FINAL REPORT

CASE STUDY:

“General equity vs. DVR share of Tata Motors: investors’

dilemma”

SUBMITTED BY:
INAYATULLAH (62809)
M.ASAD (62787)
MEHRAN (62804)
FARRUKH BUKHARI (62691)

SUBMITTED TO:
Dr ARSALAN HASHMI
 ACKNOWLEDGEMENT
I would like to express my gratitude to my project guide MR. Dr Arsalan Hashmi on his guidance,
co-operation and encouragement towards the project. I also thank my parents for their constant love
and support which has encouraged and inspired me at every walk of life and to all my friends who
helped me to make this project a successful one. Last but not the least, I would like to thanks to all
who support me to complete the work of this project.
 EXECUTIVE SUMMURY
“The automobile industry in India is one of the most successful stories of post liberalization
manufacturing space in India and entirely based on prudent policy support of the Government.
However, the recent economic changes have not only been unfavorable but they have been
inhibitor for the automobile industry. Some of the critical factors which is affecting the
automobile sector are GDP, inflation rates, interest rates, Exchange rates along with the some
qualitative factors like recession. These factors are continuously changing which affect the
demand of the product. In such scenario only strong strategies will help the company to survive in
market. Tata motors strategy of diversification, acquisition, and merger will be a best example for
the survival and growth. This paper covers the Strategy adopted by Tata motors to enter into
premium class segment by acquiring Jaguar Land Rover. Although the company was in trouble
right after the acquisition of Jaguar and Land Rover (JLR) in June 2008 due to the arrival of
global financial crisis. The bridge loan of US$ 3 billion which used to fund the acquisition of JLR
was due on June 2009 and yet at the end of the year 2008, Tata was only able to repay the US$
1billion. The declining revenues and a tight credit conditions was hurting the company’s cash
flow. But due to the management competencies & changing economic situation help the company
to not only to overcome the situation but also to grow.
COMPANY BACKGROUND
Founded by Jaksetic Tata in 1868, the Tata group is a global enterprise, headquartered in India,
comprising over 100 independent operating companies. The group operates in more than 100
countries across six continents, with a mission 'To improve the quality of life of the communities
we serve globally, through long-term stakeholder value creation based on Leadership with Trust'.
Tata Sons is the principal investment holding company and promoter of Tata companies. Sixty-six
percent of the equity share capital of Tata Sons is held by philanthropic trusts, which support
education, health, livelihood generation and art and culture. In 2015-16, the revenue of Tata
companies, taken together, was $103.51 billion. These companies collectively employ over
660,000 people. Each Tata company or enterprise operates independently under the guidance and
supervision of its own board of directors and shareholders. There are 29 publicly-listed Tata
enterprises with a combined market capitalization of about $116.41 billion (as on March 31,
2016). Tata companies with significant scale include Tata Steel, Tata Motors, Tata Consultancy
Services, Tata Power, Tata Chemicals, Tata Global Beverages, Tata Teleservices, Titan, Tata
Communications and Indian Hotels. Many Tata companies have achieved global leadership in
their businesses. For instance, Tata Communications is 1ST international wholesale voice
provider and Tata Motors is among the top ten commercial vehicle manufacturers in the world.
Tata Steel is among the top fifteen best steelmakers and TCS is the second largest IT services
company in the world by market cap and profit. Tata Global Beverages is the second-largest tea
company in the world and Tata Chemicals is the world’s second-largest manufacturer of soda ash.
Employing a diverse workforce in their operations, Tata companies have made significant local
investments in different geographies. In tandem with the increasing international footprint of Tata
companies, the Tata brand is also gaining international recognition. Tata companies bring to their
customers worldwide a whole host of reputed brands which touch their lives every day. Brand
Finance, a UK-based consultancy firm, has valued Tata’s multi- brand portfolio at over $23
billion in 2016. With its pioneering and entrepreneurial spirit, the Tata group has spawned several
industries of national importance in India: steel, hydro-power, hospitality and airlines. The same
spirit, coupled with innovativeness, has been displayed by entities such as TCS, India’s first
software company, and Tata Motors, which made India’s first indigenously developed car, the
Tata Indica and the smart city car, the Tata Nano. Pursuit of excellence has similarly been
manifested in recent innovations like the Silent Track technology developed by Tata Steel Europe
and the next-generation Terrain Response, including infrared laser scanning to predict terrain, and
Wade Aid to predict water depth, by Jaguar Land Rover. The Tata trusts, majority shareholders of
Tata Sons, have endowed institutions for science and technology, medical research, social studies
and the performing arts. The trusts also provide aid and assistance to non-government
organizations working in the areas of education, health care and livelihoods. Tata companies
themselves undertake a wide range of social welfare activities, especially at the locations of their
operations, as also deploy sustainable business practices. Going forward, Tata companies are
building multinational businesses that seek to differentiate themselves through customer-
centricity, innovation, entrepreneurship, trustworthiness and values-driven business operations,
while balancing the interests of diverse stakeholders including shareholders, employees and civil
society.
“A USD 42 billion organization, Tata Motors Limited is a leading global automobile
manufacturer with a portfolio that covers a wide range of cars, sports vehicles, buses, trucks and
defense vehicles.”
Tata Motors Limited, a USD 42 billion organization, is a leading global automobile manufacturer
with a portfolio that covers a wide range of cars, sports vehicles, buses, trucks and defense
vehicles. Our marque can be found on and off- road in over 175 countries around the globe.
We bring to the customer a proven legacy of thought leadership with respect to customer-
centricity and technology. We are driving the transformation of the Indian commercial vehicle
landscape by offering customers leading edge auto technologies, packaged for power
performances and lowest life-cycle costs.

MERGRS AND ACQUISITION OF JAGUAR LAND ROVER BY TATA MOTORS.

INTRODUCTION
The business organization wants to expand their business through the expansion strategy. The
expansion strategy is the most frequently employed generic strategy. Expansion strategy is the
true growth strategy. Expansion strategy involves a redefinition of the business of the corporation.
The process of renewal of the firm through fresh investments and new businesses, products,
markets is facilitated only by expansion strategy. Expansion strategy is implemented by
redefinition the business by adding the scope of business substantially the efforts of the current
business. The strategy may take the enterprise along relatively unknown and risky paths, full of
promises and pitfalls. Expansion also includes diversifying, intensifying, acquiring and merging
businesses.

REASONS FOR MERGERS AND ACQUISITIONS

• Financial synergy for lower cost of capital.
• Improving company's performance and accelerate growth.
• Economies of scale.
• Diversification for higher growth products or markets.
• To increase market share and positioning giving broader market access.
• Strategic realignment and technological change.
• Tax considerations.
• Undervalued target.
• Diversification of risk.
THE DEAL OF TATA AND JAGUAR LAND ROVER
In June 2008, India-based Tata Motors Ltd. announced that it had completed the acquisition of the
two iconic British brands Jaguar and Land Rover (JLR) from the US-based Ford Motors for US$
2.3 billion. This acquisition would help the company in several ways, to get a global footprint and
enter the high-end premier segment of the global automobile market. Now the Tata Motors would
own the world's cheapest car - the US$ 2,500 Nano, and luxury marquees like the Jaguar and
Land Rover. In the Competitive market for attaining the Success, one needs to be a global player
to manage the business risk and company need to be strategies themselves based on its internal
strengths &external opportunities and Tata Motors acquisition of Jaguar and Land Rover is an
unique example for this Tata Motors wanted to expand its product portfolio and diversify its
market base. According to industry analysts, some of the issues that could trouble Tata Motors
were economic slowdown in European and American markets, funding risks, currency risks etc.
In the 10 months post-acquisition, sales volumes plunged 32% and the unit recorded a loss of 281
million pounds ($461 million). Tata's total debt in March 2009 rose to 435.8 billion rupees ($9.72
billion), nearly double what it owed in the previous fiscal. In such scenario the question generated
about the acquisition decision of Tata motors is right or wrong. This paper is an attempt to
critically analyze that the decision taken by Tata Motors about acquisition of Jaguar Land Roar
two iconic brands was the right decision. The automobile industry in India is one of the most
successful stories of post liberalization manufacturing space in India and entirely based on prudent
policy support of the Government. However the recent economic changes have not only been
unfavorable but they have been inhibitor for the automobile industry. Some of the critical factors
which is affecting the automobile sector are GDP, inflation rates, interest rates, Exchange rates
along with the some qualitative factors like recession. These factors are continuously changing
which affect the demand of the product. In such scenario only strong strategies will help the
company to Survive in market.
Tata motors strategy of diversification, acquisition, and mergerwill be a best example for the
survival and growth. This paper covers the Strategy adopted by Tata motors to enter into premium
class segment by acquiring Jaguar Land Rover. Although the company was in trouble right after
the acquisition of Jaguar and Land Rover (JLR) in June 2008 due to the arrival of global financial
crisis. The bridge loan of US$ 3 billion which used to fund the acquisition of JLR was due on
June 2009 and yet at the end of the year 2008, Tata was only able to repay the US$ 1billion. The
declining revenues and a tight credit conditions was hurting the company’s cash flow. But due to
the management competencies & changing economic situation help the company to not only to
overcome the situation but also to grow.
WHY THE TATA GO FOR JAGUAR LAND ROVER
Tata Motors had several major international acquisitions to its credit. It had acquired Tetley,
International luxury hotels, South Korea-based Daewoo's commercial vehicle unit, and Anglo-
Dutch Steel maker Corus (Refer to Exhibit I for the details of the group's international
acquisitions). Tata Motors' long-term strategy included consolidating its position in the domestic
Indian market and expanding its international footprint by leveraging on in-house capabilities and
products and also through acquisitions and strategic collaborations.
On acquiring JLR, Ratan Tata, Chairman, Tata Group, said, "We are very pleased at the prospect
of Jaguar and Land Rover being a significant part of our automotive business. We have enormous
respect for the two brands and will endeavor to preserve and build on their heritage and
competitiveness, keeping their identities intact. We aim to support their growth, while holding
true to our principles of allowing the management and employees to bring their experience and
expertise to bear on the growth of the business.

REASONS BEHIND FORD MOTOR’s DECISION TO SELL JLR

"Acquisition of JLR provides the company with a strategic opportunity to acquire iconic brands
with a great heritage and global presence, and increase the company's business diversity across
markets and product segments."
Tata Motors, in April 2008
In 2006, reports said that losses at Jaguar stood at USD 715 million. Jaguarwas not performing
well as it was unable to provide any profit for Ford due to high manufacturing costs in United
Kingdom. Bringing down production costs and turning around the company successfully will be
the challenge for the company. That was the reason Ford was ready to sale the JLR at half of the
price. Tata take this as an opportunity to enter into premium class segment to take an advantage of
demographic dividend of India because of the double digit GDP growth during that period.
Company have an assumption that the situation may last for few years and Disposable income of
people may increase which help the company to diversify their business in India into premium
class segment. But due to economic slowdown not only world market but also Indian market get
affected and Tata Motors was in trouble.

SWOT Analysis of the Company

A. OPPORTUNITIES:
1. Demand of luxury automobiles in growing markets like India and China.
2. Support from Jaguar in Technology.
3. Complete product line with addition of luxury brands.
4. Access to European and American Market.
B. THREATS:
1. Volatility in market driven by new products.
2. Strong presence of competitors like Mercedes, BMW, Lexusand Infinity.
3. Receding sales and brand image.
4. High interest rate Investment riskier and costlier.
C. STRENGTHS:
1. Tata’s strong management capability.
2. Strong monetary base to invest.
3. Synergy due to Corus, TACO and TCS.
4. Experience in growing market like India.
5. New product development and brand building experience.
D. WEAKNESSES:
1. Inexperience in handling luxury automobile brand.

PROBLEMS FACED BY TATA MOTORS DUE TO ACQUISITION OFJAGUAR

LAND ROVER
PROBLEM 1: Lack of access to credit to repay the bridge loan of US$3 Billion Tata Motors was
facing problem in cash liquidity and have negative working capital after the acquisition of JLR.
Besides, the debt ratio had increased over the five years and they have negative interest coverage
which these show that the company was having problem in paying the bridge loan. A bridge loan
is a short-term loan that is used until a person or company secures permanent financing or
removes an existing obligation. This type of financing allows the user to meet current obligations
by providing immediate cash flow. The loans are short-term (up to one year) with relatively high
interest rates and are backed by some form of collateral such as real estate or inventory. Tata
Motors was finding it difficult to access credit and raise fund from the stock market due to the
tight liquidity conditions, depressed stock market and lack of investors’ confidence. Besides,
lacking of working capital has caught them into trouble to repay the bridge loan of US$ 3 billion
which used to finance the acquisition of Jaguar and Land Rover (JLR). The bridge loan was due
on June 2009 and yet at the end of the year 2008, the company was able to repay only US $ 1
billion.
PROBLEM 2: Global financial crisis has severely impacted the global automobile industry
especially the luxury cars segment Subprime mortgage crisis has caused the demise of Lehman
brothers which later lead to the collapse of the global financial sector and further deepened the
global financial crisis. The result of this demand of automobile is also decrease. The Company’s
export was declined by 38.6% during the year 2009, due to the meltdown in major international
markets.
PROBLEM 3: Increasing materials and fuel prices have slow the demand of vehicles Due to the
impact of tighter money supply with higher interest rate, there will be meteoric rise in fuel and
materials (e.g.: steel, tires) price. High fuel price has caused Tata Motors to feel the heat of
slowing demand. Decrease in sales volume and increase in cost as well as bearing the increment
of short term debt would easily kill Tata Motors.
PROBLEM 4: Share price dropped drastically and affect its global image as the debt market was
frozen, Tata Motors turn to the equity market to raise fund. But the share prices of Tata Motor is
also significantly decrease due to uncertainty of acquisitions success and global crises which
result even in decrease in net profit and EPS ( Earning Per Share ) of company as explain in table:

ACQUISITION IS WRONG OR RIGHT

Tata Motor was facing a lot of problem after the acquisition. But still the deal was anticipated to
generate two synergies such as Cost Synergies and Revenue Synergies.

COST STRATEGY:
The TATA Motors has the Competitive Advantage from the overall International Market through
the Tata Group of companies like Corus for steel, Corus was the main supplier of automotive high
grade steel to JLR and other automobile industry in US and Europe,TCS for providing
engineering design, manufacturing solutions and sourcing services, INCAT Provides services like
supplier programs, consulting services and global outsourcing. This would have provided a
synergy for TATA Group on a whole. The whole cost synergy that can be created can be seen in
the following diagram

REVENUE STRATEGY:
Such as well-known brands, distinguish brand identity of LandRover and Jaguar, emerging Indian
car market and opportunity to sell brands in India and opportunity of global presence. Due to these
reasons these products being taken over by Tata group.

FINANCIAL ANALYSIS OF TATA MOTORS AFTER THE ACQUISITION:

To understand the impact of acquisition on Tata Motors first we will see the overall domestic &
export sales trend of Passenger & Commercial Vehicles in India from FY 07-08 as Tata motors is
only in these two segments.
 Chart Title
60,000.00

50,000.00

40,000.00

30,000.00

20,000.00

10,000.00

0.00
2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007

Fixed asset Current asset Current Liablity Column1

As per above chart we analyze the assets and liability which indicate significance change in Fixed
asset after the merger of the Jaguar and Range rover with Tata Motor, it increase because after the
merger the assets of Jaguar and Range Rover are added in the Tata Motor balance sheet. We can
see good increase in current asset as well after 2010 there were very low variation in current asset
and also fixed asset, in 2007 Tata motor had have very low liability but after merger and due to
international crises the company liability increase very fast and gradually it decrease but if we see
the current situation the company is again going to decline as the liability is again increasing it
take upward direction.

PER SHARE RATIOS 2021 2020 2019 2018 2017 2016 2015

Basic EPS (Rs.) -6.59 -21.06 5.94 -3.05 -7.15 -0.18 -14.72

Diluted EPS (Rs.) -6.59 -21.06 5.94 -3.05 -7.15 -0.18 -14.72

Cash EPS (Rs.) 3.36 -10.88 15.07 6.09 1.79 6.68 -6.63

Book Value 49.77 51.11 65.26 59.39 62.31 68.5 46.1

[ExclRevalReserve]/Share
(Rs.)

Book Value/Share (Rs.) 49.77 51.11 65.26 59.39 62.31 68.5 46.17

Dividend / Share(Rs.) 0 0 0 0 0 0.2 0

Revenue from 122.83 122.1 203.77 173.23 130.49 126.17 112.76

Operations/Share (Rs.)
 PBDIT/Share (Rs.) 6.1 2.03 22.07 14.33 7.63 12.81 2

PBIT/Share (Rs.) -3.52 -7.35 12.94 5.19 -1.31 5.95 -6.09

PBT/Share (Rs.) -6.04 -19.81 7.06 -2.79 -6.93 0.46 -12.35

Net Profit/Share (Rs.) -6.26 -20.26 5.95 -3.05 -7.15 -0.18 -14.72

PROFITABILITY RATIOS

PBDIT Margin (%) 4.96 1.66 10.82 8.27 5.84 10.15 1.77

PBIT Margin (%) -2.86 -6.01 6.35 2.99 -1 4.71 -5.39

PBT Margin (%) -4.91 -16.22 3.46 -1.6 -5.31 0.36 -10.95

Net Profit Margin (%) -5.09 -16.59 2.91 -1.75 -5.48 -0.14 -13.05

Return on Networth / Equity -12.57 -39.64 9.11 -5.13 -11.48 -0.26 -31.93
(%)

Return on Capital Employed -3.46 -7.18 11.57 5.04 -1.19 5.31 -16.02
(%)

Return on Assets (%) -3.68 -11.64 3.31 -1.74 -4.12 -0.1 -9.48

Total Debt/Equity (X) 0.99 1.14 0.79 0.81 0.89 0.61 1.35

Asset Turnover Ratio (%) 72.28 70.18 113.61 99.35 75.26 75.59 72.67

LIQUIDITY RATIOS

Current Ratio (X) 0.6 0.53 0.58 0.62 0.59 0.63 0.42

Quick Ratio (X) 0.43 0.38 0.37 0.38 0.33 0.36 0.19

Inventory Turnover Ratio (X) 10.33 11.46 14.84 10.38 7.98 8.37 7.56

Dividend Payout Ratio (NP) 0 0 0 0 0 0 0

(%)

Dividend Payout Ratio (CP) 0 0 0 0 0 0 0

(%)

Earnings Retention Ratio (%) 0 0 0 0 0 0 0

Cash Earnings Retention Ratio 0 0 0 0 0 0 0

(%)

VALUATION RATIOS

Enterprise Value (Cr.) 130,130.20 42,927.34 75,419.87 126,665.65 176,759.28 144,649.88 196,159.63

EV/Net Operating Revenue 2.77 0.98 1.09 2.15 3.99 3.38 5.4
(X)

EV/EBITDA (X) 55.72 58.65 10.06 26.03 68.21 33.26 304.63

 MarketCap/Net Operating 2.46 0.58 0.86 1.89 3.57 3.06 4.88
Revenue (X)

Retention Ratios (%) 0 0 0 0 0 0 0

Price/BV (X) 6.07 1.39 2.67 5.51 7.48 5.64 11.93

Price/Net Operating Revenue 2.46 0.58 0.86 1.89 3.57 3.06 4.88

Earnings Yield -0.02 -0.29 0.03 -0.01 -0.02 0 -0.03

PER SHARE RATIOS 2014 2013 2012 2011 2010 2009 2008 2007

Basic EPS (Rs.) 1.03 0.93 3.9 6.06 39.26 19.78 52.63 49.65

Diluted EPS (Rs.) 1.03 0.93 3.77 5.78 39.26 19.78 52.63 49.65

Cash EPS (Rs.) 7.47 6.64 8.98 49.75 59.9 37.78 71.21 67.06

Book Value 59.5 59.9 61.76 313.45 259.01 240.62 202.68 177.57
[ExclRevalReserve]/Share
(Rs.)

Book Value 59.58 59.98 61.84 313.83 259.44 241.11 203.34 178.25
[InclRevalReserve]/Share
(Rs.)

Dividend / Share(Rs.) 2 4 20 15 6 15 15
2

Revenue from 106.52 140.32 171.11 738.4 619.93 499.19 746.17 691.84
Operations/Share (Rs.)

PBDIT/Share (Rs.) 9.08 11.9 14.97 79.79 89.55 49.84 94.79 92.11

PBIT/Share (Rs.) 2.65 6.2 9.91 58.45 71.43 32.83 77.87 76.9

PBT/Share (Rs.) -3.19 0.55 4.23 34.44 49.59 19.72 66.83 66.78

Net Profit/Share (Rs.) 1.04 0.95 3.91 28.41 39.26 19.78 52.63 49.65

PROFITABILITY
RATIOS

PBDIT Margin (%) 8.52 8.48 8.74 10.8 14.44 9.98 12.7 13.31

PBIT Margin (%) 2.48 4.42 5.79 7.91 11.52 6.57 10.43 11.11

PBT Margin (%) -2.99 0.39 2.46 4.66 7.99 3.95 8.95 9.65

Net Profit Margin (%) 0.97 0.67 2.28 3.84 6.33 3.96 7.05 7.17

Return on Networth / Equity 1.74 1.57 6.33 9.06 15.15 8.21 25.96 27.95
(%)
Return on Capital Employed 2.75 0.97 3.84 5.14 7.75 4.96 15.49 19.18
(%)

Return on Assets (%) 0.67 0.57 2.27 3.34 4.38 2.64 7.75 9.96

Total Debt/Equity (X) 0.76 0.75 0.56 0.73 1.12 1.06 0.8 0.59

Asset Turnover Ratio (%) 68.94 85.78 99.6 86.89 69.22 66.81 110.01 138.87

LIQUIDITY RATIOS

Current Ratio (X) 0.36 0.48 0.62 0.58 0.52 0.54 0.8 1.1

Quick Ratio (X) 0.15 0.27 0.41 0.37 0.39 0.42 0.61 0.83

Inventory Turnover Ratio 8.88 10.05 11.84 12.1 12.05 11.51 11.88 10.66
(X)

Dividend Payout Ratio (NP) 193.87 213.77 103.09 70.32 38.34 30.65 28.5 30.21
(%)

Dividend Payout Ratio (CP) 26.96 30.44 44.95 40.16 25.13 16.04 21.06 22.36
(%)

Earnings Retention Ratio -93.87 -113.77 -3.09 29.68 61.66 69.35 71.5 69.79
(%)

Cash Earnings Retention 73.04 69.56 55.05 59.84 74.87 83.96 78.94 77.64
Ratio (%)

VALUATION RATIOS

Enterprise Value (Cr.) 142,514.26 99,721. 96,670.9 91,763.5 57,992.8 21,292.0 27,919.7 31,230.5
96 6 9 9 6 0 9

EV/Net Operating Revenue 4.16 2.23 1.78 1.95 1.64 0.83 0.97 1.17
(X)

EV/EBITDA (X) 48.77 26.27 20.34 18.03 11.35 8.31 7.64 8.8

MarketCap/Net Operating 3.74 1.92 1.61 1.69 1.22 0.36 0.84 1.05
Revenue (X)

Retention Ratios (%) -93.87 -113.77 -3.09 29.67 61.65 69.34 71.49 69.78

Price/BV (X) 6.69 4.5 4.46 3.98 2.92 0.75 3.08 4.1

Price/Net Operating 3.74 1.92 1.61 1.69 1.22 0.36 0.84 1.05
Revenue

Earnings Yield 0 0 0.01 0.02 0.05 0.11 0.08 0.07

PROFITABILITY RATIOS
The profitability ratio declining continuously it improved in 2019 which was 2.91 in last five
years remaining year were in negative value, in 2007 it was above 7% and remain same in 2008
but after 2008 it took downward trend and ultimately it turn into negative value.

LIQUIDITY RATIOS
Cash inflows from operating activities increased versus last year primarily on account of increase
in profitability and favorable working capital changes. Liquidity ratio indicates not impressive
improvement which we seen in 2007 it was 1.1 current ratio and quick ratio was 0.83 which
decline after merger as company get huge amount of loan which increase liability.

INVESTMENT / MARKET RATIOS

Earnings per share decrease in 2021 & 2020 as compare to 2019, as a result of decrease in profit
after tax driven by decline in gross margin and increase in operating expenses as a percentage of
sales.
Price Earnings ratio increase in 2021 from 2020, mainly due to decrease in earnings per share
Dividend yield ratio declined in 2021 from 2020due to decrease in dividend per share partially
offset by decrease in share price.

DIVIDEND PAYOUT RATIO

Decreased to 26.93 in 2020 from 30.44 in 2020 and 44.9 in 2019 and before 2019 it was below the
current value, on account of decrease in dividend per share partially offset by decrease in profit
after tax.

PERFORMANCE OF JAGUAR LAND ROVER BUSINESS

The turnaround of Jaguar Land Rover has become part of corporate experience. For the 12-month
period ended Dec 31, 2010, the automaker's revenue was in excess of 9.2 billion pounds ($15
billion), and net income for that period was $1.5 billion. Present financial outcome will clear the
competencies of the Tata for the success. JLR has significantly consolidated its position in the
premium car segment. The strengths of JLR include iconic globally positioned brands, strong
product portfolio of award winning luxury and high performance cars and premium all- terrain
vehicles, global distribution network, strong product development and engineering capabilities,
and a strong management team. Present financials of company will help to analyze the success of
strategy of acquisition JLR. The Indian auto industry witnessed a decline in both passenger
vehicles and in commercial vehicles segment by 4.7% and 22.4% in FY13-14.
RECOMMENDATIONS
The case is all about raise capital to tackle crunch situation of the company where Tata Motor
Acquire Two well-known brands (Jaguar and Range Rover) which were selling on very low price.
But Tata motor didn’t analyze the situation perfectly they took decision and require huge capital
to run the company. For that they issue the DVR and also take loans from different sources.
Company issue DVR because they didn’t want to take any risk on the ownership.
My recommendation for this organization is that they should choose one option from DVR and
long term barrowing but they used both option to raise the capital it will create a big problem for
the company as they issue DVR on discounted rate and they bear loss almost every year. In 2009
their profit decline drastically and in 2010 they able to earn good profit till 2012 but after that they
again went into negative profit, in 2015 & 2019 they had have positive profit rest of the years they
only get negative profit.

CONCLUSION
TATA motors decision of acquisition criticizes on the ground of time of deal that is changing
economic situation of the world. Post-acquisition due to slowdown in domestic and world
economy demand of commercial as well as passenger vehicle decreased. Tata motors major
revenue is coming from commercial vehicle before acquisition. This acquisition will help the
company to develop its brand in luxury passenger vehicle. The opportunity came to Tata motors
for the acquisition is also the result of economic downtrend. Ford was ready to sale these two
iconic brand at half of its price which is at the time of acquisition paid by Ford in 2005. Such
distress sale by Ford is an opportunity for Tata motors to become globalize and enter into
premium class passenger vehicle which may not possible as early in other case. Tata motors
strength that is their managerial competencies along with experience of large market like India,
great brand and financial base help them to take such strategic decision. Fall in domestic market
demand may change their strategy to move to growing countries like china is also the strategic
decision taken towards the fulfilment of strategic intent of company. Tata motors now develop its
brand value in world because of this successful acquisition and growth of these two companies.