Tata Motors in Trouble
|
Case Code: BSTR314 Case Length: 18 Pages Period: 2007-2009 Pub Date: 2009 Teaching Note: Available |
Price: Rs.300 Organization: Tata Motors Industry: Automobiles Countries: India/UK/US Themes: Competition, Collaboration, Entry Strategy, Expansion Strategy |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
Financing Issues
To finance the acquisition, Tata Motors raised a bridge loan of US$ 3 billion (the additional amount was for engine and component supply, contingencies, and working capital) through a syndicate of banks...
Problems with the JLR Deal
The initial response from the employees of JLR toward the Tata Motors-JLR deal was positive. An internal survey carried out in early August 2008 showed that the employee satisfaction was at 78% as against 41% during the pre-acquisition days. However, with the declining demand for luxury cars, JLR had to cut down production and redeploy the workers at Solihull in late August 2008...
Problems in the Domestic Market
By the time Tata Motors announced its first quarter results for the year 2008-09 in July 2008, it was evident that the company was in for trouble. The profits reported were at Rs. 3.26 billion, a drop of 30% compared to the first quarter of 2007-08. Though sales had increased, the drop in the profits was the highest in the past five years...
The Nano Project - A Nightmare
The Tata Nano project was the brainchild of Ratan Tata. The project to make the cheapest car in the world started in 2003. It was reported that right from the beginning, the designers were asked to be as frugal as possible to maintain the low price of the car. In India, owning a car was considered to be a luxury. Most of the people opted to drive two-wheelers, as cars were not affordable. Tata Nano was targeted at the segment of two-wheeler drivers who wanted to buy a car if it was available at an affordable price. According to Ratan Tata, "It (Tata Nano) will provide Indian families with a safe form of transport."...
Is the Worst Over?
In January 2009, Tata Motors announced that due to lack of funds it may be forced to roll over a part of the US$ 3 billion bridge loan after having repaid around US$ 1 billion. The financial burden on Tata Motors was expected to increase further with the pension liability of JLR coming up for evaluation in April 2009...
Exhibits
Exhibit I: Tata Motors - Stock Price Chart (January 2008 - January 2009)
Exhibit II: JLR - Unaudited Income Statements
Exhibit III: JLR - Unaudited Statement of Assets and Liabilities (2004-07)
Exhibit IV: JLR - Wholesale and Production Volumes (January - December 2008)
Exhibit V: Tata Motors - Audited Financial Results (2007-08)
Buy this case study (Please select any one of the payment options)
| Price: Rs.300 |
Price: Rs.300 | PayPal (7 USD) |
