Tata Motors : Company Analysis

PDF Format

Published : September 2006

No.of Pages : 42
Price : US$ 950

This report provides an detailed analysis of Tata Motors. It includes the organizational structure,
subsidiaries, description of its businesses and a list of key personnel. The company analysis has
also examined with the help of a SWOT framework. The report highlights the key financial
parameters of the company like sales and income growth rates, ratio analysis and stock
performance. The report talks about Tata's domination of the domestic commercial vehicles
segment and its increased participation in the passenger vehicles segment. It also highlights
Tata's business strategy of strengthening its business operations worldwide through aquisitions
and partnerships to capitalize on the low cost opportunity present in the Indian market.

Executive Summary
Tata Motors is one of the leading automotive vehicle manufacturing companies in India. It belongs
to the Tata Group, one of the leading business groups in India. The automotive segment designs,
manufactures, assembles and sells trucks and buses, passenger cars, utility vehicles and their
related parts and accessories. The company primarily operates in Europe, Africa, the Middle
East, Australia, South East Asia and South Asia. The company recorded revenues of US$5.4
million during in 2006, an increase of 23% over 2005. Tata Motors accounts for 61% of the
commercial vehicle market in India and is the world's fifth-largest medium and heavy commercial
vehicle manufacturer. Tata Motors has disclosed its US$2.2-billion capex plan for FY07-10. The
investments will go towards product development, production capacity improvement and
restructuring the small car segment. It is aimed at more than doubling the gross fixed asset over
next three to four years.
Table of Contents :-

1. Corporate Overview
Established in 1945, Tata Motors is India's largest automobile company. The company operates
from 29 regional sales centers and has a network of over 500 independent dealer outlets.

1.1 Corporate History

• In 1945, Tata Motors established

• In 2005, tat Motors acquired 21% stake in Hispano Corrocera

1.2 Key Facts

• Net Sales (2005)-US$4.55 billion

• Net Income (2005)-US$304.1 million

1.3 Key Subsidiaries / Affiliates

1.4 Organizational Chart
1.5 Profiles of Key People

• Chairman- Rattan Tata

• Managing Director- Ravi Kant

1.6 Recent Developments

• In August 2006, Tata Motors forays into the Russian market

• In July 2006, Tata Motors and Fiat Group enter a joint venture

2. Business Description

2.1 Business Segments

• Commercial Vehicles
• Passenger Vehicles

2.1.1 Products/Services

2.2 Geographical Segmentation

In FY05, International Sales for Tata Motors were to the tune of 13.8% of the total revenue

2.3 Key Partnerships/Alliances

Marcopolo’ A 51:49 joint venture for mass production technology of buses

Daewoo Commercial Vehicles Company ‘ In 2004, Tata Motors acquired the Daewoo Commercial
Vehicles Company

3. SWOT Analysis

3.1 Strengths

• Strong presence in the commercial vehicle market

• Brand recognition
• High investment in R&D
• Wide distribution channels

3.2 Weaknesses

• Limited product portfolio in the passenger segment

• Operations mainly restricted to India

3.3 Opportunities

• Increasing demand for cars in India

 • Expansion in international markets

3.4 Threats

• Increase in prices of raw materials

• Intense competition from global players

4. Key Business Strategies

• Ambitious Capex Plans for Growth

• Focus on Key Subsidiaries
• Expanding Presence in Overseas Markets
• Focus on the Bus Market
• Plan to Streamline Production
• Joint Venture to Upgrade Technology

5. Financial Performance

5.1 Financial Highlights

In 2005, Tata Motors’s revenue increased by 23.2% y-o-y, while Operating Income increased
24.6% y-o-y in the same year.
5.2 Five-Year Financial Summary
Tata Motors revenue reached US$5.4 billion in 2005 at a CAGR of 37.7% from US$1.5 billion in
2002.
5.3 Ratio Analysis
The company’s operating and net margins improved slightly despite the significant cost increase
pressures. The company was able to maintain its margins through its continuous cost reduction
drive.

Performance Ratios - In FY05, L’Oreal reported 8.4%ROA and 13.7% ROE, improving by 1.3
points and 1.5 points, respectively over FY04.

5.4 Market Indicators

5.4.1 Stock Chart
5.4.2 Earnings Estimates
The sales figures of Tata Motors is expected to increase to US$7.5 billion by 2009, while the net
income is expected to increase to US$578.5 million during the same period.

6. Competitive Landscape
6.1 Industry Overview
6.1.1 Industry Definition and Segmentation
6.1.2 Key Drivers

• Continued Road Development

• Ban on Overloading to Spur Commercial Vehicle Demand
• Low Penetration Level of Passenger Cars
• Growing Urbanization
• A Burgeoning Middle Class
• Better Financing Options
6.1.3 Major Trends

• Young Generation Fueling Car Sales

• Increasing Presence of Foreign Car Makers

6.1.4 Outlook
Automakers in India plan to quadruple total sales to US$145 billion by 2016, compared to US$36
billion in 2005, targeting 16% annual growth.
6.2 Competition

• Mahindra & Mahindra

• Maruti Udyog

6.2.1 Competitive Positioning

Tata Motors holds 61% share in domestic market for Commercial Vehicles.
6.2.2 Geographical Coverage
Maruti Udyog has the highest percentage of its operations in the domestic market at 93.8%.
6.2.3 Client Base
6.3 Financial Assessment
In 2005, Tata Motors had the highest CAGR of 37.2% among its peers.
6.4 Stock Market Performance
As of August 2006, Mahindra & Mahindra had the highest performing stock among its
competitors.

7. Outlook
7.1 Company View
In FY07, the company has planned further increase in commercial vehicle sales by launching new
products in the cargo as well as passenger segments.
7.2 Analyst View
Tata Motors’ CV portfolio is expected to post a CAGR of 16% over during 2006-2008, driven
largely by the LCV segment.

Appendices
Appendix I Consolidated Profut & Loss, 2005-2006
Appendix II Consolidated Balance Sheet, 2005-2006
Appendix III Mergers & Acquisitions/Divestiture (2000-2006)

List of Tables
Table 1.1 Key Facts
Table 1.2 Key Subsidiaries/Affiliates
Table 1.3 Profiles of Key People (2005)
Table 1.4 Recent Developments (2006)
Table 2.1 Variants of Tata Motors Commercial Vehicles
Table 2.2 Variants of Tata Motors Passenger Vehicles
Table 2.3 Key Partnerships/Alliances (2004-2006)
Table 3.1 R&D Investments (2000-2005)
Table 4.1 Capex Breakdown
Table 4.2 Q107 Performance of Subsidiaries
Table 5.1 Financial Highlights (2005-2006)
Table 6.1 Demographic Segmentation of Car Owners (2005)
Table 6.2 Leading Players in the Indian Automotive Industry (2005)
Table 6.3 Competitive Positioning
Table 6.4 Client Base
Table 7.1 Segment-Wise Sales Volume Forecast (FY2006-FY2008)

List of Figures :-
Figure 1.1 Organizational Chart
Figure 2.1 Volume Mix (FY2006)
Figure 2.2 Revenue Share by Geography (FY2004-FY2006)
Figure 3.1 Commercial Vehicles Sales and Market Share ‘Domestic (2002-2006)
Figure 5.1 Revenue Growth (2002-2006)
Figure 5.2 Operating Income Growth (2002-2006)
Figure 5.3 Net Income Growth (2002-2006)
Figure 5.4 Profitability Ratios (2005-2006)
Figure 5.5 Performance Ratios (2005-2006)
Figure 5.6 Stock Performance (Sep2005 to Aug2006)
Figure 5.7 Earning Estimates (2007-2009)
Figure 6.1 Industry Segments
Figure 6.2 Urban Population (1951-2001)
Figure 6.3 Growth in Income Groups (1996-2005)
Figure 6.4 Indian Automakers Sales (2005-2016)
Figure 6.5 Geographical Segmentation (2006)
Figure 6.6 Revenues (FY2006)
Figure 6.7 Net Income (FY2006)
Figure 6.8 Stock Market Performance (Sep 2005-Aug 2006)