Tata Motors in Trouble

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Case Details:

Case Code : BSTR314
Case Length : 18 Pages
Period : 2007-2008
Pub Date : 2009
Teaching Note : Available
Organization : Tata Motors
Industry : Automobiles
Countries : India/UK/US

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Tata Motors Reports Loss Contd...

The management of Tata Motors was of the view that the acquisition of JLR, which had a global presence and a repertoire of well established brands, would help the company become one of the major players in the global automobile industry.

However, things did not turn out the way Ravi Kant had expected. Due to the global financial crisis that deepened further with the collapse of Lehman Brothers in September 2008, consumer demand plummeted and global lines of credit were frozen.

Consequently, Tata Motors' financial position for the third quarter ending December 2008 presented a bleak picture (Refer to Table I for the company's financial performance for the third quarter and nine months period in the financial years 2007-08 and 2008-09).

The company reported a loss of Rs. 2.63 billion, compared to a profit of Rs. 4.99 billion during the third quarter ending December 2007. Tata Motors reported a quarterly loss after a span of seven years. In the December 2008 quarter, Tata Motors' reported a sales volume at 98,760 vehicles as compared to 144,608 vehicles during the corresponding quarter of the previous year. Mentioning the reasons for the company's poor performance, the management said, "In the October-December quarter of the financial year 2008-09, the automotive sector in India suffered severe contraction in demand, arising from major financial and other market upheavals. This exacerbated the lack of liquidity and unavailability of consumer finance."5...

Excerpts >>

5] "Tata Motors Q3 Net Loss at Rs 2.63 Billion,"www.moneycontrol.com, January 31, 2009.

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