MS 408 :- Financial Consideration and Engineering

Decisions

THE
TATA
Case Study
EMPIR
E
Group Members:-
1. Amit Yadav
2. Kushagra
Bhargav
3. Mayank
Mentor:- Prof. Chelvakumar Khewaria
4. Narendra
Saraswat
5. Roshan Agrawal
BEHIND THE
SCENES
B-School Approach!
Profit, Profit and Profit!
Constant Interference
 TATA STEEL EUROPE
Cyrus Mistry Sells Scunthorpe
Net Debt Tata Steel (In crores)
Plant to Greybull capital
74,626
70,236 70,452

57,855

Ratan Tata - the company would

invest whatever it takes to
make it efficient for UK plant
at Port Talbot

Annual Report:2013-14: Fresh drawls and

repayment of loans
Annual Report:2015-16: Creation of the
long term assets, project in kalinganagar of
Rs. 11,486 crore. 4/11/17 3
2014-15: The Dhamra Port
 TATA STEEL
Closing Cash and Cash equivalents(in crore) Debt Ratio(total liabilities/total asset)

10657
80.1
9695
8451 8648
77.8

6609

74.0 74.0

FY2012-13: Disposed subsidiaries and Joint Many subsidiaries were sold in between
ventures: Rs. 317.83 crore
Large amount of loan repaid in 2016 4/11/17 4
 TATA EUROPE STEEL (TSE)
TSE Turnover ( in crores) TSE Loss before tax
84666
82153 79878
78012 12789

67402

7621
6649

4281
3684

Less demand of steel in Europe after the crisis
In 2015: Steel import from China
Re-structuring of the TSE was in done by a
committee, including the divestment of TSUK
BSPS increased funding deficit
Demand very low: reduced by 9%
Fixing of Blast furnaces at Port Talbot
Annual Report: Tata Steel: FY 2012-13: Raise
Rs 11,000 crore in last four years through
4/11/17 5
divestments
 TAJ BOSTON HOTEL &
BELMOND
Hotels
were
acquir
ed in
2006
Loss increased &
Taj Boston Hotel
to
expan
Revenue decreased- Taj Sold for $125 million - July16
Boston
d Acquired for $170 million
overs
eas
busin
ess.

FY:2014-15
FY:20
15-16 Belmond Orient Hotels
$6.7 million $7.3
loss millio
5.1 % shares sold for $50 million
n loss Sold at $9.3 per share
Bought at $35 per share
FY:20
14-15
$35.4 FY:2015-16 Blue Sydney 2014
millio $35.1millio
n n revenue Sold for around $32 million
reven Acquired for $27.1 million
ue
Will invest in Dubai and China
TATA MOTORS
Largest Revenue Contributor of Tata Group (Jaguar Land Rover)

Suicide of Karl Sylm in January 2014

Takeover by Cyrus Mistry

TATA MOTORS - PROBLEMS FACED
Product Pipeline
No cars launched after Nano in 2009 for five years
Two cars launched after 2014, Bolt and Zest
Talent Pipeline
Karl Sylm hired employees at top/middle level creating disquiet
among old employees

Nano units sold per month - Around 2000 (Supposed to be 20,000 as

decided)

Jaguar Land Rover acquisition - Rescuer (Net profit of 11.4% from 2014
to 2016 not upto the mark)

Source: http://economictimes.indiatimes.com/automobiles/after-death-of-md-karl-slym-cyrus-mistry-looks-to-turn-around-tata-
TATA MOTORS UNDER CYRUS MISTRY

Played hands-on role

Converted 12 member leadership unit into 5 member leadership unit
TATA MOTORS & CYRUS MISTRY
TATA MOTORS
Misalignment among Ratan Tata and Cyrus Mistry

"Tata Motors was close to finalising for the first time, a productivity-
based agreement with labour unions. Ratan Tata called the labour
unions and asked the union leaders for their public support and in
return undermined the introduction of the incentive linked to
productivity," Mistry wrote

Ratan Tata prevented key reforms in Tata Motors: Cyrus Mistry

 TATA DOCOMO DISPAT
Loss Reasons:
Decline in CDMA revenues
High financial costs (Rs 2,640 Cr.
from Rs 2,512 Cr.)
Delay in 3G networks
TATA DOCOMO LOSSES (in Rs. Crore)
TATA SONS gave Rs. 2500 Cr. to repay loans
Cut its workforce by 20 %
Cut its marketing spend by 40 %
1,500 crore for net diminution in the value of its
subsidiaries
Reason behind NTT DOCOMO exit:
confusing and was beyond
expectation and totally
unpredictable spectrum
Supreme Court cancelled 3 circle
licenses
Trust Members extreme anxiety
Ratan Tata keen to sue Docomo for
defamation
 Strategies
Large debt
Need of to
due to JLR
CASH generate
acquisition
cash

Reduced dividends to
Cash holding were shareholder of Tata
increased Motors
Clearance of some debt
Investment in depreciation
expenses/ assets Cash from various debt
Further investment in digital
security
industries (Tata Cliq, iQ)
Revenue Distribution to Shareholders
Boeing Contract of Apache
Fuselage (TAM ltd) 2.44
2.14 2.1
Defense contract are in Revenue spent on depreciation 1.6
pipeline 6.3 1.3
Current Ratio 5 5
0.62 0.60
0.58
3.5 0.1
0.48 0
0.42 2.57 2.6 2.7
0.36

4/11/17 13
 High

TATA POWER High Finance

Cost
Depreciation
and
Provision for
Impairments
Amortization

Huge Losses in 3 consecutive years.

Low dividend per share, maximum of 1.3 in Tata Power Exceptional Expenses
2016 (in Rs. Crore)

Year 201 2012 201 201 201 201 3699.27

3476.53
1 3 4 5 6 3439.9

Profit 2059 (1087 (85) (260 168 873 2641.69 2729.62

2600
/Loss ) ) 2051.69
2174.21
2376.39

TATA POWER SHARE PRICES 1800

1527.09
1334.64
980.24
866.15 850

0 0 0

Finance Cost Depreciation and Amortisation

Provision for ImpairmentS
REFERENCES:
Annual reports of Tata Steel, Tata Power, Tata Motors etc.

http://economictimes.indiatimes.com/industry/indl-goods/svs/steel/tata-steel-uk-completes-sale-of-long-products-
business-to-greybull/articleshow/52532790.cms
https://ftalphaville.ft.com/2016/10/25/2177961/what-next-for-tata-steel/

Image1 - http://
www.seatholidays.com/australasia/australia/hotels/blue-sydney-a-taj-hotel/blue-sydney-a-taj-hotel-australia.asp
Image2 - http://www.cpp-luxury.com/tata-group-shows-increased-interest-in-orient-express-hotels/

Image3- https://taj.tajhotels.com/en-in/taj-boston/

http://
www.theaustralian.com.au/business/taj-sells-blue-sydney-for-32m/news-story/0c4fdb08fa0f2336f2fe72fafd4d6d4
0
http://
www.rediff.com/business/slide-show/slide-show-1-special-why-taj-and-leela-are-selling-their-hotels/20140110.htm
http://indianexpress.com/article/business/companies/offer-for-tata-groups-blue-hotel-property-in-sydney-falls-thr
ough
/
http://www.forbesindia.com/article/battle-at-bombay-house/tata-vs-mistry-the-inside-story/44721/1
4/11/17 15