“TATA MOTORS MAY STRUGGLE TO REV UP”

Source: economic times dated 15-02-2017

An Analysis by : 1. ABISHEK SANTHOSH RAJ A 2. ANOOP RAJAN MATHEW 3. DARSHANA GOGOI 4. GANESH KUMAR 5. JOSEPH ARNOULD MARIAN 6. MADDI BHADHRI NADH

THE NEWS

Revenues increased Net profit falls 96% in Q3 Shares fall 10.3% - biggest decline in 5yrs Jaguar Land Rover (JLR) misfires

TATA MOTORS

Established in 1945 by J R D Tata CEO : Guenter Butschek Chairman : Natarajan Chandrasekaran Headquarters : Mumbai Subsidiaries: JLR, Tata Daewoo, Tata

Hispano Net worth: $12.7 billion

JAGUAR LAND ROVER (JLR)

Acquired by TATA Motors in 2008 Contributes 83% of TATA Motors’ total revenue Manufacturing units in UK, Slovakia, India and China No 1 manufacturer in UK Sales :

EUROPE CHINA UK US REST21.6% 20.6% 19.3% 16.8% 21.7%

ANALYSIS ON TATA MOTOR’S STRUGGLE TO REV UP

Unfavorable marketing expenses Higher new model launch Lower wholesale volumes Surge in Variable cost

INCREASE IN EXPENSES

POSSIBLE REASONS FOR THE CAUSE- GLOBAL

Tianjin Explosion Brexit Trump effect

IMPACT OF TIANJIN EXPLOSION

28th August 2015, Port Tianjin, China 5800 JLR’s destroyed Incurred a loss of £154 mn Spent £85 mn on recovery in FY16-17

IMPACT OF BREXIT

8 operations of JLR in UK Estimated decrease in Revenue: £ 1.10

billion 10% levy on exports to Europe 4% levy on import of components Fall in pounds sterling Fall in share price

2015-2016 2016-2017126000

128000

130000

132000

134000

136000

138000

140000

Sales units of JLR-Q3

Sales: 6700 units decrease(5%)

2015-2016 2016-20170

10

20

30

40

50

60

70

80

90

100

Tax Paid

mn pounds

80% increase in tax

IMPACT OF DONALD TRUMP

US taxation policies- Border tax adjustments

Negative impact for automakers for sales US accounts for 20% of subsidiary JLR May hit EPS by 50%

SHARE PRICES WITH RESPECT TO THE EVENTS-NASDAQ

POSSIBLE REASONS FOR THE CAUSE- DOMESTIC

Ouster/Leadership of Mr. Cyrus Mistry Demonetization effect Tata Nano Project

IMPACT OF CYRUS MISTRY

Focused more on increasing EPS Invested £3.1 billion in product creation Lost £ 65 billion (TATA group) : poor

investments Set up innovation centres globally Introduced 8 new products in FY 16-17 Stock fell by 16.4% after his ouster

INVESTMENT BY CYRUS MISTRY ON R&D

IMPACT OF TATA NANO PROJECT

Drain on financial resources 3000 Crores loss 2,50,000 cars are not on roads 8500 Crores cross holdings

IMPACT OF DEMONETIZATION

08th November,2016 Affected commercial and passenger vehicle

sales 13% decline in sales OEM’s were affected Share price fell

SHARE PRICES WITH RESPECT TO THE EVENTS-BSE/NSE

22/8/2015 24/8/2015 23/6/2016 24/6/2016 1/8/2016 1/9/2016 24/10/2016 27/10/2016 11-Nov 15/11/2016 9/2/2017 15/02/20170

100

200

300

400

500

600

700

444

308.25

488448

493

589559

521 534.15

457.25

512

436

Share price

DATE

SHAR

E PR

ICE

Tianjin Explo-sion Brexit Raise in sales of JLR Cyrus Mistry Demonetization/US Elec-

tionsRelease of Financial State-

ments

TIME-LINE OF EVENTS

24th Oct 2016 - ouster of

Cyrus Mistry

23th June 2016 - Brexit

28th August 2015 – Tianjan

Explosion8th Nov 2016 –

DemonetizationNov 2016 – US Elections(Tax

Policies)

Feb 2017 – Release of Financial

Statement for Q3

BIBLIOGRAPHY

The Economic Times Indian Express Business Line Tata motors press release for Q3 JLR Automotive, Annual Report

2015-16 Financial statement of Tata

Motors till Q3

www.tatamotors.com www.forbes.com www.theguardian.com www.moneycontrol.com www.google.com www.nasdaq.com

THANK YOU