition and Transfer of Undertaking
Act) as a Public Limited Company. Rechristened Maruti Udyog Ltd., the company
was incorporated under the provisions of the Indian Companies Act, 1956.Realizing
that the company – as well as the industry as a whole – could only succeed with
foreign cooperation; bids for foreign collaboration were invited. What is more, the
Indian Government not only sought to turn Maruti into a success story, but pursued a
wider political agenda with the project that drove the search and selection for a
foreign Joint Venture partner.

According to Venkataramani, the “Project report forManufacture of passenger cars

and light utility vehicles”, dated 27. May 1982 revealed that among the major goals
associated with Maruti were:

1. Modernization of the Indian automobile industry;

2. Production of fuel efficient vehicles;
3. A large output of motor vehicles;
4. Import of foreign technology and equity participation by the collaborator
5. Production of a “people’s car” suited to Indian driving and climatic
conditions

41
 6. Creating potential for earning foreign exchange by export of Maruti
products; and
7. Generating employment through establishment of ancillary industries
(Venkataramani, 1990: p. 65)

Although there was an earlier intention to produce light commercial vehicles and
medium sized-cars, the idea of producing a fuel efficient small car prevailed. In 1981,
Maruti’s board of directors decided that the vehicle to be manufactured would be a
small car and that the engine size should be kept below one liter (Venkataramani,
1990). The decision was driven by the rationale that the Maruti project could only
succeed if mass production was realized. This, in turn, was tightly linked to the car’s
affordability and cost of operation. The decision was further supported by market
research findings as listed below.

While the 1980s saw the emergence of India’s small car in sales and production terms
and for the first time higher production of passenger cars compared to commercial
vehicles, research and development (R&D) for small cars played a marginal role.
Basically all product and production competence lay in the hands of the foreign
partner Suzuki. First efforts to set up R&D in Maruti, mainly aimed at minor product
adaptation to local road and climate conditions (Mohanty et al., 1994). By the same
token, production was firmly focused on domestic demand. As the figure below
shows overall exports remained negligible until the 2000s

Change and Continuity of India’s Small Car From the 1990s onward :

In the 1990s and especially in the 2000s, India’s small car continued to develop and
grow stronger. While it was still the domestic demand structure that sustained the
small car in sales and production terms, the emergence of small car export and R&D
additionally strengthened the small car market. As the small car market developed
further, there were changes in the market’s qualitative and quantitative terms. These

42
changes were largely rooted in India’s economic reforms that started in the 1990s
and received a new boost in the 2000s.

A New Industrial Policy in the 1990s

Following the balance of payment crisis in the early 1990s, the Indian Government
launched stabilizing measures and embarked on a New Industrial Policy in 1991. First
stabilizing measures included the reduction of the fiscal deficit and the devaluation of
the Indian rupee. While the stabilization measures aimed at short-term alleviation of
the economic crisis, the reform program addressed structural problems in the Indian
economy with a more long-term approach. Internally, the reforms focused on shifting
the economy from a State-led coordination and State-led investment growth regime to
a more market-led coordination and market-led investment growth regime. This
implied a massive de-regulation of private sector controls and a step-wise privatization
of public sectors and their enterprises. Externally, the reforms aimed at liberalizing the
trade regime summarized by Krueger and Chinoy (2002) as follows:
In the first two years of the reforms, measures liberalizing the trade regime included-

Economic Reform and Small Car Demand

The liberalization and India’s new industrial policy not only had a strong impact on
the supply side for the production of small cars; equally important was the impact
the liberalization had on the demand side for small cars in India.

In 2004/2005 the sales of passenger cars and multi-utility vehicles crossed for the
first time the 1 million mark (Maruti Udyog Ltd., 2004). In 2004, India was “the
fastestgrowing large market for passenger cars in the world” (The Economist
Intelligence

43
Unit, 2006: p.40). Yet, it remained to be a small car market. The Economist
Intelligence Unit stated in this context: India’s car market is, however, strikingly
onedimensional: the mini- and compact car segments combined accounted for 74.5%
of

It was the highly price sensitive, lower market segments (especially the Mini (A1)
and Compact (A2) Segment that benefited strongly from the reform driven economic
growth and particularly fiscal and monetary reforms. Also, the reform of the banking
system, low interest rates and the continued reduction of excise duty rendered vehicle
financing easier and stimulated entry level demand (ACMA, 2006; Nair, 2006).
Lastly, the automobile industry benefited as a whole from infrastructure projects,
government efforts to reduce poverty and rural development. The Economist
Intelligence Unit (2006) noted that investments in agricultural efficiency already
contributed to increased demand in rural areas. India remains an overwhelmingly
agrarian society, so that any initiative to raise farm incomes should translate into
rising car sales. Car producers are already opening more dealerships in semi-urban
and rural regions to tap rising incomes and demand, and these areas now account for
a growing share of overall sales. (The Economist Intelligence Unit, 2006: p. 39)

While the liberalization led to an overall opening up and segmentation of automobile

demand in India, it was the lower segments that remained the strongest beneficiaries
from the reforms and economic growth. Despite a strong growth of the luxury
segments (starting from a very low level, however), India’s social structure and
disposable incomes suggest that the market remained to be dominated by lower and
small car segments in the then foreseeable future (e.g. D’Costa 2005).

According to India’s National Council of Applied Economic Research, in 2002 only

6.1m households out of a total of 176m were classified as ‘affluent or very rich’, and
therefore able to afford a personal car. However, another 56.8m household was

44
considered to be ‘well off’ able to afford motorcycles and scooters, but not cars.
Some of those aspiring consumer households will have already moved into the
‘affluent’ group during the current economic boom. If only 10% of these ‘well-off’
households can move to the next level in the next five years, the number of
carowning households could rise by nearly 6m, nearly doubling current levels.
Although this structural shift seems eminently achievable, economic shocks – such as
a drought or a fiscal crisis that leads to much higher interest rates – could stem
demand for a period of time. (The Economist Intelligence Unit Limited, 2006: p.
38) .The economic sustainability of the small car rests above all on the nature of
domestic demand scenario in the years to come. This demand scenario is constituted
by India’s market reform and economic growth, the political will to further develop
the small car market and above all the social structure and income situation that
create demands at the lower end.

It is also this basic condition that entices new players to introduce small or/and lately
mini cars into the Indian market. Cases in point are the Tata Nano, and yet another
mini car, Renault and Bajaj are planning to introduce in cooperation by 2011 (e.g.
Lamparter, 2008). Especially the mini-car projects are likely to have a substantial
impact on the Indian automobile sector. As Baig (2008) states: “Impact on the auto
market: Priced at nearly half the price of the cheapest Indian car but three times the
price of an average motorcycle, the Tata Nano will create a new market niche. It may
just end up attracting some 5% of the 7 million annual buyers of two-wheelers and
define a new entry level for cars. Indians bought 1.2 million cars last year and the
Tata Nano will probably add some 3, 00,000 – 4, 00, 000 new buyers to this. Bigger
cars however are likely to remain unaffected and motorcycles and scooters will
continue to sell.” (Baig 2008: p. 2)

A core rationale of the new auto policy is that the development of the Indian
automobile industry (in production and R&D terms) crucially depends on volumes.
Volumes, in turn, can only be realized in India if the vehicles produced and developed

45
are affordable for Indian consumers. Specific measures to develop the small car path
include fiscal policies such as lower excise duties for small cars. In the 2000s, the
Indian Government reduced excise duty for small cars to 8%, contrasting with the
16% for other passenger cars (Ministry of Heavy Industries & Public Enterprises,
2002).

Thus, despite new emphases in India’s automobile policy, we see above all continuity
in the goal and motivation for fostering small cars. An old issue is that small cars
were seen as a sine qua non to realize mass production in India. Mass-production, in
turn, is seen as a prerequisite for the growth of the Indian automobile industry and its
contribution to the Indian economy. The emphasis on fuel-efficient cars and export
capability are also old policy issues and reflect India’s continuing balance of
payments challenge. At the same time, the concern for safety, environmental

The Emergence of India as a Worldwide Research and Production

Hub for Small Cars :

Economically, the small car path in India has reached a sustainable level. In the past
this sustainability was largely driven by the nature of domestic demand. However,
the Indian government envisions this path growing even stronger by turning India
into a worldwide R&D and production hub. The Automobile Mission Plan states in
this context that-

“Export opportunities for four wheelers would lie primarily in the small car segment
as Indian companies have gained expertise in manufacturing vehicles in this segment
and enjoy an advantage over other low cost countries. India should capitalize on this
expertise and target becoming a manufacturing hub for A/B class vehicles. This is
already being leveraged by OEMs like Hyundai with Santro, Suzuki with Maruti

46
800/Alto and TATA Motors with Indica.” (Ministry of Heavy Industries & Public
Enterprises, 2006: p. 13-14)

While the National Automotive Testing and R&D Implementation Project (NATRIP)
,is envisioned to play a coordinating role, different States have also taken individual
initiatives with regard to providing R&D facilities. The government of Maharashtra,
for example, has set up what it calls an ‘Auto Cluster’ providing testing facilities for
OEM and their suppliers (Interview MCCI). While the political initiative is there, the
question is to what extent the Indian automobile industry actually moves beyond
being a mere technology adopter and producer for the domestic markets?
In terms of exports, the 2000s show a new trend pointing towards rising exports in
the passenger car sector. What is more, most of the vehicle exports do focus on the
lower market segments with Hyundai being the dominant exporter.

With regard to R&D there was an emerging trend of using and developing local
capability. On the one hand there is a general development of increasing R&D
expenditure in the Indian automobile industry, which has also been stimulated
recently by more stringent emission regulations (Shastry, 2004). On the other hand,
there is an increasing small car R&D focus among some manufacturers, who seek to
develop India into their corporate hub for car R&D. A case in point is Maruti-Suzuki
that is in the process of developing the Indian operation into a R&D hub for small
cars. Similarly, Tata has invested substantially in small car R&D in recent years
(Venugopal, 2005) and Hyundai and Fiat have also established regional R&D centers
in India (The Economist Intelligence Unit Limited, 2006). The Tata Nano is probably
the most recent and prominent example of India’s rising local R&D capability in the
small car segment. While Tata strongly relies on local partners/suppliers (most of
which have international involvement like Bosch, Freudenberg, Continental, Johnson

Challenges to the Sustainability of the Small Cars in Future

47
Looking at a host of factors including India’s demographic development (a young and
fast growing population), upwards social mobility (rising per capita income from a
low level), low vehicle density (8 per 1000 in 2004 (Statistisches Bundesamt, 2006)),
rising oil prices, infrastructure bottlenecks and pollution problems, a small car path
seems to be only economically a sustainable path for India’s future auto-mobilization.
At least, it appears to be the most sustainable path within the traditional ambit of
mass-motorization. Yet, the same conditions that suggest a small car path also pose
limitations. For example, rising oil prices and India’s dependence on oil pose a threat,
as small car demand may be more vulnerable in the face of financial crises than other
segments. This situation may not only apply to domestic demand but also to exports.
Another threat to the socio-economic sustainability of the small car path is the poor
road infrastructure in India (Haldea, 2008).

CHAPTER - 3

48
 COMPANY PROFILE

CHAPTER - 3

COMPANY PROFILE

Tata Motors is a part of the Tata Group manages its share-holding through Tata Sons.
The company was established in 1950 as a locomotive manufacturing unit and later
expanded its operations to commercial vehicle sector in 1954 after forming a joint
venture with Daimler-Benz AG of Germany. Despite the success of its commercial
vehicles, Tata realized his company had to diversify and he began to look at other
products. Based on consumer demand, he decided that building a small car would be
the most practical new venture. So in 1998 it launched Tata Indica, India's first fully
indigenous passenger car. Designed to be inexpensive and simple to build and
maintain, the Indica became a hit in the Indian market. It was also exported to Europe,
especially the UK and Italy. After years of dominating the commercial vehicle market
in India, Tata Motors entered the passenger vehicle market in 1991 by launching the
Tata Sierra, a multi utility vehicle. After the launch of three more vehicles, Tata Estate
(1992, a station wagon design based on the earlier 'Tata Mobile' (1989), a light

49
commercial vehicle), Tata Sumo (LCV, 1994) and Tata Safari (1998, India's first
sports utility vehicle). Tata launched the Indica in 1998, the first fully indigenous
passenger car of India. Though the car was initially panned by auto-analysts, the car's
excellent fuel economy, powerful engine and aggressive marketing strategy made it
one of the best selling cars in the history of the Indian automobile industry. A newer
version of the car, named Indica V2, was a major improvement over the previous
version and quickly became a mass-favorite. Tata Motors also successfully exported
large quantities of the car to South Africa. The success of Indica in many ways marked
the rise of Tata Motors.

3.1 Production

Although the sector was hit by economic slowdown, overall production (passenger
vehicles, commercial vehicles, two wheelers and three wheelers) increased from 10.85
million vehicles in2007-08 to 11.17 million vehicles in 2008-09. Passenger vehicles
increased marginally from 1.77million to 1.83 million while two-wheelers increased
from 8.02 million to 8.41 million. In recent times, India has emerged as one of the
favorite investment destinations for automotive manufacturers.
•Volvo Buses India is eyeing 35 per cent growth in domestic sales this year at 550600
units as against around 440 units sold in 2008.

•Toyota Kirloskar Motor Pvt Ltd (TKML), the Indian subsidiary of Japan’s Toyota
Motor Corp, is increasing its investment by US$ 164.8 million at its manufacturing
site near Bangalore, to touch US$ 824.32 million by 2016.

•French carmaker, Renault, has completely recast its plans for India as part of a new,
aggressive approach that will see it producing cars in its Chennai plant by 2011.

50
•Hyundai has made India its global hub for manufacturing small cars. It will invest
US$ 1 billion in its second plant in Chennai by 2013. In addition, it is also investing
US$ 40 million in its research and development (R&D) facility in Hyderabad.

•General Motors has so far invested about US$ 1 billion into its Indian operations.

•Mercedes-Benz will invest about US$ 64. 21 million in its plant at Chakan near Pune.

3.2 Domestic Market

Sales of cars and commercial vehicles have been impacted due to global economic
slowdown. However, in spite of that there has been a marginal increase in the number
of vehicles sold in 2008-

51
 55 09 as compared to 2007-08. Total number of
vehicles sold including passenger veh cles,
commercial vehicles, two-wheelers and three-
wheelers in 2008-09 was 9.
2 million as compared to 9.65 million in 2007-08. According to an Ernst &Young analysi
, passenger vehicle sales in the country will grow at a CAGR of 12 per cent to touch .75
million units by 2014 as against 1.89 million units at the end of 2008-09. While d
mestic market is expected to contribute 2.75 million units to the total tally, t e
remaining 1 million units would contribute towards exports. Likewise, as per estimates
by CARE Research, the domestic two-wheeler sales will grow at a CAGR of 8.8 per
cent by 2014 at11.3 million units vi s-a-vis 7.43 million units in 2008-09.
onda Siel Cars India (HSCI), the Indian subsidiary of the Japanese giant Honda Motor Co,
said that its sales will register double digit growth in the current financial year.
he company expects its total sales to be around 60

3.2.1 Exports

According to the Society of Indian Automobile Manufacturers (SIAM), automobile

sales (including passenger vehicles, commercial vehicles, two-wheelers and
threewheelers) in the overseas markets increased to 1.53 million units in 2008-09
from 1.23 million units in 2007-08. Export of passenger vehicles increased from
218,401 in
2007-08 to 335,739 units in 2008-09. The growth in export wailed by Hyundai Motor India,
followed by others such as MSIL, Mahindra Renault, Fiat India Automobiles,
General Motors India and Honda Siel Cars India
3.3 Policy

In order to make India a power to reckon with in the automotive sector the
government launched the Automotive Mission Plan (AMP) 2006-2016. The vision of
the AMP is "to emerge as the destination of choice in the world for design and
manufacture of automobiles and auto components with output reaching a level of US$
145 billion accounting for more than 10 per cent of the GDP and providing additional
employment to 25 million people by 2016." As per the AMP, it is estimated that the
total turnover of the automotive industry in India would be in the order of US$ 122
billion-159 billion in2016. It is expected that in real terms, India would continue to
enjoy its eminent position of being the largest tractor and three-wheeler
manufacturers in the world and the world's second largest two-wheeler manufacturer.
By 2016, India will emerge as the world's seventh largest car producer (as compared
to the eleventh largest currently) and retain the fourth largest position in world truck
manufacturing sector. Further, by 2016, the automotive sector would double its
contribution to the country’s GDP from current levels of five per cent to 10 per cent.

3.4 VISION AND MISSION

53
 3.5 PRODUCT RANGE

Tata Sumo

Production 1994–present
Assembly Pune, India

54
 Successor Victa, Victa DI, Sumo Grande
Class MUV, SUV (Sumo Grande)
Body style 5-door, Body on Frame
Layout Front Engine, Rear Wheel Drive
Engine 2.0L IDI
Transmission 5-speed manual
Wheelbase 2,400 mm (94.5 in)
Length 4,450 mm (175.2 in)
Width 1,756 mm (69.1 in)
Height 1,906 mm (75.0 in)

Tata Safari

Manufacturer Tata Motors

Also called Tata Dicor
Production 1998–present
Class SUV
Body style 5-door SUV
Engine 2.0L turbodiesel I4
2.2L turbodiesel I4
3.0L turbodiesel I4
Transmission 5-speed manual
Wheelbase 2,650 mm (104.3 in)
Length 4,650 mm (183.1 in)
Width 1,918 mm (75.5 in)
Height 1,925 mm (75.8 in)
Kerb weight 1,920 kg (4,233 lb)
Related Tata Sumo

55
 Tata Indica

"Tata Indica V2"

Manufacturer Tata Motors

Production 1998–present

Assembly Pune, Maharashtra, India

Class Supermini car

Layout FF layout

Tata Nano

Manufacturer Tata Motors

Also called one-lakh car
Production 2008–present
Assembly Pantnagar, Uttarkhand, India[1] Charodi,
Gujarat, India (since June 2010)[2]

Class City car

56
 Body style 4-door
Layout RR layout
Engine 2 cylinder SOHC petrol Bosch multi-point

fuel injection (single injector)

allaluminium 624 cc (38 cu in)

Transmission 4 speed synchromesh with overdrive in 4th

Wheelbase 2,230 mm (87.8 in)[3]
Length 3,099 mm (122.0 in)[3]
Width 1,495 mm (58.9 in)[3]
Height 1,652 mm (65.0 in)[3]
Designer Justin Norek of Trilix, Pierre Castine[4]
ALL Products:

 Passenger cars and utility vehicles :

1. Tata Sierra (Discontinued)

2. Tata Estate (Discontinued)

3. Tata Sumo/Spacio

4. Tata Sumo Grande

5. Tata Safari

6. Tata Indica

7. Tata Vista

8. Tata Indigo

9. Tata Manza

10. Tata Indigo Marina

11. Tata Winger

12. Tata Magic

13. Tata Nano

14. Tata Xenon XT

15. Tata Aria

57
16. Tata Venture

17. Tata Iris

 Concept vehicles

1. 2000 Aria Roadster

2. 2001 Aria Coupe
3. 2002 Tata Indiva
4. 2004 Tata Indigo Advent
5. 2005 Tata Xover
6. 2006 Tata Cliffrider
7. 2007 Tata Elegante
8. 2009 Tata Pr1ma
9. 2010 Tata Versa
10. 2010 Tata Essota
11. 2011 Tata Pixel

 Commercial vehicles

1. Tata Ace
2. Tata Super Ace
3. Tata TL/Telcoline/207 DI Pickup Truck
4. Tata 407 Ex and Ex2
5. Tata 709 Ex
6. Tata 809 Ex and Ex2
7. Tata 909 Ex and Ex2
8. Tata 1109 (Intermediate truck)
9. Tata 1512 (Medium bus chassis)
10. Tata 1612/1616 (Heavy bus chassis)

58
11. Tata 1618 (Semi Low Floor bus chassis)
12. Tata 1623 (Rear Engined Low Floor bus chassis)
13. Tata 1518C (Medium truck)
14. Tata 1613/1615 (Medium truck)
15. Tata 2515/2516 (Medium truck)
16. Tata Starbus (Branded Buses for city, inter city, school bus and standard passenger
transportation)
17. Tata Divo (Fully built luxury coach)
18. Tata CityRide (12 – 20 seater buses for intra-city use)
19. Tata 3015 (Heavy truck)
20. Tata 3118 (Heavy truck) (8×2)
21. Tata 3516 (Heavy truck)
22. Tata 4018 (Heavy truck)
23. Tata 4923 (Ultra-Heavy truck) (6×4)
24. Tata Novus (Heavy truck designed by Tata Daewoo)
25. Tata Prima (The World Truck designed by Tata Motors and Tata Daewoo)

 Military vehicles

1. Tata LSV (Light Specialist Vehicle)

2. Tata Mine Protected Vehicle (4×4)
3. Tata 2 Stretcher Ambulance
4. Tata 407 Troop Carrier, available in hard top, soft top, 4×4, and 4×2 versions
5. Tata LPTA 713 TC (4×4)
6. Tata LPT 709 E
7. Tata SD 1015 TC (4×4)
8. Tata LPTA 1615 TC (4×4)
9. Tata LPTA 1621 TC (6×6)
10. Tata LPTA 1615 TC (4×2)
11. Tata Winger Passenger Mini Bus

59
3.6 MARKETING STRATEGIES ADOPTED BY TATA

Marketing strategy is a process that can allow an organization to concentrate its

limited resources on the greatest opportunities to increase sales and achieve a
sustainable competitive advantage. Marketing strategy includes all basic and longterm
activities in the field of marketing that deal with the analysis of the strategic initial
situation of a company and the formulation, evaluation and selection of
marketoriented strategies and therefore contributes to the goals of the company and its
marketing objectives.

3.6.1 SALES STRATEGY

3.6.1.1 Sales promotion

According to American Marketing Association, sales promotion refers to “those

activities other than personal selling, advertising & publicity that stimulate consumer
purchasing & dealer effectiveness, such as display shows & exhibitions and various
other non-recurrent selling effort not in ordinary routine.”

3.6.1.2 Sales Promotion Objectives

• To increase the sales & encourage the present consumers to use more frequently.
• To attract new customers by means of incentive campaigns etc.

• To build buying habit.

• To motivate & attract the sales force and get their cooperation.

• To improve manufacturer-dealer relationship.

60
 • To help the new product enter into existing and new market.

3.6.1.3 Importance of Sales Promotion

• Spread Information.
• Stimulate Demand.
• Creates Product Identity.

3.6.1.4 Sales Promotion Method

SALES
PROMOTION MEANING OBJECTIVES
METHOD

Offering a product at a lower than the To encourage immediate sales,

1.Price Offers
normal price. attract non-users,etc.

When the consumer is entitled to To encourage product trail, build

2.Coupon redeem a specific standard certificate loyalty, trade – up regular users,
for a product free or in part payment. stimulate re-purchase rate.

Other than normal trade & cash To push more sales to trade, early
3.Discounts
discount. cash recovery.

4.Dealer Where participating dealers are invited To increase sales, buy dealer’s
Sales to compete in terms of the sales loyalty; motivate dealer’s staff to
Contests performance. sell more.

Offer of useful articles & attractive

To improve dealer relations, make
5.Dealer gifts gifts to dealers for his personal, family
impact on consumer.
or office use.

3.6.1.5 SALES PROMOTION STRATEGY

61
 A. Tata True Value Outlet:-

Tata has aided customers by providing them the facility to bring their vehicle to a
'Tata True Value' outlet and exchange it for a new car, by paying the difference. They
are offered loyalty discounts in return. This helps them retain the customer.

B. Tata Call Center:-

Tata has proper customer complain handling cell under the CRM department. The
customer care will help the customers solving all their problems and answer all their
grievances.

C. Tata Insurance:-

It is launched in 2002 Tata provides vehicle insurance to its customers with the help
of National Insurance Company, Bajaj Allianz. The service was set up by the
company with the inception of two subsidiaries Tata Insurance Distributors Service
Pvt. Ltd. And Tata Insurance Brokers Pvt. Ltd

1.6.1.6 Promotional Strategies

• Road Shows

The company plans to stage road shows, to display vehicles in the pavilions during various
college festivals and exhibition. This car will appeal to youngsters more.

• Television advertisements

62
 Advertisements to promote and market our product will be shown on leading
television channels. Major music and sports channels will promote and they will
reach out to the youth will be promoted through Star, Zee, etc as it has more viewers.

• Radio

Radio is the medium with the widest coverage. Studies have recently shown high
levels of exposure to radio broadcasting both within urban and rural areas, whether or
not listeners actually own a set. Many people listen to other people's radios or hear
them in public places. So radio announcements will be made and advertisements will
be announced on the radio about the product features and price, qualities, etc.

• Print Ads

Daily advertisements in leading newspapers and magazines will be used to promote

the product. Leaflets at the initial stage will be distributed at railway stations, malls,
college areas and various other locations.

• Workshops and Seminars

Workshops and seminars will be held in colleges and big corporate to make people
aware about the companies past performance and product features, its affordability
and usage, vast distribution network. Road shows will be conducted where free trials
of the car would be given.

3.7 COMPETITVE ADVANTAGE OF TATA

 Dealer network across the country

63
 Wide dealership network allows the company to service customers over a wider geogr
aphical area than competitors. Currently, there are 140 outlets of Tata Motors.

 True Value Operations

MUL providing its customers an opportunity to resale their car to MUL or exchange
with anew Tata car under its ‘True Value´ network has proven really beneficial. In
FY07True Value network touched 10000 units a month and more than 90% of that
resulted in the exchange of a new car

 Presence across segments

In a car manufacturing plant, the press shop, paint shop, engine and transmission
assembly, and machine shop are used for manufacturing different models A presence
across various segments ensures that the company retains its existing customers by
offering them upgrades from its portfolio of models.

64
 CHAPTER : 4 DATA

ANALYSIS & INTERPRETATION

CHAPTER : 4

DATA ANALYSIS & INTERPRETATION

______________________________________________

Strategic Analysis of Tata Motors:

We present the strategic analysis of Tata Motors using SWOT analysis,

Porter’s Model of Competitive Advantages, Porter’s Five Forces Model of
competitiveness and Ansoff Matrix.
SWOT Analysis was strategically modeled by Ansoff (1980) to focus on two
kinds of prioritization – High prioritization of opportunities and High prioritization of
building new competencies. When “opportunities” are prioritized, the organizations
tend to develop products that have high demands in the markets and when
“development of new competencies” is prioritized then organizations do not look at
the current opportunities in anticipation that the new competencies will develop new
opportunities for them.

65
 It is difficult to predict which one works better – they may yield different
results for different organizations. In case of Ford Motor Company and Tata Motors
there seems to be a fundamental difference in prioritization – Ford Motor Company
have focused on prioritization of developing competencies and taken aggressive steps
for the same in anticipation of developing opportunities whereas Tata Motors have
focused on prioritization of availing opportunities and developed competencies to
avail them as fast as possible.

4.1 SWOT Analysis of Tata Motors:

Having presented the SWOT analysis of Ford Motor Company, we now

analyze the SWOT framework of Tata Motors. As mentioned above, Tata Motors
prioritizes opportunities and builds their competencies around them. Their
announcement of Tata Nano is an excellent example where they have launched the
model and opened bookings much ahead of building their manufacturing
competencies to meet the demand not caring about the issue that they will end up
accumulating a huge backlog of customer orders [Brown, Robin (2009)].

4.1.1 - Tata Motors Strengths:

• Excellent brand equity and strengths in Indian Market

• Legacy and Dignity of Tata brand heritage which is almost as old as Ford Motor Company
• Sound global recognition in light trucks and buses
• Sound fundamentals in turbo diesel engines that they developed in joint venture with
Cummins
• Sound presence in Asian Markets
• Ownership of the heritage of British motor brands – Land Rover and Jaguar
• Strategic tie up with Mercedes Benz which is one of the hottest cars in premium car market
segment in India

• World class quality accreditations (ISO 9001, ISO 20000, ISO 14001)
• Excellent cost management framework (Ariba Spend Management)
• Excellent Supply Chain Management using the SAP framework
• Experienced, high quality, productive and low cost work force
• Ownership of some of the largest automobile manufacturing plants of the world

66
• Diversification strengths due to other large businesses of Tata Group
• Excellent financial strengths – close to $10 Billion of annual revenues
• Sound Parent Group support – Tata Group annual turnover is in excess of $30 Billion

4.1.2 - Tata Motors Weaknesses:

• Never done well in US, UK and European car markets (although done reasonably well in
light trucks and buses) – as presented earlier, they failed miserably in their City Rover
launch in Europe

• Not yet prepared fundamentally to handle the global markets of Land Rover and Jaguar.
• Weak technical competencies when compared to companies like Ford Motor Company
• Current Manufacturing capacities not adequate to meet the demands of Nano –
already taken a risk of over commitment and under delivery pertaining to the Tata Nano
economy-car.

• Perceived as too Indianized – it will take them a long time to establish a global branding

• Do not possess localization skills outside India markets – this is one of the primary reasons
for their failure in the City Rover venture

• Focus is more on cost – thus their car models lack advanced features that are common.

4.1.3 - Opportunities for Tata Motors:

• Gain control over UK and Europe markets by re-enforcing the heritage of Jaguar and Land
Rover.
• Deep roots of British style manufacturing processes given their own heritage of the British
rule in India – can help them do better with Jaguar and Land Rover.
• Introduce Asian variants of Jaguar and Land Rover by promoting their “Power Icon”
branding – this may work very well with Asian politicians, Capitalists and
Bureaucrats

• Develop more joint ventures like Tata – Mercedes Benz and introduce their cars in the
Asian markets.

67
• Tata Nano has taken the world by surprise whereby many economy car manufacturers of
the world are yet to even think of such a cheap car.

• Excellent test drives and experience reports of Tata Nano can invite attention of urban
middle class at global level – if they build their manufacturing and supply chain effectively,
they have the opportunity to virtually capture the market segment which doesn’t even exist
in the world – a market of $2500 cars (many bikes are more expensive than this car which is
spacious enough to accommodate four six feet tall people).

4.1.4 - Threats for Tata Motors:

• Jaguar and Land Rover requires lot of funds initially which may strip down the company to
cashless levels.

• The Singur crisis has already hit their manufacturing backbone for Tata Nano cars – the
company has not yet come out of the draining down of cash in excess of $300Million.
• Urgency in shifting the Singur plant to alternate place has hit their supply chain very badly
– a large number of suppliers had established plants in Singur to support Tata Motors –
many of them may not be having enough cash to shift to new location of Tata Motors Nano
plant.

• Many companies across the world are busy developing their own models of Economy Cars
– they may launch in competition with Tata Motors giving them tough time in the market
that currently seem to be monopolistic in favour of Tata Motors.

4.2 - Strategic Analysis of Tata Motors as per Michael Porter

 Diamond Model of Competitive Advantages.

Michael E Porter developed the Diamond Model to analyze the competitive
advantages of nations to analyze how some countries gain competitive advantages in
certain industrial sectors by developing their respective indigenous industries. This
model and the five forces model of firm competitiveness have become empirical
generalizations in strategic analysis of companies. We hereby present the analysis of

68
Tata Motors using these Models. The Michael Porter’s Diamond Model is presented
in the following figure:

Figure 3: Michael Porter’s Diamond Model

Organizations that have achieved competitive advantages across the world have
carried out innovations in their product offerings, in the services, in the way they do
business and in the way they compete in the marketplace. The innovations of all
companies appear to be their own but are actually based on some strong fundamentals of
factors that interact with each other considerably (Porter, Michael E. 1990. pp75). The
diamond model presents a strong correlation of the four underlying influencing factors
governing the success of an organization at National as well as International level with the
help of the controls of the local Government on these Influencing factors acting as the
Catalyst.

4.2.1-Firm Strategy and Rivalry:

69
 Michael Porter defined this factor as an imposed urgency on organizations to
“Innovate” in order to compete with companies in direct competition in the Local
Markets. This influencing factor is governed by the overall business system in
the country controlled by the local Government, in which companies are formed,
organized, governed and managed through structured legal and statutory
framework (like Company Law, Companies Act, Corporate Governance Act, etc).
[Porter, Michael E. 1990. pp78, 83]
Tata Motors strategy has been different compared to Ford Motors. They defeated their
rivals by capturing the opportunities much ahead of competition even before they are
prepared to deliver against orders. Their strategy has been to reserve customers by
charging booking amounts such that they first secure the customer base and then start
manufacturing.
They are very cost conscious about overheads or extra inventory and hence
manufacture strictly against orders. Their strategy in the launch of Tata Nano is the
same whereby they first intend to secure the customers by charging nominal booking
amounts and then deliver the cars gradually as and when they are launched. Given
that their Nano concept is not yet challenged by any competition, it would be easier
for them to reserve the bookings such that even if they face a competition, their
customers of first lot will remain untouched. [MotorTorque.com UK. 2009]

4.2.2-Demand Conditions:

Michael Porter’s concept of demand conditions is related to the domestic

demands laid on the company by end customers, suppliers, government, etc. thus
exposing the company to the challenge of managing demand-supply ratio. The
demand conditions also get internationalized if the Government Machinery supports a
system that helps companies to achieve this. It is important to note that not all
companies having strong local strengths can get into the International Markets Tata
Motors have not developed the competency of localization of products and
services as per local demands. In India, they have decades of experience in
developing products against local demands and hence are very successful.

70
 The government machinery of India has already helped them to stretch their
legs beyond the country limits (like the legal and statutory framework of India has
allowed them to acquire British companies and launch Nano worldwide through
Geneva).
But they have not mastered the art of localization of products as per the
regional demands in countries of their operations. Example, they failed in City Rover
miserably because they tried to push cars fit for Indian conditions into Europe which
is considered as a blunder today. Hence, overall it will take a long time for them to
establish global branding.

4.2.3-Related and Supporting Industries:

Porter suggested that the domestic Industry in a country grows substantially if

the local government is successful in creating and administering the framework of
competition among players and suppliers that support the industries. In such a
national framework, a strong network of competitors, suppliers and service providers
is created that collectively influence a healthy growth of business, increase demands
and boost supplies.
Such competition when stretch their legs in the global markets leave a positive
impact on the local strengths of the country due to inflow of money, global best
practices, innovations,ideas, and patents
The related and supported industries of Tata Motors are largely Indian based
whereby many of them do not have the competencies to support global expansion of
Tata Motors. In the current context, Tata Motors is expanding their global operations
using their internal teams that establish dealership networks in the countries of their
operation. Currently, they have operations run by internal employees in many
countries outside India.
In many countries, they are solely dependent upon the orders booked by
customers through their local dealers and service providers that operate with their own
local competencies.
71
This is the reason that some of their models like Tata Sierra has good acceptance in UK
markets.

4.2.4-Factor Conditions:

Lastly, the factor conditions in Porter’s diamond model complete the

framework. Factor conditions are related to business support framework to the
business that includes skilled manpower, basic infrastructure, supply channels,
funds transfer channels (like a nationwide payment system), availability of loans from
banks and venture capitalists.
Tata Motor Company again has well established and experienced Human
Resources Management team. They manage employee and worker relationships very
effectively and as per local laws and regulations of a country. Overall, their
competencies in this area are comparable with the competencies of Ford Motor
Company.

4.3- Analysis of Tata Motors as per Michael Porter’s Five Forces:

4.3.1 Model that shape Industry Competition.

In 1980, Michael Porter presented the five forces that shape competition in the
industry for any business organization as – Rivalry among existing competitors,
threats of new entrants, bargaining power of suppliers, bargaining power of buyers,
and threat of substitute products or services. These forces determine the competitive
position of organizations in the markets of their operations.
We hereby introduce a brief introduction about this model and then determine
the competitive positioning of Ford Motor Company and Tata Motors with the help of
this model.

72
 Figure 4: Porter’s Five Forces Strategy that Shape Competition
One important observation that Michael E Porter made about these forces is
that if these forces are intense then almost no company gains distinct competitive
advantages and earns attractive returns on investments.
The threats of new entrants and substitute products and services are
prevalent in industries where major innovations are underway that can potentially
cause creative destruction of the existing products and services. New entrants always
enter the markets with a desire to capture market shares quickly and hence tend to put
lot of pressure on product pricing thus capping the profit potential of the market.
Hence, the existing players in the market benefit out of the barriers to entry of
new players that essentially comprise of – supply and demand economies of scale,
supplier switching costs to customers (especially when the customers have invested
heavily in solutions compliant with supplier’s technology or are very much used to
the same), capital requirements, access to distribution channels, restrictive
government policies, etc.
The other two balancing forces are bargaining power of suppliers and
buyers. The bargaining power of buyers shall be lesser if competition is less given
that customers will not have many choices for purchasing products. However, the

73
bargaining power of suppliers is higher in case of lesser competition given that lesser
competition will not develop the supplier network (and their mutual competition) and
hence they will tend to have more bargaining power.
Ferrier and Smith et al (1999) stated that companies that pose complacency in
their approach tend to lose market shares to their more aggressive and active
counterparts. They observed that some industry leaders tend to erode their own
market shares through new innovations that carry out a typical Schumpeter’s
creative destruction of their existing product market shares.
This is carried out to ensure that they reinforce their market shares with new
innovations and improved customer value before new entrants tend to do so.
Mapping the global market landscape of motor industry, the threat of new
entrants is extremely high because there are a large number of high quality regional
motor manufacturers across the world that are working towards entering new
markets across the globe. The phenomenon of Japanese companies entering US
markets and giving tough times to native players like Ford Motor Company is
witnessed by people all across the world.
The Japanese companies like Toyota have introduced substitute products in
the US, UK and European markets and have eroded market shares of Ford Motor
Company given that they (probably) were more aggressive and innovative than Ford
Motor Company in these markets. Tata Motors is one such company that is all set to
enter global markets and pose threats to the local market players with their new
innovations (like Tata Nano). Their Nano models can kill local competition of low
cost cars in many countries if they are able to maintain the engineering excellence that
they have been able to demonstrate in the test drives.

They have largely been able to control the bargaining power of suppliers by virtue of
excellent supply chain management in the backend and hence are able to offer
unbelievable prices to their customers not letting any room for them to bargain.
Currently, Tata Motors are facing some barriers to their entry in many markets – like
the emission norms of European Union – but they are gradually working on the
remedies without comprising much on their local cost advantages

74
 4.4 - Ansoff Analysis of Tata Motors.

Ansoff, H I (1958) developed a matrix to analyze the product marketing

strategy of an organization when designing a model for diversification. Following is
the image of original sketch of the matrix drawn by Ansoff himself:

Ansoff Matrix
A simpler form of Ansoff product marketing strategy is presented below:

Simplified view of Ansoff model

Each of these quadrants describes a specific product marketing strategy as detailed below:
• Existing products to be marketed in existing markets – market penetration strategy
• New products to be marketed in existing markets – product development strategy
• Existing products to be marketed in new markets – market development strategy
• New products to be marketed in new markets – diversification strategy
In order of risks, the strategy based on existing value chains of organizations
possesses lowest risks while the strategy requiring deployment of altogether new
value chains by organizations possesses highest risk.
75
Thus market penetration strategies possess lowest risks associated with the
implementation but diversification possesses highest risks associated with the
implementation. If we take a closer look at the strategies of Ford Motor Company and
Tata Motors and map with Ansoff matrix, we can easily conclude that the Ford Motor
Company is applying strategies having lowest risk although they are paying highest
price for the same whereas Tata Motors is applying strategies with highest risks and
hence is in a make or break mode. We present the following analysis for justifying
this conclusion:
Tata Motors is currently implementing high risk strategies given that they
have attempted to enter two new markets where they do not possess any expertise –
UK and European premium car markets with the help of Jaguar and Land Rover and
the $2500 Nano car that may altogether develop a new car market globally. If things
favor them, they have the potential to become the next Ford of the world but if the
happenings do not favor them (like the Singur crisis witnessed by them), then they
can suffer losses that will take decades for them to repair.

4.5 - Balanced Score Card Analysis of Tata Motors.

Kaplan and Norton (1996) developed the balanced score card strategy to
assess the performance of businesses by virtue of their internal competencies
measured through key performance indicators (KPIs). The balanced scorecard is
presented in the figure below:

76
 Figure 7: The Balanced Score Card System for Vision and Strategy

The strategy is based on four primary factors that balance each other in a
strategic framework – Customer, Financial, Internal Business Process and Learning
and Growth. The Customer and Financial perspective is the way the company appears
to the customers and the Stake Holders whereas the Internal Business Processes and
Learning and Growth perspective is the way the company appears to the internal
employees and managers.
This dissertation will result in detailed financial perspective of Financials and
Customers and hence we will revisit the Balanced Score Card later in the dissertation.
The internal business processes and learning and growth perspective has been quite
sound in both Ford Motor Company and Tata Motors but the perspectives have been
entirely different. Ford Motor Company has focused on localization of products at a
global platter whereby they keep their parts supply chain centralized and assemble
cars as per the local requirements of a region after studying the needs.
This has resulted in them able to deliver different variants of cars as per the
requirements of different countries using the same spares supplied by their centralized
supply chain vendor. Hence, the internal learning and growth of Ford Motors has been
77
very comprehensive with localized knowledge captured from various countries and
the benefits of global knowledge and experience effectively mixed with the localized
knowledge.
Tata Motors appear to be far behind this strategy as compared to Ford Motors but they
appear to be taking the same path towards globalization. They have developed Nano
as per Indian conditions to start with but are ready to match the localized conditions
required at the global level – like the stringent emission norms of Europe. They
already have their small trucks (Tata Sierra) operating in UK which must have
developed their knowledge on UK and European market requirements. Moreover,
after the acquisition of Jaguar and Land Rover their knowledge will be strengthened
further. They already have the basics in place to apply the knowledge in Nano and it
may be just a matter of time that they will be able to achieve compliance for Nano
against the regulations of Europe and other countries that they are targeting.

CHAPTER 5 FINDINGS BASED

ON ANALYSIS CHAPTER 5

FINDINGS BASED ON ANALYSIS

78
Corporate restructuring became a key solution to overcome all extensive problems
lying in Indian corporate sector. And an extensive reform taken in the year 1991
Liberalization, Privatization and Globalization (LPG) in Indian economy led Indian
corporate to gain more competitive edge opening up with great global opportunities.
It has signaled the need for an extensive restructuring of an Indian corporate sector.

Mergers and acquisition have emerged as one of the most potent tool of corporate
consolidation and restructuring. Firms are combining their businesses, their
operations and trying to bring down their operating cost by achieving economies of
scale, reducing internal competition and sustaining the financial position of both.

In the present study, the mergers and acquisitions of Tata Group of Companies
specifically the ten cases are taken to understand the impact of such decisions on the
overall financial performance of the group. The study is confined to ten mergers and
acquisitions in the Tata Group and for the pre and post five years of decisions. For
better understanding and insight of the concept, researcher has summarized each
chapter and findings and suggestions have been drawn in point wise format.

Objective of the research study have been accompanied by findings. During the research
work, researcher formulated the objectives and defined the hypothesis according to the
objectives of the study. Pre, post-merger, and acquisition financial performance of selected
Tata group companies were analyzed with the help of appropriate accounting techniques
and statistical tools. Following findings are abstracted from the study:

• Tata Chemicals & British Salt:

It is observed that the profitability parameters of the company post merger period
were not attractive. Further study revealed that financial crisis in the year 2008 and
imbalance in the soda ash market following Beijing Olympics was the main reason
for poor financial performance of the post merger period. Later Tata Chemicals Ltd.
Invested in research and development with the stated mission of “Serving Society
through Science”. TCL was the early adopter of the technology and came out with
79
India’s first packaged, iodized salt “Tata Salt” and started its journey towards
excellence. Tata Namak – Desh ka Namak made the company towards success.
Liquidity position, operational efficiency of the company and even the leverage
position has the positive impact post-merger and acquisition period. Overall, it is
concluded that there is no significant difference found in pre and post-merger and
acquisition period.

• Tata Communication & BT Group:

The pre and post five-year financial performance of Tata Communication was quiet
satisfactory. Profitability parameters have shown the downfall in the year 2010 &
2011. Operational efficiency, leverage position, liquidity parameters and return ratios
have shown a positive trend in the post-merger period. The statistical analysis has
shown the negative trend it is proved here that the company did not find an y
significant difference in the financial performance due to merger decision.

• Tata Consultancy Services and CITI Group:

The acquisition resulted into positive manner on liquidity and profitability of TCS.
There is mean difference on the part of operational efficiency of the company. The
mean in the post-merger period has shown the negative impact on the operational
efficiency of the company. Return on capital employed and return on equity even
have shown the decreasing trend. As a result there is no significant difference found
in pre and post merger and acquisition performance.

• Tata Chemicals and General Chemicals:

There is a negative picture of profitability parameters of Tata Chemicals in the post
merger period. The mean difference of pre and post merger has shown negativity.
Return on asset ratio has shown the decline of mean difference pre and post. Return
on equity trend even is not satisfactory for the post acquisition period. Thus the null
hypothesis related to all the parameters like profitability, liquidity, operational
efficiency is accepted.

80
 • Tata Motors & JLR:
It was one of the historic decisions taken by Tata group. They have had the entry
into the premium car segment by acquiring the brand JLR. The overall financia l
performance of Tata Motors has the cascading effect of another giant acquisition
made by Tata Steel of Corus. With the passage of time, the cascading effect is
removed. During immediate five year post acquisition period the financial
performance was not satisfactory. And the null hypothesis is accepted.

• Tata Motors and Hispano:

Tata Motors is the one who gave India, its first indigenous car. They have been one
of the leaders in the automobile sectors from centuries. The Tata group has gone for
the adventures like merger and acquisition of Corus steel, Jaguar and Land Rover and
meanwhile Hispano. The huge burden of payment of purchase consideration had left
the negative impact on the overall financial parameters of the company for at least
immediate period of five years. As a result, null hypothesis is accepted.

• Tata Steel and Corus:

Tata Steel as such has created history by having its existence in Indian economy as
the pioneer company established by Jamsetji Tata in the year 1868. It has acquired the
Corus, five times bigger than Tata Steel, the biggest adventure ever made by Indian
conglomerate. The acquisition definitely made Tata Steel to be the fifth largest steel
maker in the world. But there was simultaneously a huge burden on the balance sheet
due to hefty debt employment. The adventures’ announcement itself has made the
share prices to go down in the year 2008. The decision after nine years has been
reversed. The null hypothesis is accepted over here as the fall off on the part of poor
financial performance.

• Tata Communication & China Enterprises:

The mean difference of pre and post-merger of profitability, operational efficiency,
return on capital employed, and return on net worth have shown drastic fall down.

81
Liquidity position of the company is constant in the both phases. Overall, statistically
the financial performance of Tata Communication has shown negative impact in the
second phase. The null hypothesis is accepted here, as there is no significan t
difference between pre and post-merger financial performance of the company.

• Tata Global Beverages and Grand:

Tata Global beverages have its entry into the global coffee market with an acquisition
of Grand. Extreme negative impact in the mean difference pre and post-merger for
profitability and as a result in the return on equity was observed. The leverage ratio of
the company has gone up as the debt fund was used to finance the acquisitions.
Therei s no significant difference found in all the parameters of financial performance
of pre and post-performance positively.

• TRF and Dutch Lanka:

TRF established in the year 1962, five decades after its inception they are now the
pioneers in solutions in material handling equipment and processing system in
infrastructure. The acquisition has taken place in the two phases first 51% and then
rest 49%. The financial performance was not satisfactory as compared to
preacquisition period. The profitability parameters, liquidity parameters, capital
efficiency and operating efficiency have shown the fall down. Thus the nul l
hypothesis is accepted statistically.

CHAPTER 6 SUGGESTIONS /

RECOMMEDATIONS CHAPTER 6

82
SUGGESTIONS / RECOMMEDATIONS

Mergers and acquisitions have proven to be the most adopted strategic move by the
corporates all over the world. One can call today’s world as the Competition world.
Restructuring in the form of mergers and acquisitions is considered as one of the best
way to roothold the company’s existence. Mergers and acquisitions have proven to be
a significant and increasingly popular means for achieving corporate diversity and
growth. It is experienced that many of the corporate restructuring decisions have
proven wrong due to unfruitful rewards. It would be a kind of embellishment if mere
on the basis of few M&A decisions to suggest to the strongly rooted business hub.

It is suggested here that the success of merger and acquisition do not depend only
upon the deep financial and strategic analysis and planning, but planning of
congruence between two companies for the implementation of the decision is equally
significant.

1. It is necessary to assess the merger and acquisition decision as a unique decision

always as far as its immediate and long run impacts are concern.

2. It is observed that the synergies can be achieved in the long run period of time.
So short-term impacts should be tackled strategically.

3. It is advisable for the group to control on the operating cost of the company so
that the profit margin can be improved.
4. It is suggested that cost benefit initiatives, well-specified market segmentation,
and value additions to the product should also be focused in conjunction with the
restructuring decisions.

5. The financial parameters are most important for the success of any merger and
acquisition decision, operational and leadership problems even cannot over looked.
83
6. Sometimes reversing the decisions can be a work out for the improvement in
performances. Tata Steel has already worked out with sale of its European arm to
Greybull Capital. It is thought as the cost improvement initiative by the company.

7. The economic conditions of the overall economy even plays significant role for
the success of merger and acquisition.

84
 CHAPTER - 7

CONCLUSION CHAPTER

-7

CONCLUSION

Founded in the year 1868 by late Shri Jamsetji Tata, an Indian conglomerate has its
footprints in seven different sectors employing six lakh employees all over the
world. It has its thirty companies listed on Bombay Stock Exchange.

Tata Group eyes the market capitalization of $350 billion by the year 2025. Tata
group has added $100 billion to the market capitalization by its thirty listed
companies during last 15 years. Tata Group accounts for 7.9% of the total market
capitalization of BSE. They believe in wealth creation and not the economic
parameter of profitability. Whatever they earn, whole-heartedly they gift it to the
society in the various forms. The history of wealth creation is not ten or twenty year
old but it’s a long journey from the year 1868 where in the five generations of
leadership has already been blessed. The current leadership of the group is with
Cyrus PallonjiMistry. They were the first to enter into the foreign boundaries to do
the business through acquisition. They have booked many leaderships and been
pioneered in various employee oriented efforts. As a result Tata group is the most

85
respected business conglomerate of the world. The individual profitability or the loss
making incidences are not affecting the strong rootholds of the group. Collectively
the Tata group has more than 110 companies operating in six continents on the earth.
The collective financial performance will battle prominently the economic threats to
their group companies.

86
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