GENERAL PROJECT REPORT ON

“TATA MOTORS”

BY

SHUBHAM JAIN
(ROLL NO. 4310327)
(19P756C0100 )

Under the guidance of

Teacher. Mr. RAKESH SEN

In Partial Fulfillment of

  Bachelor of Commerce {B.COM}

Marketing group applied Economics

Submitted To

B. T. Institute of Excellence
Affiliated to
Dr. Harisingh Gour University (central university)

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 B. T. Institute of Excellence
Affiliated to

Dr. Harisingh Gour University

(Central university)

CERTIFICATE

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

submitted by Mr. Shubham jain {Roll No. 4310327} {Enrollment No.

19P756C0100} in partial fulfillment of Bachelor of Commerce {B.COM} has

satisfactorily completed the project work under our guidance and supervision.

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

Teacher. Mr Rakesh sen sir Prof. Dr. Raju Tandon

Project Guide Principal

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Internal Examiner External Examiner

ACKNOWLEDGEMENT

I am also thankful to Prof. Dr. Raju Tandoan, Principal B. T. Institute of

Excellence and also to HOD of B.com for providing me with this opportunity.

I express my gratitude for Mr. Rakesh Sen. (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.

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 DECLARATION

I, hereby declare that the project report on “TATA

MOTORS” is written and submitted by me to, towards the
partial fulfillment for the study of B.com. 3rd year & 6th
semester 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: Sagar

Date: 29/04/202

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 INDEX

CHAPTER PAGE
CHAPTERS
No.
NO.

EXECUTIVE SUMMARY 1-7

1. INTRODUCTION OF PROJECT 8

1.2 History & Background of Tata Motors 9-10

1.3 Tata’s Global Operations 11

1.4 International Marketing 12

1.5 Opportunities 12-16

1.6 Risk 16-24

1.7 Outlook 24-25

1.8 Internal Control System 25-26

2. LITERATURE REVIEW 27 - 33

3 COMPANY PROFILE 34

3.1 Production 35

3.2 Domestic Market 35

3.3 Policy 36

3.4 Vision & Mission 37

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663.5 Product Range 38-44

3.6 Marketing Strategies 44-48

3.7 Competitive Advantage 48-50

4 DATA ANALYSIS & INTERPRETATION

4.0 Strategic Analysis 50

4.1 SWOT Analysis 51-53

4.2 Michael Porter Analysis 54-57

4.3 Michael Porter’s Five Forces 58-60

4.4 Ansoff Analysis 60-62

4.5 Balanced Score Card Analysis 62-64

5 FINDINGS 65-69

6 SUGGESTIONS / RECOMMENDATIONS 69 -70

CONCLUSION

REFERENCES (BIBLIOGRAPHY AND

91 - 99
7 WEBLIOGRAPHY etc)

ANNEXURE

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CHAPTER - 1

INTRODUCTION

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
customer needs. Besides product development, R&D is also focusing on

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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
maker.

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
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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
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.

Employees:

To create a seamless organization that incubates and promotes innovation,

excellence and the Tata core values

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 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.

.Vendor and Channel Partners:

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
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
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 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
coaches for India and other international markets.

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

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.

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

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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.

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" off-
road 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.
The Company also plans to continue to strengthen business operations in

addition to vehicle sales, such as spare part sales, service and maintenance
contracts.

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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.

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.

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.

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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
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.

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 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
materials from low cost countries, reduction in number of suppliers, reduction

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

16
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.

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.

17
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 require

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.

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Although the Company engages in currency hedging in order to decrease its
foreign exchange exposure, a weakening of the Indian Rupee against the US
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.

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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.

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

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

21
Manufacturing and engineering: The Company has manufacturing facilities
and design and engineering centres, located in India, the United Kingdom,
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.
employees, particularly qualified engineers with expertise in automotive
design and production. The competition for such employees is intense, and
the 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.

22
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

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.

1.7Outlook:

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

23
 markets.

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.

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;

24
Audit Committee of the Board of Directors, comprising independent
directors, which is functional since August 1988, regularly reviews the
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.

25
CHAPTER – 2

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
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

26
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.

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 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
State- led 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.

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).

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

27
 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
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.

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
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.

28
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 fastest-
growing large market for passenger cars in the world” (The Economist Intelligence
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 one-
dimensional: 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

29
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)

.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 are affordable for Indian consumers.

30
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
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.

31
 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

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

32
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 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
33
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 550-

600 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.

• 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 On 2008

34
Exports
According to the Society of Indian Automobile Manufacturers (SIAM), automobile
sales (including passenger vehicles, commercial vehicles, two-wheelers and three-
wheelers) 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.

35
3.4 VISION AND MISSION

36
 PRODUCT RANGE

Tata Sumo

Production 1994–present
Assembly Pune, India
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

37
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

Tata Indica

"Tata Indica V2"

38
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
Body style 4-door
Layout RR layout
Engine 2 cylinder SOHC petrol Bosch multi-point

39
 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

40
15. Tata Aria
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)

41
9. Tata 1512 (Medium bus chassis)
10. Tata 1612/1616 (Heavy bus chassis)
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)

42
 9. Tata LPTA 1621 TC (6×6)
10. Tata LPTA 1615 TC (4×2)
11. Tata Winger Passenger Mini Bus

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 long-
term 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 market-
oriented strategies and therefore contributes to the goals of the company and its
marketing objectives.

SALES STRATEGY

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.”

Sales Promotion Objectives

 To increase the sales & encourage the present consumers to use more
frequently.

43
  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.

 To help the new product enter into existing and new market.

Importance of Sales Promotion

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

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,

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

44
 Other than normal trade & cash To push more sales to trade, early
3.Discounts
discount. cash recovery.

Where participating dealers are To increase sales, buy dealer’s

4.Dealer Sales
invited to compete in terms of the loyalty; motivate dealer’s staff
Contests
sales performance. to 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.

SALES PROMOTION STRATEGY

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:-

45
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

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

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

46
 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.

COMPETITVE ADVANTAGE OF TATA

 Dealer network across the country

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

47
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

48
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.
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.

49
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)].

- 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
 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

50
- 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 t e ch n i ca l co mp e t en c i es 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.

- 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.
 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.

51
 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).

- 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.

52
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 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

53
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:

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]

54
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.
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

55
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.
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.

56
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.

Figure 4: Porter’s Five Forces Strategy that Shape Competition

57
 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
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.

58
 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

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:

59
 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

60
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.
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:

61
 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 a semble
cars as per the local requirements of a region after studying the needs.

62
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 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.

63
 CHAPTER 5

FINDINGS BASED ON ANALYSIS

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:

64
  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
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
Any significant difference in the financial performance due to merger de cision.

 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:

65
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.

 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.

66
  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.
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

67
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 pre-
acquisition period. The profitability parameters, liquidity parameters, capital
efficiency and operating efficiency have shown the fall down. Thus the nul
l
hypothesis is accepted statistically.

68
CHAPTER 6

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.
69
70
5. The financial parameters are most important for the success of any merger
and acquisition decision, operational and leadership problems even cannot
over looked.

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.

71
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 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.

72
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