Analysis Of Tata Motors Essays

Analysis Of Tata Motors Essays Analysis Of Tata Motors Essay Analysis Of Tata Motors Essay They are the no. Vehicle manufacturers (especially cars and trucks) of India and have impressive export records as well. In terms of size, they are much smaller compared to This dissertation is dedicated to Strategic Analysis techniques of Data Motors. The strategic valuations like Michael Porters Diamond Model, STOW Analysis, Balanced Score Carding, etc. Are of great interest to both internal and external investors. The Data Group was founded in 1 868 when India was under British Empire. The group formed their textile business in 1874 and Steel manufacturing in 1907. In 1945, Data Sons Limited started the automotive business with manufacturing steam locomotive boilers after purchasing the shops of East Indian Railways from Government of India, which was under the British Government in that year. After purchasing these shops, the Data Sons decided to establish Data Engineering and Locomotive Company Limited (TELLS Limited) and establish the primary manufacturing facility in Jackhammers (an industrial city in Eastern India). This company was managed by J. R. D. Data from 1945 to 1973 and by Summand Moldboard from 1973 to 1988. Summand established the second manufacturing facility in Pine India looking into the mom in the auto market. In 1991 Rattan Data took over the Data Empire from his uncle and moved the Data group out of the sectors where they were not very competitive -? like Cement and Textiles. Today, Tats largest manufacturing businesses are Steel and Motors after the consolidation carried out by Rattan Data. As on end of financial year 2008, the Data Group has an annual turnover in excess of $30 Billion out of which more than $9 Billion is contributed by Data Motors. TELLS Limited is now widely known as Data Motors that is among the worlds top five manufacturers of medium and eave trucks and worlds second largest manufacturer of medium and heavy busses. Data possess a strategic engagement with Mercedes Benz for assembling and selling Mercedes Benz commercial vehicles and passenger cars in India. Another strategic tie up that they possess is with Cummins pertaining to their diesel engines through Data Holiest Limited. In fact, Data Motors contributed to the Cummins Diesel engines by adding turbo chargers on them vide their joint manufacturing operations with Data Holiest Limited. The only partnership of Data that didnt go well was with Rover Group of Britain that went bankrupt in year 2005. Data tried entering the European markets through a model named City Rover that faired poorly due to its negative publicity, higher price and poor quality compared to the competition. Rattan Data is now 70 years old but still presents the image of a dynamic, innovative and revolutionary entrepreneur. He is known for high aggressive moves for the benefits of Data Motors customers. In 1 997, Data Motors launched its first indigenously developed car named Indict that currently possesses more than 15% of the car market share in India. The other car models of Data Motors that are popular in India and some markets of Asia are Data Indigo, Data Sierra, Data SUmo and Data Safari. In 2008, Data achieved a global publicity due to two major activities that made headlines worldwide. In the Geneva Motor show they presented their four- setter small car named Anna priced about $2500 which is expected to be the cheapest car of the world. In March 2008, Data Motors acquired the two globally prestigious companies Jaguar and Land Rover from Ford Motor Company. It is assessed that Data Motors did So to achieve a new image of a global automotive company like Ford Motor Company given that their business span has largely remained indigenous within India for a long time. Strategic Framework of Data Motors: Data Motors is certified as ISO 9001 :2000 compliant in Quality Management System and as ISO 14001:1 996 compliant in Environmental Management System. Hence, they possess global recognition in best practices that strengthens their branding at a global level (http://WV. . Automatons. Com/ our_world/awards. PH). They are known to be very much customer focused and are very conscious about the fitment of their products for customer needs. They believe in continuous innovations as they keep on releasing new innovations in their existing models. Although the indigenous cars of Data Motors do not compare with the engineering exc ellence of a global player like Ford Motor Company, they are well suited for Asian conditions where the comfort factor is more important than cruising at high speeds. Reviews by Indian Motor sites reveal that the Data Motors Indict Indigo models possess sluggish performance of engine in terms of speed and performance but are good in terms fuel efficiency, maintainability, internal space that are more important factors given the road and traffic conditions in India. This reveals that Data Motors have focused on the local conditions of the country and have designed cars that are more suitable for customer needs rather than imposing additional but useless engineering on them. Example, there is no point designing a car that can run at 100 miles per hour if the maximum speeds that can be achieved even at best roads is 70 miles an hour. One of the major success factors of Data Motors are their supply chain excellence. The entire world is surprised by the launch of Data Anna that shall e priced at 1 lake approximately. An analysis by Bogart, Justine (2009) reveals that Data Motors could commit this price to the industry due to their excellent backbend supply chain network. Data Motors worked very early with their suppliers in arriving at the cost estimate of the car to the extent that even the functional specifications of the parts were completed much before even talking about the car to the markets. Data Motors uses Arabia spend management solution as reported by Business Wire in 2005. Arabia is a software based platform that helps in reducing bottom line costs considerably. Data Motors is a modest company when it comes to spending because one of their primary objectives has been achieving highest operational efficiencies at lowest costs. Data Motors extensively uses Information Technology to support their business objectives. They possess Computer Aided Design and Computer Aided Modeling technologies, Siebel for Customer network management, SAP for supplier relationships and supply chain management, business logistics management, customer relationship management, human resources management and Finance management. They also use BMW Soft;are for business services management under the I TILL and ISO 20000:2005 framework. The IT systems of Data Motors limited are outsourced to their group company named Data Technologies Limited. The BMW tools help them to manage IT services management, IT change management and also to comply with critical statutory laws and best practices like Serbians Solely Act, ITIL, and ISO 20000:2005. Data Motors do have the fundamentals to play the role of change agent for some of the major changes in the global automobile industry. Historically, Data Motors have not done well in entering the motor markets in western entries and hence this acquisition presents an excellent opportunity for Data Motors to establish their presence in ILK and European car markets. Jaguar and Land Rover may not have done well in the recent past but they have remained the pride and heritage of Great Britain and are very close to heart of the native British citizens. Data Motors may just have to apply some technical innovations in these cars and re-price them according to the modern economics and these models for sure will again do wonders in the UK markets. One good thing about this acquisition is that the heritages of India and Britain have many common links including the very establishment of Data Group that was done during the British rule in India. The fundamentals of Data Motors possess many best practices of the British industries and hence the employees Of Jaguar and Land Rover will be able to easily correlate the culture of Data Motors with the original British heritage although these organizations have remained under American influence for so long. The biggest gamble that Data Motors is currently playing is the Data Anna targeted at urban middle class that are yet to afford a car and have en moving on Motorcycles. Data Motors have priced this car at $2500 approximately which itself is a challenge for them to fulfill. They have already made a loss of more than 300 Million Dollars because they had to shift their entire plant for Data Anna manufacturing from a location called Singer in the eastern part of India amidst local disturbances and security problems The current manufacturing capacity of Data Anna is 50,000 cars per year whereas Brown, Robin (2009) of motorize. Com expects a booking of 500,000 units in the first lot itself. This means that in the current capacity Data Motors will take 10 years to fulfill the orders of first lot itself. After the Singer crisis, they are in the process of setting up a new factory such that the combined output of Data Motors can be 250000 cars per year which again will take two years to fulfill the bookings of the first lot itself. Hence, Data Anna is going to be a major challenge for Data Motors whereby they would need to aggressively deploy new plants although they are reeling under cash crunch due to their acquisition of Jaguar and Land Rover in 2008. Hence, overall it IS a do or die situation for Data Motors if they succeed they will attain the tutus of no. Small car manufacturer of the world; but if they fail they would lose reputation in the global markets permanently. COMPANY PROFILE Data motors one of Indians largest private sector companies with a turnover of over RSI 80 billion, is the countrys leading commercial vehicle manufacturer and has significant presence in the multi-utility and passenger car segments. Data motors were established on September 1, 1945, originally fo r the manufacture of Steam Locomotives at Jackhammers. By 1954, the company had diversified into the manufacture of commercial vehicles in elaboration with Daimler Benz, Germany. By the time their collaboration ended in 1 969, Data motors had become an independent producer of Medium Commercial Vehicles with a great degree of initialization. It had also developed the capability Of designing testing and manufacturing such vehicles. The widely successful Data Indict, an Euro 2 compliant vehicle, is the countrys first indigenously designed, developed and manufactured passenger car. Data Motors followed that up with the Data Indigo, a sedan that was launched in December 2002. The company also makes several other assigners vehicles, including the Safari, Sumo and Sierra. The companys products have received wide acceptance not only in India but also in the Middle East, Asia, Africa, Australia, Latin America and Europe. Business TELLS is into the business of manufacturing and selling medium, heavy and light commercial vehicles, multi utility vehicles and passenger cars. Its major product line can be basically classified into three broad categories. There are various sub-brands and products in these categories: 1 . Passenger Cars 2. Stability Vehicles 3. Commercial Vehicles Chapter 3 OBJECTIVES OF THE RESEARCH Chapter 5 Research Methodology Research Methodology : Hypotheses In the modern business world, company valuation is not only needed for mergers acquisitions but also to present the strengths and fundamentals of the company to the stake holders and investors. The stock markets in many companies use such valuation data to assign ratings to a company starting from very risky to invest to very safe to invest. These analytics are published after carrying out structured mechanisms of company analysis as would be presented theoretically in the Literature Review. These mechanisms an be demonstrated by analyzing practical scenarios which shall be carried out by presenting the case studies of Data Motors based on the published valuation reports of by these companies as well as multiple third parties. The reports of the case studies shall be analyzed to present conclusions about the strengths of the company and the risk factor from the perspective of prospective investors in the stocks of the company or potential buyers of the entire company. However the perspective shall be academic and may not be applicable for professional purposes. The outlook of the next five years for the chosen impasse shall be done based on academic understanding of Strategic and Financial valuation techniques. It is assumed that all the analytics techniques shall be applicable in excel sheets and no special software tools shall be required. Not all valuations are of interest to everyone.