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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Please note:

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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Excerpts

The Acquisition of JLR

Ford, a leading automaker and one of the largest multinational corporations in the global automobile industry, acquired Jaguar from British Leyland Limited in 1989 for US$ 2.5 billion. Ford bought Land Rover in 2000 for US$ 2.7 billion from BMW. Over the years, the operations of both Jaguar and Land Rover were fully integrated...

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...

Excerpts Contd...>>

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