See discussions, stats, and author profiles for this publication at: https://www.researchgate.

net/publication/367282504

Tata Motors - International Finance class discussion caselet

Presentation · January 2023

CITATIONS READS

0 113

1 author:

Mohammed Iqbal
Pondicherry University
3 PUBLICATIONS   11 CITATIONS   

SEE PROFILE

All content following this page was uploaded by Mohammed Iqbal on 20 January 2023.

The user has requested enhancement of the downloaded file.

 TATA Motors acquires Jaguar & Land Rover – An international finance perspective

Caselet for class discussion

Tata Motors is an Indian multinational automotive manufacturing company. It is headquartered

in Mumbai, and is a subsidiary of Tata Group, one of India's largest conglomerates. The
company was founded in 1945 and has since grown to become one of the largest car
manufacturers in India, as well as a major player in the global automotive market.

Tata Motors manufactures a wide range of vehicles, including cars, buses, trucks, and military
vehicles. The company's product portfolio includes a number of popular models, such as the
Tata Nano, Tata Tiago, Tata Tigor, Tata Altroz, and Tata Harrier. The company has also
acquired luxury car brands such as JLR (Jaguar Land Rover) in 2008, which has helped it to
expand its global footprint and enter the luxury car market.In addition to manufacturing cars
and commercial vehicles, Tata Motors also provides engineering and automotive solutions,
including powertrain and transmission systems, and operates in the electric vehicle market
through its subsidiary Tata Motors Electric Mobility Limited.

Tata Motors has a strong presence in India and other emerging markets, such as Africa, South
Asia, and Southeast Asia. The company exports its products to several countries worldwide,
including Europe, the Middle East, and Latin America.In terms of financial performance, Tata
Motors has seen a steady growth in revenue and profit in recent years, and it has a strong
reputation for innovation and sustainability. The company is committed to reducing its
environmental impact and has invested in technologies such as electric vehicles and alternative
fuels.

Jaguar Land Rover (JLR) is a British multinational car manufacturer that specializes in the
production of luxury vehicles. JLR is headquartered in Coventry, England and it operates under
two brands: Jaguar and Land Rover.Jaguar is known for producing luxury saloons and sports
cars, while Land Rover produces luxury SUVs and off-road vehicles. Some of the popular
models under the Jaguar brand include the XE, XF, F-Type, and I-PACE, and for Land Rover,
the Range Rover, Range Rover Sport, Range Rover Evoque, and the Discovery.

Jaguar Land Rover is one of the largest employers in the UK automotive industry, with
manufacturing sites across the country. The company has a strong presence in the global
market, with a particular focus on Europe and the United States. In addition to manufacturing
cars, JLR also provides engineering and automotive solutions, such as powertrain and
transmission systems and is also investing in electric and hybrid vehicles.

The company has a strong reputation for design and engineering excellence and is committed
to sustainability, with a focus on reducing its environmental impact through the use of
alternative fuels and advanced technologies.In recent years, Jaguar Land Rover has faced some
challenges, including the effects of the global pandemic, the Brexit uncertainty and the shift to
electric and autonomous vehicles, but it continues to be a leading player in the luxury car
market.

Tata Motors, an Indian multinational automotive manufacturing company, acquired the Jaguar
Land Rover (JLR) businesses from Ford Motor Company on April 1st, 2008. The acquisition
was a significant milestone for Tata Motors, as it marked the company's entry into the luxury
car market and expanded its global footprint. In the early 2000s, Ford Motor Company was
 facing financial difficulties due to declining sales and increasing competition in the global
automotive market. In an effort to improve its financial position, Ford began divesting non-
core assets, including the Jaguar and Land Rover brands. In 2007, Ford announced that it was
looking to sell the JLR businesses, and Tata Motors emerged as the leading bidder.

Tata Motors was interested in acquiring the JLR businesses for several reasons. First, the
acquisition provided the company with an opportunity to enter the luxury car market, which
had higher profit margins than the mass-market segment. Second, the acquisition expanded
Tata Motors' global footprint and helped the company to diversify its revenue streams. Third,
the acquisition of JLR gave Tata Motors access to advanced technology and engineering
capabilities, which it could use to improve its own products.

Tata Motors acquired the JLR businesses for a total of $2.3 billion, which included $1.7 billion
in cash and the assumption of $600 million in pension liabilities. The acquisition was financed
through a combination of debt and equity. Tata Motors raised $1.5 billion through a rights
issue, and the remainder of the purchase price was financed through debt.

The acquisition of JLR has had a positive impact on Tata Motors' financial performance. In the
years following the acquisition, Tata Motors' revenue and profit have increased significantly.
For example, in the fiscal year ending March 31, 2020, Tata Motors' revenue was $45.4 billion,
and its profit was $1.4 billion. The acquisition has also helped Tata Motors to improve its global
market share, particularly in the European market.

In conclusion, the acquisition of Jaguar Land Rover by Tata Motors was a strategic move that
enabled the company to enter the luxury car market and expand its global footprint. The
acquisition has had a positive impact on Tata Motors' financial performance, as evidenced by
the company's improved revenue and profit in the years following the acquisition. The case
highlights the importance of considering strategic factors when making an acquisition and the
potential benefits of diversifying revenue streams and expanding into new markets.

Questions

1. From the given context, how do you think exchange rate changes between USD/JBP
will affect the financial statements of Tata Motors.
2. How does such cross boarder acquisitions affect BoP of India?
3. Explain the forex related risks associated with this acquisition?
4. Design a hedging strategy for Tata Motors for managing risk related to forex volatility?

View publication stats