Capstone Project

Project Title: The strategic roadmap of Tata MotorThe strategic roadmap of Tata MotorThe strategic roadmap of Tata MotorThe strategic roadmap of Tata Motorssss

Project Guide: Air Commodore Krishna Shankar

Submitted by:

� Debabrata Siddhanta (23)

� Prateek Ramchandani (51)

� Priyanka Sahu (53)

� Vikas Guru (78)

Kirloskar Institute of Advanced Management Studies, Harihar,

Karnataka.

2008 – 2010

Index

No Topic Page No

1. Objective of the Study 2 2. Automobile Industry Overview 3-4 3. PEST Analysis of Automobile Industry 5 4. Porter Five Forces analysis of Automobile Industry 5-6 5. Introduction about Tata Motor 7 6. Genesis and Brief Description of the Problem 8-9 7. Tata Motor Product Portfolio 9-11 8. Tata Motor Organization Culture 11-12 9. Financial Analysis 12-14 10. Management Costing as a Measure of Operational Performance 15 11. IT Implementation in Tata Motor 16 12. Problems at the beginning of the Project 17-18 13. Problem Genesis: Root cause Analysis 18 14. Introduction to Suggestion and Solutions of Problems 19 15. Possibilities of Cost Cutting at JLR 19 16. Cost Cutting measures at JLR 20 17. Emerging Market for Tata Motors: China 22-24 18. Emerging Market for Tata Motors: South Africa 24-26 19. Need for hybrid Cars 27-29 20. Integrated Marketing Plan 29- 21. Brand Awareness Programme 30-32 22. Appendis A/B/C/D 33-38 23. Bibliography 39-40

Objectives

� Designing the strategy which will be implemented to be out of the turmoil.

� To Search for new market for development of business worldwide.

� To Design Company’s cost cutting measures at JLR which would help to lower the break-even point going forward.

� To create an operational excellence to align production with demand and control cash flows.

� To create an integrated marketing plan to build brand awareness.

Automobile Industry Overview:

In India there are 100 people per vehicle, while this figure is 82 in China. It is expected

that Indian automobile industry will achieve mass motorization status by 2014.

The automobile industry in India comprises of Automobile Manufacturer, Original Equipment manufacturer (OEMs) and auto component manufacturers. This industry contributed nearly 5 percent to the country’s GDP in 2006-07. This industry also offers great employment opportunities. It employs around 13 million people directly and indirectly.

The Indian automotive industry has witnessed an unprecedented boom till 2006-07, because of the improvement in living standards of the middle-class, and a significant increase in the disposable incomes. The industry is very close to touch a 10 million mark, to which the commercial vehicles segment will be a major contributor.

Salient features of Indian automobile industry.

� India is the second largest two-wheeler market in the world. � Fourth largest commercial vehicle market in the world. � Eleventh largest passenger car market in the world. � Fifth largest bus and truck in the world. � Envisaged to be the seventh largest automobile market by 2016, and world’s third

largest by 2030 (behind only China and US)

Over 20 OEMs have set up their International Purchase Offices (IPOs) in India to source the components from this region. This number is expected to double by the year 2010. The OEMs in India include firms like General Motors, Ford Motors, Cummins International, Bosch, Volkswagen, BMW, JCB etc.

India enjoys a cost advantage with regard to castings and forgings. The manufacturing costs in India are 25 to 30 percent lower than its western counterparts. India’s competitive advantage does not come from costs alone, but from its full service supply capability.

The quality consciousness of the industry matches global standards now with the supported by the fact that eleven companies of India received the coveted Deming prize, which is largest number outside Japan.

Indian automobile companies

1. Ashok Leyland 2. Force Motors 3. Hindustan Motors 4. Mahindra & Mahindra Limited 5. Maruti Suzuki 6. Premier Automobiles Limited 7. REVA 8. Tata Motor

Multi-national automobile companies in India

1. Audi 2. Renault-Nissan 3. BMW 4. Mercedes-Benz 5. Fiat( Handled by Tata Motor) 6. Mitsubishi Motors 7. Ford Motor Company 8. Škoda 9. General Motors 10. Toyota 11. Honda 12. VOLVO 13. Hyundai

OVERVIEW OF PERFORMANCE OF THE INDIAN AUTOMOBILE INDUSTRY IN

2007- 08

Domestic Sales:

The cumulative growth of the Passenger Vehicles segment during April 2007 – March 2008 was 12.17 percent. Passenger Cars grew by 11.79 percent, Utility Vehicles by 10.57 percent and Multi Purpose Vehicles by 21.39 percent in this period. The Commercial Vehicles segment grew marginally at 4.07 percent. While Medium & Heavy Commercial Vehicles declined by 1.66 percent, Light Commercial Vehicles recorded a growth of 12.29 percent. Three Wheelers sales fell by 9.71 percent with sales of Goods Carriers declining drastically by 20.49 percent and Passenger Carriers declined by 2.13 percent during April- March 2008 compared to the last year. Two Wheelers registered a negative growth rate of 7.92 percent during this period, with motorcycles and electric two wheelers segments declining by 11.90 percent and 44.93 percent respectively. However, Scooters and Mopeds segment grew by 11.64 percent and 16.63 percent respectively.

Exports:

Automobile Exports registered a growth of 22.30 percent during the current financial year. The growth was led by two wheelers segment which grew at 32.31 percent. Commercial vehicles and Passenger Vehicles exports grew by 19.10 percent and 9.37 percent respectively. Export of Three-Wheeler segment declined by 1.85 percent.

Environmental AnalysisPEST Analysis of Indian Automobile Industry keeping in mind Tata Motors

3

POLITICAL•Promoting Govt. policies for phased,

integrated & conductive growth.

•100% FDI allowed

•Emphasis on R&D by giving weighted

150% Tax reduction.

ECONOMICAL•India becoming manufacturing hub for

Mini car, OEM and auto components.

•Sound economic growth in

manufacturing sector.

•Firms have tie up with global players.

SOCIAL•Growth in Urbanization, 4th largest

economy by PPP indicator.

•Preference for small & compact Car

•Preference for fuel efficient car with

low running cost. (Tata Indica)

TECHNOLOGICAL•Hybrid car entering into market.

•Few Global companies established

R&D centers in India

•Major Global players have set – up

manufacturing units in India

Michael Porter Five Forces Analysis of Automobile Industry India:

Bargaining Power of Suppliers: (Low)

There are 6400 suppliers of auto components in India, of which about 6 percent are organized and the remaining 94 percent are small scale unorganized players. There are 8 Indian OEMs and around 12 foreign OEMs operating, it means about 20 major players are operating as OEMs in India. But still the supplier concentration ratio relative to firm concentration ratio is high. Companies like Maruti Suzuki, TVS motors, have their own Vendors Park for tier-1 suppliers. They are the dedicated suppliers to the OEMs and to some extent this shows the dependency on one particular OEM. With the same explanation we can understand that the “threat of forward integration by the supplier relative to threat of backward integration by the firm is also low. Suppliers provide standardized product with almost equal amount of quality so the differentiation of the inputs is low. Threat of Substitute Product: (Low)

Substitute of Automobile Industry products are Railways, Airways and Seaways. The relative price performance of the substitute is very poor and even in the near future it looks unpractical to think about any product or service replacing automobiles. Threat of New Entrants: (Medium)

Government Policies and Barrier to New Entrants: (Low)

After LPG reforms of 1990 in India this Industry is no more a highly regulated industry. After the sector opened to foreign direct investment in 1996, global majors moved in. Automobile industry in India also received an unintended boost from stringent government auto emission regulations over the past few years. In 2002 government of India introduced the ‘Auto Policy’ and that policy was the major boost to Automobile sector, it approved the 100 percent FDI investment and lot more other initiatives and reforms have introduced. Access to the distribution network is high because of the size of the country and very widely dispersed customers across geography. It has taken some 40-50 years of companies like M & M and Tata Motors to reach to rural India. Access to this kind of distribution channel may be nightmare for a foreign company or it may empty their pockets. This industry is high capital intensive industry and customer of this industry is brand conscious and loyal. The Intensity of Competitive Rivalry: (Medium)

If look at the statistics attached in appendix tables we can refer to that before recession the compound market growth was more than 15% in last year. The number of domestic players is eight and foreign players are 12. So this shows a high growth along with lot of competitor situation. The exit barriers are high because it is capital plus labor intensive industry. This industry is gives jobs to about 13 million people directly and indirectly. Exit from this kind of industry for any player is very difficult. Buyer’s Bargaining Power: (Low)

India is the second largest two-wheeler market in the world and Fourth largest commercial vehicle market in the world and market growth rate is also high this shows the large customer base for automobile industry in India, so definitely the buyer’s concentration to firm concentration is high. Indian customer for this industry is a price sensitive customer with the moderate amount of information availability (not high like institutional buyer but also not as low as pharma industry’s end consumers).But customers are individual buyer and in this case the bargaining power of customer is low.

Tata Motors--- An Introduction Tata Motors Limited is India's largest automobile company, with consolidated revenues of Rs.70, 938.85 crores (USD 14 billion) in 2008-09. 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 second largest bus manufacturer. Established in 1945, Tata Motors' presence indeed cuts across the length and breadth of India. Tata Motors is a part of the Tata Group manages its share-holding through Tata Sons. Over 4 million Tata vehicles ply on Indian roads, since the first rolled out in 1954. Tata Motors makes passenger cars, multi-utility vehicles and light, medium and heavy commercial vehicles. Tata Motors has 70 subsidiary companies worldwide to support the activities of TML. Some of the main subsidiaries include Tata Daewoo Commercial Vehicle, Tata Technologies, Tata Motors finance, Telco Construction Equipment, Jaguar Cars and Landrover. Tata Motors has joint ventures with Marcopolo, the Brazil-based maker of bus and coach bodies, and with Fiat Auto. The company’s manufacturing base in India is spread across Jamshedpur (Jharkhand), Pune (Maharashtra), Lucknow (Uttar Pradesh), Pantnagar (Uttarakhand) 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 power trains. The company is establishing a new plant at Sanand (Gujarat) for Tata Nano which will start operations in 2010. 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. Tata Motors has expanded its production and assembly operations to several other countries including UK, South Korea, Thailand, South Africa and Argentina and is planning to set up plants in Turkey, Indonesia and Eastern Europe. Tata also has franchisee/joint venture assembly operations in Kenya, Bangladesh, Ukraine, Russia and Senegal. Tata has dealerships in 26 countries across 4 continents. Though Tata is present in many counties it has only managed to create a large consumer base in the Indian Subcontinent namely India, Bangladesh, Bhutan, Sri Lanka and Nepal and has a growing consumer base in Italy, Spain and South Africa

Genesis and Brief Description of the Problem: The automobile sector in India was severely impacted by the disruption in the Indian and global business environment. GDP growth slowed down considerably from 9% in FY 07-08 to 6.7% in FY 08- 09. While the slowdown in the Indian economy was less compared to other world economies, it did have a severe impact on most sectors. Both turnover and profitability of the automotive sector came under tremendous pressure. Double digit inflation and high material cost in the first half of the year leading to higher vehicle prices, higher fuel prices, unavailability of finance, higher cost of financing and uncertainty in the overall economic conditions impacted demand to a great extent. The domestic commercial vehicle industry witnessed a decline of 17.4% compared to the over 7.6% growth achieved in the last fiscal. The Company’s commercial vehicle sales in the domestic and international markets, at 291,993 vehicles, were 17.2% lower than the previous year. In the domestic market, the M&HCV segment contracted drastically during the year, and shrunk to almost two-thirds of its size last year. The LCV segment also faced pressure as a result of the slowdown and the unavailability of finance for a large part of the year. The tightening liquidity and the drastic increase in interest rates, coupled with high fuel prices for a major part of the year suppressed demand to a considerable extent. The overall slowdown in the economy also accentuated the negative sentiments with the consumers. Despite the new launches and heavy promotion spends by players in the industry, the industry declined by 0.5% during the year. Depreciation (including product development expenditure) for 2008-09 increased by 29.2% to Rs. 925.71 crores from Rs. 716.66 crores in FY 2007-08 on account of increase in fixed assets. It represents 3.6% of net turnover as compared to 2.5% for FY 2007-08. Jaguar and Land Rover Business:

Jaguar and Land Rover Business, acquired on June 2, 2008 comprised three major manufacturing facilities in U.K., two advanced design and engineering facilities, National Sales Companies in several regions across the World and significant Intellectual Property Rights. In fiscal 2009, the global financial crisis impacted the whole of the automotive industry. The effect on the premium market has been particularly evident with industry volumes falling between 25% and 30%. Nearly all the key participants in the luxury segment witnessed a fall in volumes mainly due to the general lack of consumer credit. As compared to corresponding period of the previous year, during the period June’08 to March’09, JLR volumes witnessed a decline of 32%. While Land Rover fell by 39%, decline in Jaguar volumes were contained at 4% mainly supported by the success of the new XF launched in January 2008. JLR retail sales in North America is declined by 37% mainly due to higher fuel prices which affected demand for both new and used vehicles with large capacity engines. The resultant sharp reduction in residual values, coupled with the reduced availability of credit, made leasing deals both more expensive and less readily available. Jaguar retail volumes for the period June 2008 to March 2009 were 10.9% down compared to the same period in the previous year. Relatively better performance compared to the relevant segment trends was largely due to the positive market reaction to the new Jaguar XF. Land Rover retail volumes for the period June 2008 to March 2009 were down by 45% compared to the same period in the previous year.

In the United Kingdom and Europe (excluding Russia) sales were also driven by favourable market reaction to the new Jaguar XF. Jaguar retail volumes for the period June 2008 to March 2009 were flat and up 3% respectively versus the same period in previous year. Land Rover retail volumes for this period were down by 43% and 45% respectively, compared to the same period in the year 2007-08.

All these issue merged together and created the problem for Tata Motor. Now we are going deep into Tata Motor to understand all these issues together and get a better understanding.

Tata Motor Product Portfolio

Tata has a variety of product in almost all sectors. Also Tata handle the Fiat distribution operations in India so that was also included in its product portfolio. Its British unit is not categorized with other passenger car because we will discuss about it in differently.

Competitive Analysis in India--------------Cars by Price Range

Under Rs. 3

Lakhs

• Maruti 800, Maruti Alto, Omni • Reva • Tata Nano

Rs. 3-5 Lakhs

• Ambassador • Chevrolet Aveo U-VA, Chevrolet Spark, Chevrolet Opel Corsa • Fiat Palio, Fiesta, Ford Icon • Hyundai Santro, Hyundai i10, Hyundai Getz • Maruti Zen, Maruti Wagon R, Maruti Versa, Maruti Esteem, Maruti Gypsy,

Maruti Suzuki A-Star, Maruti Suzuki Zen Estilo, Maruti Suzuki Swift, Maruti Suzuki Ritz New, Mahindra Logan

• Indigo XL, Indigo Marina

• Tata Indica, • Toyota Qualis, • Tata Indigo CS

Rs. 5-10 Lakhs

• Chevrolet Swing, Chevrolet Aveo, Chevrolet Tavera, Chevrolet Optra Magnum • Fiat Linea, Fiat Adventure, Fiat Grande Punto, Ford Fusion • Hyundai Accent, Hyundai Elantra, Hyundai i20, Hyundai Verna, Hyundai

Sonata Embera, Honda City ZX, Honda Jazz New • Maruti Baleno, Maruti Suzuki Sx4, Maruti Suzuki Swift Dzire, Mahindra

Scorpio, Mitsubishi Lancer, Mitsubishi Cedia, Mahindra Bolero • Toyota Innova, • Tata Sumo Victa, Tata Sumo Grande, Tata Safari

• Skoda Fabia

Rs. 10-15 Lakhs

• Chevrolet Forester • Ford Mondeo & Ford Endeavour, Ford Focus • Honda Civic, Hyundai i30 New • Skoda Octavia & Combi • Toyota Corolla, Toyota Corolla Altis, • Tata Indicruz New

• Volkswagen Jetta

Rs. 15-30 Lakh

• Audi A4 • Chevrolet Captiva • Chevrolet Cruzes New • Honda CR-V, Honda CRV 2008, Honda Civic Hybrid, Honda Accord, Hyundai

Santa Fe New • Maruti Suzuki Grand Vitara, Mitsubishi Pajero, Mercedes C Class • New Skoda Superb New • Opel Vectra • Skoda Laura • Toyota Camry, Ford Endeavour Thunder Plus, Terracan & Tucson, Toyota

Fortuner New • Volkswagen Passat , Volkswagen Jetta

Rs. 30-90 Lakhs

• Audi A6, A8 & Audi TT, AUDI Q7 • BMW X5, 5 Series & 7 Series • Mitsubishi Montero, Mercedes Benz S-Class, Mercedes E Class, S Class, SLK,

SL & CLS-Class • Porsche Boxster, Cayenne, 911 Carrera & Cayman S • Toyota Prado • Volvo Xc90, Volvo S80

Above Rs. 1

Crore

• AUDI R8 • Bentley Arnage, Bentley Continental GT & Flying Spur, Bentley Azure • Maybach • Rolls Royce Phantom

The segregation is made on Ex-Showroom price of base models.

Tata’s Model are highlighted

Tata Motors Organizational Culture Tata Motors is driven through core philosophies of Tata group like Dignity, Trust and Reliability. Apart from that company follows these Core Values in its day to day activities.

• Integrity • Customer focus • Corporate Citizenship • Passion for engineering

The values of the Organization are driven from Top down with the Chairman ensuring that it is adhered to in letter and spirit. Keeping to commitments and firming on time schedules were sacred. There are no hierarchical competitive clashes or ego driven conclusions. The organization’s interest is paramount The said structure is at every manufacturing location and the Plant Head is in charge for the unit. Functional Heads function at the corporate level as well and report to the Managing Director or to the Executive Director. Channel Partner:

A Supplier Relationship Management programme and Dealer Management System are in place and the Management Committee reviews the programme from time to time. The key indicators of review are the Supplier coverage and the efficiency of the transactions with the Company. The Company also organizes Supplier’s day/Vendor meets/Channel partner meets where suppliers can touch base with the Board members and share their thoughts and inputs. Employees:

The Management Committee on a very regular basis reviews the employees’ issues. The remuneration guidelines, the employee satisfaction, the employee growth plan and the organization culture are discussed in these meetings. Major employee welfare schemes are put up to the Board for approval.

All employees are evaluated based on performance and merit. In the PMS system, Individual performance plans are cascaded from the Balance Score Card down to the smallest work unit, bringing business and customer focus to all levels and teams. Monthly and mid-course half yearly reviews are held to ensure resources; targets and training are in alignment with business needs. Employees have an opportunity to develop their own view of their performance and discuss it with their supervisor. Formal evaluation ratings are assigned at the end of the year. PMS instills a high performance culture in the organization. Company provides continuous training programme to its employee. On an average each employee takes around 50 hour of training in a year. Financial analysis

Standalone FINANCIAL RESULTS for YEAR ended March 2009

(Rs. in Crores)

2008-09 2007-08 Change %

Gross Revenue 28599.27 33093.93 -13.58

Net Revenue (excluding excise duty) 25660.79 28739.41 -10.71

Total Expenditure 23908.35 25807.82 -7.36

Operating Profit 1752.44 2931.59 -40.22

Other Income 925.97 483.18 91.64

PBDIT 2678.41 3414.77 -21.56

Interest and Discounting Charges 673.68 282.37 138.58

Product Development Expenses 51.17 64.35 -20.48

Depreciation 874.54 652.31 34.07

Exceptional item 65.26 160.73 -59.40

Profit Before Tax 1013.76 2576.47 -60.65

Tax Expenses 12.5 547.55 -97.72

Profit After Tax 1001.26 2028.92 -50.65

• For FY09 volumes declined by 13.5% causing Net Revenues to fall to Rs.256.6 Bn, a

decline of 10.7% than last year.

• Consequently, EBITDA for FY09 stood at Rs 17.5 bn. Reported EBITDA margins stood at 6.83% in FY09 (FY08:10.2%).

• Depreciation costs increased by 34% for FY2009. This increase has been due to the

increase in fixed assets mainly due to the expansion of capacity at Uttaranchal for the production of Tata Ace and Magic and Pune plant for the production of the Indica Vista and Indigo variants.

• High interest rate environment for most part of the year along with increased debt

resulted in an increase of interest cost which stood at Rs.6737 mn for FY09.

• Profit After Tax (PAT) decreased by 50.7% to Rs. 1,001.26 crores from Rs. 2,028.92 crores in FY 2007- 08. This was mainly on account of decrease in turnover, due to

slump in domestic and international markets. Basic Earning Per Share (EPS) decreased to Rs. 22.70 as compared to Rs. 52.64 last year for Ordinary Shares. Basic EPS for ‘A’ Ordinary Shares is Rs. 23.20.

• Balance Sheet size of the Company increased to Rs. 26,425.64 crores as at March

2009 from Rs. 15,095.74 crores as at March 2009. This increase is attributed to significant capital expenditure incurred by the Company on new products and programmes and strategic investments. As on March 31, 2009, the Ordinary Share Capital of the Company stood at Rs. 449.83 crores as compared to Rs. 385.50 crores as on March 31, 2008 and ‘A’ Ordinary Share Capital of Rs. 64.18 crores, raised during the year by Rights Issue.

(Rs. In crores) Summarized Balance Sheet of Tata Motors Ltd.

WHAT THE COMPANY OWNED

As on March 31, 2009

As on March 31, 2008

NET FIXED ASSETS 14,599.31 10,452.27

INVESTMENTS 12,968.13 4,910.27

NET CURRENT ASSETS 1,143.82 272.85

MISCELLANEOUS EXPENDITURE 2.02 6.05

TOTAL ASSETS (NET) 26,425.64 15,095.74

WHAT THE COMPANY OWED

LOANS 13,165.56 6,280.52

NET WORTH 12,230.15 7,839.5

Share Capital Rs. 514.05 crores (Previous Year Rs. 385.54 crores)

Reserves Rs. 11716.10 crores (Previous Year Rs. 7453.96 crores)

FOREIGN CURRENCY MONETARY ITEM TRANSLATION A/C 164.12 -

DEFERRED TAX LIABILITY (NET) 865.81 975.72

TOTAL FUNDS EMPLOYED 26,425.64 15,095.74

• Borrowings increased mainly to support Capital expenditure, Investments and

increased working capital requirements in a volume decline scenario which mainly include new plant and investment in subsidiaries.

• The Gross total debt (inc. FCCNs) stood Rs 131.6 bn as on 31tst March’09. The Company’s Net Debt (Net of the surplus investible funds) stood at Rs 124 bn while the Company’s net debt to equity ratio stood at 0.99.

Key Ratios of Tata Motors Ltd.

Year Ends (Months) 200903(12) 200803(12) 200703(12) 200603(12)

OPM (%) 6.71 10.53 9.70 10.68

NPM (%) 3.77 6.96 6.94 7.35

Reported EPS 19.48 52.63 49.65 39.94

Return on networth 8.09 25.98 28.00 27.81

Current ratio 0.84 0.89 1.24 1.24

Key Ratio of Tata Motors indicates the current slowdown in industry and its impact on financial performance of company. In the period of slowdown too, company could maintain to keep good current ratio which is clear indicator of sound working capital.

Consolidated FINANCIAL RESULTS for YEAR ended March 2009

(Rs. in Crores)

2008-09 2007-08 Change %

Net Revenue (excluding excise duty) 70939 35660 98.93

Total Expenditure 68742 31391 118.99

Operating Profit 2197 4269 -48.54

Other Income 799 267 199.25

PBDIT 2996 4536 -33.95

Interest and Discounting Charges 1931 743 159.89

Depreciation & Amortisation 2507 782 220.59

Profit Before Tax (2129) 3086 -168.99

Tax Expenses 376 918 -59.04

Profit After Tax (2505) 2168 -215.54

Cash Profit 1065 3773 -71.77

Consolidated Loss:

Tata Motor has posted a consolidated loss of Rs 2505 Cr. for financial year 2008-09. This is a major concern for organization to get back on the financial soundness. In Consolidated Profit & Loss A/c Tata Motors has shown loss basically due to acquisition of Landrover and Jaguar. In spite of high economic slowdown in world Car market (5 % down than previous year) company could manage to have 1065 Cr. Cash profit in FY2009.

• Market conditions continue to have an adverse impact on volumes of Jaguar and Landrover. Wholesale volume over the past ten months is down 32% versus the comparable period for the prior year.

• For the ten month period ending March 31 2009 (After acquisition) Jaguar and Land

Rover reported a loss before tax of £ (281) mn.

Management Costing as a measure of operational performance:

In view of the slump in the domestic and international markets, the Company’s profit after tax decreased to Rs. 1,001.26 crores from Rs. 2,028.92 crores in the previous year, the margins were under pressure mainly due to the rising input costs, lower volume growth and high interest cost. The following table sets forth the breakup of the Company’s expenses as part of the net revenue. Financial Performance as a measure of Operational Performance Percentage of Turnover

2008-09 2007-08

Turnover net of excise duty 100 100

Expenditure:

Material (including change in stock and processing charges) 75.5 73.3

Employee Cost 6 5.4

Manufacturing and other expenses (net) 11.6 11.1

Total Expenditure 93.1 89.8

Other Income 3.6 1.7

Profit before Exceptional Item, Depreciation, Interest and Tax 10.5 11.9

Depreciation (including product development expenditure) 3.6 2.5

Interest and Discounting Charges (Net) 2.6 1

borrowings, deposits and loans given -0.3 0.6

Profit before Tax 4 9

• Material Cost as a % of net turnover has increased to 75.5% from 73.3% for the last

year. This was largely a result of increase in prices of steel, aluminum, nickel, copper and natural rubber. However, the Company managed to lower the impact through its on going cost reduction programme with initiatives like global sourcing, vendor rationalization and value engineering.

• Manufacturing and Other Expenses reduced by 6.8% to Rs. 2,970.33 crores in FY

2008-09 from Rs. 3,188.63 crores in FY 2007-08. These were 11.6% of net turnover for the year as compared to 11.1% for the previous year, due to higher sales and marketing expenses.

• Profit before depreciation, exceptional item, interest and tax decreased by 21.6% to

Rs. 2,678.41 crores from Rs.3,414.77 crores in FY 2007-08. The margin decreased to 10.4% from 11.9% in FY 2007-08.

• Depreciation (including product development expenditure) for 2008-09 increased by

29.2% to Rs. 925.71 crores from Rs. 716.66 crores in FY 2007-08 on account of increase in fixed assets. It represents 3.6% of net turnover as compared to 2.5% for FY 2007-08.

• Net interest cost increased to Rs. 673.68 crores in FY 2008-09 from Rs. 282.37 crores

in FY 2007-08. With the global crisis in the financial markets the rates at which funds were available to the company had drastically increased. The company required external funds to manage its capital expenditure programme and also to manage working capital requirements.

Tata Motor’s IT Implementation and Importance in Strategy and

Operations Even though IT implementation is required in all the areas of the business of Tata Motor but it became really crucial in design, manufacturing and supplier/customer interface function. The company is using Digital Product Development, Digital Manufacturing Solutions and better integration with vendors in order to improve significantly its product development processes and capabilities. The NANO website has been launched which facilitates online booking along with exhibiting all other product details. Launch of a web based supplier portal fulfils the business requirement of capturing potential supplier's information, communication platform for suppliers and news about supply chain. The Company has instituted an online Dealer Management System for the channel partners that have helped the dealerships keep a step ahead of the increasing challenges of the automotive industry. It is supplemented with a robust analytical tool to help the dealerships and Tata Motors take decisions. The Company today has multiple touch points for the customer, including portals and a call center to voice their inquiries and concerns. The Company is leveraging its connected dealer network for communication and training. SAP SRM Implementation: End to end Supply Chain integration of Tata Motors (from Purchase, Supply, production, payment etc.) Benefit: mySAP Supplier Relationship Management is a purchasing platform for sustainable savings and value generation through full-cycle supply chain management.

• Reduction in Procurement cycle time • Improve process by e-procurement • Real time Supplier integration with business • Knowledge sharing

SAP WM Implementation: SAP- Warehouse Management (WM- with mobile data entry) is combined with SAP RF console technology (through bar codes) to automate all the Warehouse operations of Tata Motors. Benefit:

• Improved throughput at Warehouses by RF enabled processes • Capability enhancement to handle more parts with same team size • Real time Inventory tracking

Knowledge based Engineering Implementation in CAD/CAM: TML have developed "KNEXT" an in house software to develop Knowledge Based Engineering applications modules in the areas of body design, chassis design and vehicle performance. Benefit:

• Processes defined on KBE have reduced design Cycle time about 30 percent • Designer's knowledge acquired over the years and company best practices are

captured and retained. • Process is defined with KBE, reduce cycle time and improve adherence to

legislations, regulations, best practices.

Problems at the Beginning of the Project

• Reported revenues (net of excise) of Rs.6404.63 crores on a stand-alone basis for the quarter ended June 30, 2009, of the financial year 2009-10, a decline of 7.6% compared to Rs.6928.44 crores in the corresponding quarter previous year

• The company’s continued focus on cost efficiencies, coupled with reduction of raw

material prices, inventory reduction and improvement in sales realisation, yielded considerable benefits resulting in the operating margin to 11.4% (from 7.1% in the previous year), with operating profits at Rs.728.00 crores, an increase of 47.9% as compared to the corresponding period of the previous year.

• Consolidated Financials shows the net loss of Rs. 329 Cr on first quarter of FY10

which also include high loss due to foreign exchange. Company has targeted to reduce debt equity ratio through

� Disinvestment � Capital Rising � Internal Accruals

Debt Funding

• The company's consolidated debt stood at 349.5 billion rupees ($7.2 billion) at the end

of March. Since then it has repaid about $1 billion of long-term debt related to buying Jaguar and Land Rover.

• On 20th May 2009, Tata Motors raised Rs. 4200 crores ($ 840 million) through issue

of Secured Non- Convertible Rupee Debentures. The funds raised will be used for part repayment of the $3 billion bridge facility taken for acquiring Jaguar Land Rover. These debentures were guaranteed by State bank of India and several other banks to counter guarantee.

• Tata Motors invites FDs from public to raise Rs 1,500 cr, within a period of one year

company has come second time to public to raise money through FDs.

• Tata Motors has lower down its stake in Tata Steel by selling shares worth 2.36 billions to Tata Sons.

Jaguar Land Rover

• Market conditions continue to have an adverse impact on volumes.

� Year on Year retail volume down 35% versus the comparable period for the prior year,

� The company also took steps to adjust inventory levels and bring demand and supply into balance with the external environment; these actions combined with the retail performance resulted in a wholesale volume decline of 52%.

• Received new funding sources to meet the present forecast and funding requirements

for the next 12 months.

� Improvement in general liquidity and financial market environment to enable the company to access the proposed

� £340m European Investment Bank loan without necessitating guarantees from the UK Government

Tata Nano

• In passenger vehicles, the company has completed the process of allotment of Tata

Nanos, following the car’s launch in March 2009. Deliveries to the allottees have since begun.

• The Tata Nano is currently being manufactured at the company’s Pantnagar plant in

Uttarakhand in limited numbers. The new dedicated plant, at Sanand in Gujarat, will be ready in 2010 with an annualised capacity of 350,000 cars.

• The Tata Nano drew over 2.03 lakh (70% financed, 30% cash) fully paid bookings

amounting to nearly Rs.2,500 crores out of the 6.10 lakh forms purchased.

• The booking amounts of non allottees were given option to keep it with Tata Motors on nominal interest. This is fulfilling the working capital needs of TML.

• In second hand car market Tata Nano is being sold on premium, that is clear indicator

of future high demand of Tata Nano

Summing Up all the Problems into Some:

“Few causes are actually responsible for all problems”

Problem Genesis – Root Cause Analysis

Global

Meltdown

Consolidated

Loss of Rs.2505 Cr

Fall in Demand

For JLR

Rising Environment

Concern

EU and

Kyoto Protocol

Norms require

High investment

(JLR)

Unstable

Balance Sheet

Due to High Debt

And Fixed Cost

Capital Exp.

For AcquisitionManaging

varied

Portfolio in

India from

Nano to JLR

Tata Indica is

Recognized as Taxi

What about Nano…

Mismatch of

Production &

Demand

3

Introduction to Suggestions and Solutions to the Problems:

One fundamental cause to the JLR problem is low demand and high cost. Low demand basically created by the rising environmental concerns and recession. The most reasonable solutions that we have identified are ‘Go Green’, look opportunities into new markets and implement cost cutting measures. The term ‘Go Green’ simply means launches plug-in hybrid vehicles. This will enable JLR to get social marketing benefit and also fulfill the Kyoto-protocol and European Union norms of carbon emissions. In case of JLR there is great opportunity rising in fast developing economies like China and South Africa. The market in these countries is sufficiently mature for high end vehicles like JLR. Tata Motors is already planning to increase its presence in both markets by launching new versions of Indica/Indigo and Nano. These measures will only be effective in long-term. But JLR needs immediate action to decrease losses that can only be done by implementing cost-cutting measures. This section of the report will explain in brief the all three solution and their way of implementation. Another major challenge for Tata Motors is to manage the varied portfolio and synergies the JLR with existing Tata Motor brands. The integrated marketing plan will provide solutions to all these queries.

Possibilities of Cost Cutting at JLR:

Stripping-out layers of the organization hierarchy to reduce head count, consolidating or centralizing key functions, discontinuing long-standing but low-value-added activities. Reduce selling, general, and administrative costs, such as marketing are also prime target for cost cutting. Generate cash means managing working capital: As a rule of thumb, most automobile companies can free up cash equivalent to 10% of sales by optimizing their working capital. This involves reducing current assets, such as inventories (through more careful management of both production and sourcing processes) and receivables (through, in part, the active management of the trade credit). It is a right time for JLR to reduce material and supply chain costs: JLR should pursue a comprehensive review of its current suppliers and procurement practices, which undoubtedly will prompt new initiatives-the adaptation of internal vendor or dedicated vendor concept that has a potential to reduce cost drastically. The parent company of JLR has excellence in vendor management rationalization. Most important look for proper management of demand and supply: It will reduce cost dramatically. JLR’s demand is low so reduce the shift, if still the inventories are increasing than temporarily shutdown one of the plant.

Create the Future:

• Capitalize opportunities rising in hybrid car market and opportunities lying in new markets like China, India, and South Africa.

• Develop synergy with Tata Motors like manufacturing synergy, technological synergy, general management synergy, and strategy-capability transfer.

Cost Cutting Measures at JLR

Human resource cost cutting:

� The firm has laid off over 2000 workers since the start of the recession. � It has cut pay for new staff by up to 20% and – with the help of its workforce – has

agreed a temporary wage freeze and longer working hours. � Single shifts and down time at all three UK assembly plants. � For long term sustainability it is very important to close its ‘salary pension scheme’

for new members/employees. From the sources we came to know that the view of union is very supportive in above all plans and actions. Mr. Smith’s (CEO of JLR) highly influential negotiating skills will play very important role in making union agree with these turnaround requirements.

Manufacturing & Operations cost cutting:

� It has also announced plans to close one of its West Midlands factories by the middle of the next decade (rumoured to be Castle Bromwich).

� It will outsource production overseas and build dedicated vendors for long term relationship.

� Improved working capital by: 1) Supplier payment terms extended from 45 to 60 days in line with industry standard. 2) Receivables reduced by £133 million from 38 to 27 days.

� Single shifts are quite useful in reducing inventory level by 100 to 50 days in last one year and inventory reduced by £217m between June 2008 and March 2009 from 70 to 50 days.

� Engineering efficiencies (JLR started using Aluminium alloys in manufacturing that keeps the strength and quality same but reduces the weight and reduction in CO2 emissions).

Other cost cutting initiatives:

� Reduction in all other non-personnel related overhead costs. � JLR was facing several technology and flexibility challenges in providing suppliers

with secure access to critical business information. Compuware Corporation's Covisint subsidiary is now providing Jaguar Land Rover (JLR) a solution for secure communication and collaboration between the company and its suppliers. With Covisint, JLR has launched the Jaguar Land Rover Supplier Portal to improve the sharing of information and streamline collaborative business processes with supplier partners globally. Covisint will help JLR to reduce the cost of maintaining a supplier-facing collaboration solution and redirect valuable resources toward improving business processes with suppliers.

� JLR is planning to source few components from India, given its reputation as a high

quality, low-price destination for auto components. JLR team will also inspect the vendors engineering and product development capabilities.

Market is improving:

The JLR made an operating profit of 41.3 million pounds (Rs 316 crore) in the quarter, but with debts of Rs 9,000 crore, it made a net loss of 60 million pounds (Rs 459 crore). The unit saw sales volume rise to 44300 units, up 23% from 35,000 in the previous quarter. However, retail sales have almost remained flat (47100 in the June quarter to 46800 in the September quarter.) There has also been correction in the inventory levels and it stands at less than 100 days at the company as well as dealer level. The UK market was the surprising star of the show, with sales up by a third to 14,400 vehicles (with confidence more generally boosted by scrap page of course), while Chinese sales grew by 2.1% to 3,400. North American sales fell by 7.3% to 9,600 as consumers continue to switch to smaller, more fuel efficient cars. The latter shows how important JLR’s £800 million investment in green technologies really is and how key the LRX (a lightweight hybrid ‘baby’ Range Rover) will be. Despite all that, hats off to JLR for a strong set of results. The firm has got on with the job in hand of developing wonderful products and cutting costs to compete internationally – without much in the way of government support. There’s more to come as the firm has an excellent product pipeline. It will need one if it is to maintain employment in the Midlands – as JLR management genuinely hopes – when it goes from two plants to one in a few years’ time.

Turnaround

JLR made an operating profit of £41 million in the three months to 30 September, as compared with a loss of £34 million in the same quarter last year ago. JLR’s overall net loss narrowed to £60 million from £240 million in the comparable period last year. In fact, JLR has embarked on emission reduction technologies and the initial development in this regard, as reflected on the start-stop technology adopted on the Freelander. The project concerns the financing of the promoter’s activities related to the reduction of CO2 emissions of its cars. The Bank’s support would be focused on the development of those

power trains that are designed to meet the CO2 emission targets set by the EU Commission, notably the development of downsized diesel engines and downsized drive trains. The promoter will carry out the work in its existing R&D centres in the UK. Offsetting that, up to 800 jobs will be created at Halewood, which will build the new “baby” Range Rover alongside the Land Rover Freelander.

Emerging markets for Tata Motors:

China: With the onset of the global economic and financial crisis in 2008, growth in China’s vehicle sales slowed, reflecting the weakened state of the domestic economy and low consumer confidence. In response to weakening demand, the Chinese government introduced several policy measures, including the economic stimulus, to boost car sales. China’s auto market continued to grow in the first half of 2009. According to the China Association of Automobile Manufacturers (CAAM), as many as 6.1 million vehicles were sold in the first half of 2009, in part helped by the incentives. This strong growth is in stark contrast to the sluggish market in other parts of the world, and moreover, China’s surging car market still has considerable growth potential.

A number of factors are set to drive market demand in the next few years:

� Market potential arises from China’s relatively low rate of car ownership, which stood at about 22 cars per 1,000 people in 2008. This ratio is low compared with a global average of 120 per 1,000 and over 600 per 1,000 in the United States.

� Since 2002, both foreign and domestic carmakers have expanded production capacity

in the country in anticipation of continued strong demand growth. This generated significant competition and people expect newer brands to strike their door.

� The per capita income of urban residents has increased by 12.2%.Thus multiple car

ownership is spreading rapidly.

� Another factor resulting in greater demand for cars is the improvement and expansion of China’s road network. China has been investing heavily in improving its highway network. by the end of 2009 China had just over 60,500 kilometres of high-speed roads, double the length of the network in 2002, making it one of the largest motorway systems in the world, just behind the interstate system in the United States.

Apart from this the major factors that play an important role in automotive Industry in China are: Pollution Standards:

China enacted its first emissions standards on cars in 2000, which mirrored standards the EU put in place in 1992. Large metropolitan areas, including Beijing and Shanghai, have adopted more stringent regulations on an accelerated schedule, ahead of the rest of the country.

Beijing has implement Euro 4 standards for light duty vehicles in 2008. Beijing has adopted tougher standards identical to the EU policies enacted in 2006, known as Euro 4. China will enact these standards nationwide in 2010.

FDI:

As trade protection is very high in China’s auto market; FDI becomes a more effective way for Multi National Enterprise to enter China’s market. Foreign automakers are not allowed to set up wholly foreign-owned enterprises to produce automobiles in China. They must find local partners for form joint ventures. Moreover, local partners must possess at least 50% of the shares of a joint venture. Each foreign investor must not establish more than two enterprises producing the same type of vehicles. In addition, the government set domestic content requirements that require a joint venture to purchase a certain percentage of its auto parts and components within China. If a joint venture fails to achieve the requirements, it would be punished by paying high tariffs on imported parts and components.

Import Tariffs: The government calls for heavy import tariffs on imported cars in china.

Subsidies:

China's forceful use of government stimulus programs helped it emerge from the financial crisis as the world's fastest-growing major economy. The government is putting more resources into subsidies to support consumer spending. This is helping China's economy go off exports and find new sources of growth in domestic consumption. Thus Subsidies will help shift consumption in the future to consumption in the present. All of these small policies will help increase consumption.

Opportunity in China:

For the total automotive market in China, expected growth rate is of 10% to 15% for the year 2010.

Demand for High End Segment Cars: VW's China sales in 2009 hit a record 1.4 million units, up 36.7% year on year. Sales of Volkswagen brand cars rose 32.4% to 1.12 million units. Its luxury Audi brand sold 158,941 units, up 32.9%. Its Skoda brand more than doubled to 122,556 units. VW also sold 484 Bentleys and 118 Lamborghinis in China last year. General Motors saw its China sales in 2009 jump 66.9% to 1.83 million units. It sold 727,620 passenger cars, up 63%, through its flagship passenger vehicle venture, Shanghai GM. It also sold 60,000 Chevrolet Spark mini-cars through its mini commercial-vehicle venture, SAIC-GM-Wuling. Ford Motor’s sales in China last year from its local passenger vehicle joint venture Changan Ford Mazda rose 55% to a record 315,791 units. China overtook the U.S. as the world's largest car market measured by last year's annual sales volume. Up to 13.5 million vehicles were likely sold in China last year, compared with an estimated 10.4 million in the U.S. JLR coming in China:

It will set up a sales company in China early next year to meet the growing demand for luxury cars in the Chinese market.

Jaguar and Land Rover cars are currently imported to China by four regional import agents, which can order the cars from the British headquarters. After its China sales company is established, Jaguar Land Rover’s dealerships in the country can directly order the vehicles of this British luxury brand from its China sales firm. Jaguar Land Rover has raised its 2009 China sales forecast as rebounding economic confidence revives demand for SUVs. Last year, Jaguar Land Rover boosted China sales 63% to 12,456 vehicles. Luxury car sales in China are likely to double within five years, a top executive of Jaguar Land Rover said recently, putting the country ahead of the U.S. and making it and Russia “very important markets” as Western sales struggle. Jaguar Land Rover has raised its 2009 China sales forecast as rebounding economic confidence revives demand for SUVs. Last year, Jaguar Land Rover boosted China sales 63% to 12,456 vehicles. As demand in the U.S. and Europe has plunged amid recession, Jaguar Land Rover expects a third of its sales to come from China and other emerging economies. JLR sale in china has seen a sharp growth in last two quarters. With sales of 24,600 units in June 2008-March 2009 period, Russia and China together accounted for nearly 17 per cent of Jaguar Land Rover sales, against sales of 22,600 units or 13 per cent of total sales in the previous corresponding period. From April to Sep-09 total number of JLR sold in China are 6700 units.

Emerging markets for Tata Motors:

South Africa:

South Africa's automotive industry is a global, turbo-charged engine for the manufacture and export of vehicles and components. The sector accounts for about 10% of South Africa's manufacturing exports, making it a crucial cog in the economy. With annual production of 5, 35,000 vehicles in 2007, expected to rise to 630 000 in 2008, South Africa can be regarded as a minor contributor to global vehicle production, which reached 73-million units in 2007. But, locally, the automotive sector is a giant, contributing about 7.5% to the country's gross domestic product (GDP) and employing around 36 000 people. Growth:

South Africa has been one of the best performing automobile markets in the world in recent years. New vehicle sales figures soared to record-breaking levels for three years in succession, from 2004 to 2006. In 2006, sales increased by 14.4% to just under 650 000 units, generating revenue of R118.4-billion. Sales dropped by 5.4% in 2007, and are expected to drop further in 2008 as higher interest rates and rising prices curb spending.

Vehicle sales in South Africa:

(Data source: Naamsa

) However, major export programmes are likely to keep the local industry buoyant. Vehicle exports were around 170 000 units in 2007, and the National Automobile Association of South Africa (Naamsa) expects this to jump to 285 000 in 2008. This is extraordinary growth, especially when compared to 1997, when the number of units exported was below 20 000. South Africa currently exports vehicles to over 70 countries, mainly Japan (around 29% of the value of total exports), Australia (20%), the UK (12%) and the US (11%). African export destinations include Algeria, Zimbabwe and Nigeria.

Motor Industry Development Programme:

The catalyst for this phenomenal growth has been the government's Motor Industry Development Programme (MIDP). Introduced in 1995, the programme is legislated until 2009 and will be gradually phased out until 2012. The MIDP has boosted exports by enabling local vehicle manufacturers to include total export values as part of their local content total, then allowing them to import the same value of goods duty-free. This has allowed auto makers to concentrate on manufacturing certain vehicles or components for export, while importing other models.

Auto component manufacturers:

There are more than 200 automotive component manufacturers in South Africa and upwards of another 150 that supply the industry on a non-exclusive basis. The component industry has a turnover of about R50-billion, or approximately 2% of the country's GDP, and is looking to strong growth as export potential continues to increase.

Competitive advantages:

South Africa's automotive industry offers a number of competitive advantages to international concerns. These include world-beating cost ability on short- or low-volume runs, competitive tooling costs, and a high degree of manufacturing flexibility. The local industry also has good access to southern hemisphere and African markets. The South African industry boasts several unique technologies, such as differential locks for off-road vehicles, aluminum welding technology for radiators, and the ability to design components, such as air cleaners and air conditioners that can cope with the higher temperatures and dust levels in Africa.

Major Players and their Investment:

All of the major vehicle makers are represented in South Africa, as well as eight of the world's top 10 auto component manufacturers and three of the four largest tyre manufacturers. Many of the major multinational companies use South Africa to source components and assemble vehicles for both the local and overseas markets. Between 2000 and 2006, the industry's investment in production and export infrastructure quadrupled, from R1.5-billion to R6.2-billion, before slowing to R3-billion in 2007.

Ford: In January 2008, Ford Motor Company of Southern Africa announced plans to invest more than R1.5-billion to expand its operations in South Africa for the production of Ford's next-generation compact pickup truck and Puma diesel engine.

General Motors: General Motors South Africa, which is based in Port Elizabeth in the Eastern Cape, markets the brands Chevrolet, Opel, Isuzu, Saab, Cadillac and Hummer. In 2005, the company was awarded a six-year contract to assemble and export the Hummer H3, resulting in a US$100-million investment in its Struandale plant. GM South Africa is building a new multimillion-rand vehicle conversion and distribution centre and is investing another R481-million in its operations, upgrading its production facilities and tooling in 2008.

Mercedes-Benz: Mercedes-Benz SA recently spent about R2-billion on upgrading its manufacturing plant, and now produces both right- and left-hand drives versions of the latest Mercedes-Benz C-Class car for domestic and export markets.

Toyota: Toyota South Africa recently completed a five-year, R2.4-billion modernisation and revitalisation programme. Its Prospecton facility, just south of Durban, is now one of the most technologically advanced Toyota facilities in the world outside of Japan, and is capable of producing around 220 000 units a year. The company, which exports to more than 40 destinations, says it expects to export around 140 000 units in 2008, or almost 60% of total automotive exports from South Africa.

Volkswagen: Volkswagen South Africa is located at Uitenhage near Port Elizabeth in the Eastern Cape. In 2007, the company celebrated its 56th anniversary in South Africa - and its 2.5-millionth vehicle off the production line. It is a local leader in the passenger market, accounting for around 21% of all new vehicle sales. Between 2000 and 2008, Volkswagen South Africa invested around R6-billion in new models, a new paint shop and a new truck and bus assembly plant.

Tata Motors Presence in South Africa: Tata Motors is increasing its presence in South Africa by increasing its dealer network. Right now they have more than 20 dealers in different cities. It is planning to participate in Geneva motor show and launch its JLR and Tata Nano. Tata Nano will be the cheapest car launched in South Africa and hence South Africa is a future target for Tata Motors. Technical quality requirement of South Africa matches with India like, high dust environment and roads infrastructure etc. The vehicles designed for Indian market is also suitable for South Africa.

Need for Hybrid Car:

Two themes have clearly emerged as the next wave—lower price and eco-friendliness. The first one is captured by Tata Nano and the answer to eco-friendliness has been pretty dominated by the hybrid vehicles. Hybrid vehicles offer the key to reduce CO2 emission in the world. Almost all governments are providing easy loans, and tax benefits to hybrid cars because even governments are bonded by the Kyoto protocol’s norms. The crude oil deficits are sure to determine future government policies regarding cars and car fuels. With governments becoming increasingly aware that hydrocarbon-driven transport is unsustainable, the focus is firmly on hybrid or 'green' cars. The current economic crunch has only helped deepen the focus on fuel-saving and environmentally safer forms of transport, and hybrid cars have crossed the bridge from being a fad to a mainstream family vehicle. Meanwhile, the car manufacturing companies can ask the government to provide subsidy for hybrid vehicles, so that costs reduce and make the hybrids more price competitive in the market. Hybrid cars blend the best of the conventional car with the best of electric cars for a winning combination. Uniting the cleaner energy of the electric motor with the long-range power of the gasoline engine yields a hybrid automobile with lower toxic emissions with better fuel economy-sometimes up to 30 miles a gallon or more than conventional cars.

Market Potential for Hybrid Car

� Sales recorded by the global hybrid vehicles market are expected to surge at a CAGR of around 12% during 2008-2015.

� Hybrid cars sales in the US market are likely to cross 1 Million Mark by 2012. � Hybrid vehicle production in Japan is projected to hit a CAGR of 6.6% from 2008 to

2011. � HEV battery market is likely to attain a CAGR growth rate of around 10.4% during

the period spanning from 2010 to 2015. � Hybrid car component market is expected to grow at a CAGR of 17.4% during 2008-

2012.

How it works:

Hybrid cars use a gasoline or diesel engine to power a motor. When the power of the motor is not required to move the vehicle, the motor can shut off, saving energy, or can be used to generate electricity that is stored in batteries, and later used to power the car. Breaking can also be used to store power in the batteries, by using magnetic rather than friction brakes. The simplest hybrids merely turn the motor off when the car does not require locomotion, while more advanced hybrids use the electric motor wherever possible, and only engage the gasoline engine when additional power is required or the battery is low. The hybrid vehicle typically achieves greater fuel economy and lower emissions than conventional internal combustion engine vehicles (ICEVs), resulting in fewer emissions being generated. These savings are primarily achieved by three elements of a typical hybrid design:

1. Relying on both the engine and the electric motors for peak power needs, resulting in smaller engine sized more for average usage rather than peak power usage. A smaller engine can have less internal losses and lower weight.

2. Having significant battery storage capacity to store and reuse recaptured energy, especially in stop-and-go traffic.

3. Recapturing significant amounts of energy during braking that are normally wasted as heat. This regenerative braking reduces vehicle speed by converting some of its kinetic energy into electricity, depending upon the power rating of the motor/generator.

Competitor Analysis:

GM, Ford, Honda, Toyota Hyundai have their own Hybrid technological center. Upper Segment of hybrid cars: The two hybrid cars that get the most attention these days are the Toyota Prius and Honda Insight. In India Toyota-Kirloskar Motor unveiled its hybrid car Prius priced between Rs 26.5 lakh and Rs 27.8 lakh (ex-showroom New Delhi). The one concerning area for existing hybrid-car manufacturers is that the governments norms for hybrid car’s fuel efficiency and green-house gas reduction has risen. At the same time, earlier subsidies for today's standard hybrid cars - which typically run on regular fuel, combined with a self-recharging battery - are being phased out. The currently popular hybrids like the Toyota Prius and the Honda Insight won't qualify for the new incentives. This is because studies show that a plug-in vehicle is less polluting than a hybrid even if it is recharged from a coal-burning power source. Lately, several countries have announced incentives for the manufacture and use of 'plug-in' cars, which can be recharged from virtually any electric outlet. In the UK, for example, motorists will be offered subsidies of up to £5,000 if they buy electric or plug-in hybrid cars. Australia and Japan, as well as several states in the US, are offering comparable incentives. Plug-in hybrid-electric vehicles (PHEVs) have emerged as a promising technology that uses electricity to displace petroleum consumption in the vehicle fleet.

Tata Motor should focus on future possibilities of this market and it should come up with the PHEVs rather than just a hybrid car. A simple economic analysis is used to show that high petroleum prices and low battery costs are needed to make a compelling business case for PHEVs in the absence of other incentives. However, the large petroleum reduction potential of PHEVs provides strong justification for governmental support to accelerate the deployment of PHEV technology. However, the potential for PHEVs to reduce per-vehicle petroleum consumption is clearly very high. Reductions in excess of 45% are available using designs of PHEV. This compares favorably with the 30% maximum reduction estimated for HEVs However, it seems likely that the added battery capacity of a PHEV will result in significant vehicle cost increments, even in the long term.

Tata Nano as PHEV: Tata Nano will produce the world’s cheapest hybrid vehicle. The Nano hybrid would likely cost more than the gasoline Nano, but in theory it could less nearly 10 times less the Toyota Prius, the world’s best-selling hybrid.

Tata Motors Initiatives to fight with Environment Concern and Emission norms:

At JLR:

� In May 2009, the Freelander 2 TD4_e, Land Rover’s most fuel efficient to date featuring a new intelligent stop/start system, went on sale giving up to 20% improvement in fuel economy in real world test.

� JLR announced 800m Euro (over five years) programme specifically aimed at

reducing carbon dioxide emissions.

Integrated Marketing Plan Tata Motor India's one of the most successful automobile company with market changing steps (launch of magic, Nano, JLR, Indica) has proved itself not only in India but also in overseas market. But as we have seen in preliminary analysis that dynamics of automobile market is changing. Now competition has changed, customer perception about product has been changing. Now the next challenge for Tata Motors is ‘to fully utilise its strength and tap the great opportunities rising from brand TATA. In BGC analysis we have noticed that TATA need a star product or it has to convert one of its products into star. With the recent decisions of JLR acquisition and launch of Nano have shown that Tata's are fully aware of the scenario and marching towards there. But there are other things that also concern us like Tata have good market share but as a brand they have certain weakness:

1. Heavy commercial use has positioned Tata Motor as Taxi to mind of common people. 2. Tata Motor is on last position on customer satisfaction index. (appendix) 3. Tata Motor does not have a Model which is TOMA brand (Top of the Mind

Awareness) on the mind of customer or potential customer. 4. With the competition from Volvo, Volkswagen, Mercedes in busses has put Tata in

trouble. 5. The most important point is ‘as the company grows its image has to follow some

changes’. Like for an example, when Japanese car came in US and European market they entered with cost leadership strategy but then they evolved as ‘Excellent Engineering and Quality’ manufacturer. They have changed themselves from 'CHEAP' to 'QUALITY’ with Value for Money'. This growth has enabled them to fight with unwanted price competition where market could strip down by some other player.

Now this is the right time for TATA to evolve. Move up on ladder of perception positioning map. Tata has already decided to do that by taking the decision of JLR acquisition. But creating a superior image is strategic decision which will take time. Here we are going to propose solution which has short term objective as well as long term.

Service Quality Improvement

1) Easy financing with TMFL 2) Easy insurance

1. Use TATA- AIG to easy insurance for Tata motor 3) Opening more car service stations

1. Large service station has helped Maruti to be on top 4) train people in motor training institute for Tata car

1. ITI ( largest government based training institute) 2. private player ( George telegraph motor training institute)

5) For rural India : encourage local mechanic to use original Tata auto parts ( highlight on Nano, winger, magic) 1. Giving parts on credit 2. Easy availability of auto parts 3. Creating more trust on mechanic who are influencer in rural market for

automobile purchasing decision 6) After sales service

1. Standard service in different part of India ( strict franchise model) 2. availability of all parts in all service station

7) After sales call to customer 1. Calling the existing customer after specific period.

8) Using dealer training system 9) Bullwhip Effect: Managing inventory to manage dealer inventory cost and spend that

money for customer.

Brand Awareness program

1. Auto show

Auto shows are win-win situation for both consumers and companies as the later are able to strike deals to the tunes of a few million. Tata Motor has to use them properly to create the brand awareness. Detail is given on appendix.

2. Automobile racing ( for high end version) In order to get the impression of superior quality in automobile market participation in races is great opportunity. Tata JLR can be used to take part in racing and get benefit from that. In India recently the popularity of F1 race has gone up. In Delhi F3 races are being organized. Details of these are given on the appendix.

3. Marketing Campaign

TATA has captured a word in the mind of customers “INDIA”. Be it TATA salt (Desh ka Namak), TATA Tea (jaago re- India), TATA MOTOR( INDIca, INDIgo). So the campaign will start in accordance with that theme and also with our idea of creating engineering excellence.

1. TATA HERITAGE: A campaign which will show the TELCON to TML 2010 JOURNEY with the GROWTH of INDIA. This will be presented to investors and

customers. This can be put in format of documentary and use TV-channel to telecast it otherwise it can be made 1 min TVC and shown in popular channel. This can put in website in much interactive sound and video format.

2. CUSTOMER as ADVOCATE: This campaign will start by showing an old

person speaking his life growth with TATA where he has bought one Tata Commercial Vehicle then two, three, and more and how he has been successful in his life with. Here message would be TATA with you in your life and business. Mainly targeted to commercial vehicle buyer.

3. TATA building New India: This will be like another famous campaign of Tata

group company – JAAGO RE by TATA TEA.( most successful campaign of last year). But in this campaign we going highlight new India rising.

4. A story of a Machine: This will show machine manufacturing with 40 patents per

year in TATA.

4. Use in popular media:

1. Music Video 2. Movies 3. TV serial

Creating perceived value:

1. The marketing communication should focus performance as well as price (

not just price)

2. Launching limited edition or special variant.

1. Nike largest retail store “NIKETOWN” is opened not to get sales but to creating which made that shopping centre a tourist destination.

2. In automobile this concept is widely used (Scion (TOYOTA), Chevrolet Camaro Synergy Special Edition, Opel Corsa Color Race Special Edition, Cadillac XTS Platinum Concept, Mercedes-Benz SLK Grand Edition, Ferrari P540 Superfast Aperta.

3. Dilip Chhabria Limited Edition NANO for 1 CRORE ( appendix) 4. Limited edition product can be used to show engineering excellence. 5. Limited edition product used in movies can create buzz and awareness 6. Limited edition can create an aspiring value in the product or brand. 7. Limited Edition can use to how market will respond with full launch of the

product.

3. Leveraging on brand heritage.

4. Leveraging performance on existing performance.

1. As a company, Tata Motors was declared as the 2009 Car Maker of the Year in the ET-ZigWheels Car & Bike of the Year Awards

2. The Indigo Manza, the new generation sedan of the company launched in October 2009, has received Best Entry-level Sedan of the Year Award in the ET-ZigWheels Car & Bike of the Year Awards.

3. UTV Autocar Awards for that year rated the Indica Vista as the Best Value for Money Car of the Year.

5. Use any product/process attribute in automobile engineering and popularise

it. 1. DTSi in Bajaj Pulser. 2. GOLDEN EYE in LG. 3. Six Sigma In TOYOTA. 4. Tata motor has 40 patents in year so getting this would not be tough.

6. Using Tata car in movies and show case it properly

1. Car used in James Bond Series created a cult among car lovers and every movie has increased the sales of the car of the company which it had shown.

2. The .44 Magnum was largest selling cartridges for many years after its introduction; it did not come to the attention of the general public until 1971, when Clint Eastwood's character "Dirty" Harry Callahan described the .44

Magnum as "the most powerful handgun in the world" in the film Dirty

Harry. While this was not strictly true in 1971 (the more powerful .454 Casull was announced in 1959, and was available in custom revolvers)

3. In Indian context Spykar Jeans got the popularity after it has been shown in Movie NAMASTE LONDON

4. LANDROVER which can have excellent market in rural India can easily penetrate there by using them in movies. ( Preferably in BOLLYWOOD/ PUNJABI MOVIES)

7. Brand Synergy:

If TATA launches JLR directly under its name then they may not be proper brand fit. So in order to create the brand synergy we first highlight a product attribute of JLR and will go patent of that (product patent allowed outside). Then we will implement it in other Tata vehicle and will highlight the fact that there is engineering and R&D synergy. This will be short term objective. 8. Launch a luxury division with New Name (could be JLR or Mother Brand of

JLR) for different segment (LEXUS TOYOTA model.)

1. In 1983, Toyota chairman Eiji Toyoda summoned a secret meeting of company executives, to whom he posed the question, “Can we create a luxury

vehicle to challenge the world's best?” This question prompted Toyota to embark on a top-secret project, code-named F1 (“Flagship” + “No. 1

vehicle”). The F1 project, whose finished product was ultimately the Lexus LS 400, aimed to develop a luxury car that would expand Toyota’s product line, giving it a foothold in the premium segment and offering both long-time and new customers an upmarket product. The F1 project followed the success of the Toyota Supra sports car and the luxury Toyota Cressida models.

2. Lexus has not been connected with Toyota which was positioned as cheap car in US so Lexus stand as new brand and captured the premium market.

3. This decision would be a long-term decision ( Toyota took 7 year to materialise the plan)

4. Every function would have to work towards it.

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Appendix A:

Data Sheet No. 1

Automobile Production Trends

Number of Vehicles\Category

Passenger Vehicles

Commercial Vehicles

Three Wheelers

Two Wheelers Grand Total

2002-03 7,23,330 2,03,697 2,76,719 50,76,221 62,79,967

2003-04 9,89,560 2,75,040 3,56,223 56,22,741 72,43,564

2004-05 12,09,876 3,53,703 3,74,445 65,29,829 84,67,853

2005-06 13,09,300 3,91,083 4,34,423 76,08,697 97,43,503

2006-07 15,45,223 5,19,982 5,56,126 84,66,666 1,10,87,997

2007-08 17,77,583 5,49,006 5,00,660 80,26,681 1,08,53,930

2008-09 18,38,697 4,17,126 5,01,030 84,18,626 1,11,75,479

Data Sheet No. 2

Automobile Domestic

Sales Trends

Year\Category(Number of vehicles)

Passenger Vehicles

Commercial Vehicles

Three Wheelers

Two Wheelers

Grand Total

2002-03 7,07,198 1,90,682 2,31,529 48,12,126 59,41,535

2003-04 9,02,096 2,60,114 2,84,078 53,64,249 68,10,537

2004-05 10,61,572 3,18,430 3,07,862 62,09,765 78,97,629

2005-06 11,43,076 3,51,041 3,59,920 70,52,391 89,06,428

2006-07 13,79,979 4,67,765 4,03,910 78,72,334 1,01,23,988

2007-08 15,49,882 4,90,494 3,64,781 72,49,278 96,54,435

2008-09 15,51,880 3,84,122 3,49,719 74,37,670 97,23,391

Data Sheet No. 3

Automobile Exports Trends

Category 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

Passenger Vehicles

72,005 1,29,291 1,66,402 1,75,572 1,98,452 2,18,401 335739

Commercial Vehicles

12,255 17,432 29,940 40,600 49,537 58,994 42673

Three Wheelers

43,366 68,144 66,795 76,881 1,43,896 1,41,225 148074

Two Wheelers

1,79,682 2,65,052 3,66,407 5,13,169 6,19,644 8,19,713 1004174

Grand Total 3,07,308 4,79,919 6,29,544 8,06,222 10,11,529 12,38,333 15,30,660

* Source: ACMA Reports

Data Sheet No. 4 (Market Share of Passenger Cars):

Companies 2006-07 (April-Jan) 2007-08(April-Jan) Maruti 45.6 48.1 Hyundai 25 24.8 Tata Motors 15.2 12.7 Honda 4.6 4.1 GM 1.3 3.2 Ford 5.2 2.5 Others 3.1 4.6 Source: ACMA

Appendix B:

Graph No. 1

Graph No.2

Appendix C:

Appendix D:

1) Customer Satisfaction Index:

2) Auto Shows

The biggest Auto show in the country “Auto Expo” takes place at the Pragati Maidan in Delhi and is organized jointly by Society of Indian automobile Manufacturers (SIAM), Confederation of Indian Industries (CII) and the Auto Components Manufacturers Association.

The companies also get a chance to showcase their products, which they plan to launch in the immediate future or are in the development stage. It also gives the general public a sneak preview into the futuristic cars which are being developed. 3) Automobile Racing in India:

Automobile Racing is the sport in which automobiles are raced within a racing circuit as an effort to entertain the spectators. This concept of automobile racing is believed to have originated in France in the year 1895. Broadly, automobile racing can be classified into several categories. Firstly, we have the single seater racing which is usually termed as the high speed racing. In this form of racing, the wheels are generally uncovered and the cars have aerofoil wings. The

world famous Formula One World championship comes under the category of single seater racing. However, there are a few sub categories that are included under single seater racing. These are kart racing, A1 Grand Prix and Formula Ford. Secondly, we have the Stock Car Racing which is the North American form of popular car racing. In this form of racing, the cars used have very close resemblance with production cars. Among the Stock cars, the most renowned series is indeed NScars Nextel championship. This form of Stock car racing has also been popular in Europe and is commonly organized in Scotland and Wimbledon. Rallying is yet another form of automobile racing. As the name suggests, it involves a rally between two vehicles only. The most common championship in Rallying is the World Rally Championship or the WRC. Other smaller rallies include the likes of Monte Carlo, Rally Argentina, Finland and many more. Last, but not the least, is sports car racing. In this format, a large number of cars compete with each other in a closed racing circuit. These are generally long distance races and consist of a team of 2-3 drivers. The famous races which fall under this category include the likes of 24 hours of Daytona and 12 hours of Sebring. However, apart from these races there are some more forms of automobile racing, like off road racing, drag racing, kart racing and many more. 4) Tata Nano: From Rs 1 lakh To Rs 1 crore

He has worked on James Bond’s dream wheels. So it makes perfect sense that Dilip Chhabria should turn his imagination to the car that has captured India’s imagination. Namely: the just unveiled Tata Nano. Chhabria has strapped on everything from gull wing door, polycarbonate glazing, xenon and LED light clusters, panoramic wind-screen, wider wheels and of course a far more powerful engine (the 1400 cc Hayabusa is a moto monster and will turn your cute little car into a vrooming speeding adrenalin-pumping machine. Add to that a new suspension and the ride will be something else altogether. Chhabria’s interiors too are packed with gen-next gizmos. There’s a cowl to floor PC screen which will display everything from internet, navigation and games, not to mention customised instruments panel which is also beamed on to the screen. In short, the car, which in Chhabria’s imagination is a two-seater not four/five, will be a glitzy, powerful, gadget packed toy, customised to individual tastes and packed with enough goodies to make the Gen-next owner feel right at home. It’s the 21st century version of the kind of accessorising that became popular with the Maruti 800 (including faux fur on the dashboard, strobe lights at the back and cheesy stickers).

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Bibliography:

Company Publications

• Tata Motors Ltd., Annual Reports 2008-09, 2007-08

• Tata Motors Ltd., Investor Presentations, Q4FY09, Q1FY10, Q2FY10

• Tata Motors Ltd., Quarterly Financial Results, Q1FY10, Q2FY10

• Tata Motors Ltd., Corporate Sustainability Report, 2007-08

• Tata Motors Ltd., Investor Relations – Acquisition of JLR, 6 June 2008

• Tata Motors Ltd., Flash Figures, June 2009 to December 2009

• Tata Motors Ltd., Press Releases, June 2009 to January 2010

Reports and Journals

• Andrew Simpson, Conference Paper, “Cost Benefit Analysis of Plug – In Hybrid

Electric Vehicle Technology”, November 2006, National Renewable Energy

Laboratory, Japan

• Yuki Tanaka & Yuklo Shigeta, February 2007, “Upcoming Advances in the Hybrid

Vehicle Market”, Paper No.114, Nomura Research Institute, Japan

• Badri Narayanan G. & Pankaj Vashisht, January 2008, “Determinants of

competitiveness of Indian auto industry”, Working Paper No. 201, Indian Council

for Research on International Economic Relations (ICRIER)

• Sanjay Rishi, Benjamin Stanley and Kalman Gyimesi, August 2008, “Automotive

2020: Clarity beyond the Chaos”, IBM Global Business Services Report

• December 2008, “Global Competitiveness of Indian auto component industry and

its sustainability”, Automotive Component Manufacturer Association (ACMA) Presentation

• Manufacturing Sector Database, March 2009, Centre of monitoring Indian

economy (CMIE)

Business Magazine and Newspaper

• Lijee Philip & Sudeshna Sen, Economic Times, 12 August 2009, “Tatas no longer

need UK govt's help for JLR”

• Press Trust of India, New Delhi, 26 August 2009, “Tata Motors invites FDs from

public to raise Rs 1,500 cr”

• Janki Krishnan, REUTERS, 28 August 2009, “Tata Motors needs new equity to cut

debt analysis”

• Mehul Shrivastava, Business Week, 3 September 2009, “Tata: Clawed by Jaguar

and Land Rover”

• Swaminathan S Anklesaria Aiyar, Times of India, 6 September 2009, “Tata Motors:

Think electric for survival”

• Krishna Kant, Economic Times, 14 September 2009, “Tata Motors is finally

looking up, but JLR’s still in danger”

• Jonathan Buck, Wall Street Journal, B6, 25 September 2009, “Jaguar to close a

plant”

• Press Trust of India, New Delhi, 24 November 20009, “Tata Motor to study

market for electric Indica before launch”

• Denny Goodman, Business Standard, 27 November 2009, “Tata Motors working

on Hybrid Buses”

• Nandini Sen Gupta, Economic Times, 28 November 2009, “Where’s the

Compensation: Singur to Sanand Vendors”

• Manu P Toms, Business Line, Mumbai, 11 December 2009, “Jaguar may reach

operating profit level next year”

• Business Standard, Mumbai, 14 December 2009, “TATA Motors to reduce jobs at

JLR sales Companies”

• Press Trust of India, The Economic Times, 21 December 2009, “Tata Motors to

bring in Hybrid city buses: development on”

• Shweta Bhanot, The Financial Express, 8 January 2010, “Tata Aria to hit the road

in 3 months, cost Rs. 14 lakh”

Internet

• Tata Motors - www.tatamotors.com

• Wikipedia - http://en.wikipedia.org/wiki/Tata_Motors

• Society of Indian Automobile Manufacturer - www.siamindia.com

• Automobiles in India - www.automobileindia.com

• Wheels Unplugged - www.wheelsunplugged.com

• AUTOCAR – www.autocarindia.com

• CarWale – www.carwale.com

• GAADI - www.gaadi.com

• Auto Guide – www.auto.indiamart.com

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