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Introduction To The Company Tata Motors Group (Tata Motors) is a $45 billion organisation. It has a diverse portfolio which includes an extensive range of cars, sports utility vehicles, trucks, buses and defence vehicles. Tata Motors is India’s largest and the only original equipment manufacturer (OEM) offering extensive range of integrated, smart and e-mobility solutions. Tata Motors is one of the world’s leading manufacturers of automobiles. It was founded by Jamsetji Tata in 1868. Current CEO and MD of Tata Motors is Guenter Karl Butschek. Mission of the company: “We innovate mobility solutions with passion to enhance quality of life.” Vision of the company: “As a high performance organisation, we are, by FY 2019: 

The preferred choice for customers in delivering excellence, efficiency and value in design and engineering solutions

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Achieving sustainable financial performance

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Delivering exciting innovations”

Tata Motors has a strong global network of subsidiaries and associate companies, including Jaguar Land Rover in the UK and Tata Daewoo in South Korea. Their international footprint was established with their first export in 1961. Today, they have over 97 direct and indirect subsidiaries in India and abroad. Financial Status of Company: Tata Motors which began its operations in 1945. In 2008 the profits generated by the company was Rs. 2,168 crores while in the year 2011 it rose to Rs. 9,274 crores. In 2012 there was a major hike and the profit reported was Rs. 13,517 crores. Again in 2013 it was Rs. 9,893 crores. In 2015-16 the profits were Rs. 11,678 crores, in 2016-17 Rs. 7,557 crores and in the year 2017-18 the profits recorded were Rs. 9,091 crores. As we can see from the data that company is financially sound and the average profit generated in around last 10 years from 2008-18 is Rs. 7,332 crores (approx.). Tata motors with its operations in India and abroad is a trusted brand name, has a strong R&D and meets the highest standard of quality. The stock price of Tata motors were down by 4% in the beginning of March this year. The major reason was decline in the sales of Jaguar Land rover, a fully owned subsidiary of Tata Motors. Jaguar Land rover entered into a controversy with a Chinese firm Jiangling Motors Corp. Finally JLR won the case against Jiangling Motors. Evoque which was launched in 2018 had five unique features which were copied directly in Landwind X7 built by Jiangling Motors. The Beijing Chaoyang District Court ordered that manufacturing and marketing of

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Landwind X7 be stopped immediately and JLR be paid compensation. The shares of Tata motors were 5% higher after JLR said it expects improved financial results for Q4FY19.

Competition Analysis 8.5 million Tata branded vehicles are present globally. Tata is among those companies which provide an extensive portfolio to its consumers. Tata Motors is expanding globally since 1961. Tata Motors group is present in over 175 countries. The top three competitors of Tata Motors in the international markets and the comparison of their performance is as follows:

Name of the company

Tata Motors

Nisan

Honda

Ford

Founder

Current CEO

Revenue generated

Number of Employees

Operating in how many countries

Debt to equity ratio

$39.7B

81,090

175

0.81

J R D Tata

Guenter Butschek CEO

$120.3B

138,910

116

Yoshisuke Aikawa

Hiroto Saikawa President & CEO

1.54

Takahiro Hachigo Soichiro Honda President & CEO

Henry Ford

Jim Hackett President & CEO

$143.9B

215,638

150

0.48

$160.3B

199,000

200

2.80

Here we can see that in terms of revenue all three competitors of Tata motors are generating more revenue than Tata motors. As all the companies are operating worldwide, so Ford is the company which is operating in around 200 countries which is the highest among all four companies and Tata Motors comes second in terms of the number of countries in which they are operating i.e. Tata Motors has operations in around 175 countries. If we compare the debt to equity ratio of the companies Ford is having the highest debt to equity ratio of 2.80 which means that the company is financing its growth with debt which may cause some problems for the company in future. Tata Motors and Honda have a low debt-equity ratio showing that

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the company is generating funds from other sources for financing its growth and is less dependent on debt.

History of Entering Into Foreign Market As we know that Tata Motors is having a large product portfolio which includes cars, trucks, buses, defence vehicles etc. is one of the leading automobile manufacturers in the World. It started operations in 1954 with commercial vehicles in India and now it is operating globally and is a recognised brand name across the globe. TATA MOTOR’S CV AROUND THE WORLD With its presence in around 46 countries, Tata Motors is among the top 10 Commercial Vehicle (CV) manufacturers in the world. The company launched Tata 407 Light Commercial Vehicle (LCV) in 1986 which became popular not only in India but also in several other countries. In the text following there is a briefing how Tata Motors created a global footstep in the segment of Commercial Vehicles (CV).  In 1991 Tata Motors entered into a joint venture with Nitol Motors to set up NITA Company Ltd. It was the first assembly of the company outside India. In the years following Tata Motors started assembly operations in different countries like Myanmar, Vietnam, Bangladesh, Ukraine, South Africa, Kenya, Senegal, Nigeria and Tunisia.  In 1993 Tata Motors entered into a tie up with Cummins Engine Inc. which helped Tata Motors to manufacture powerful diesel engines with lower carbon emission.  In 2004 Tata Motors went for listing the company at the New York Stock Exchange. Also in 2004 Tata Motors acquired South Korea based Truck manufacturing unit Daewoo. Together they started a Tata World Truck Range in countries like South Korea, South Africa, SAARC nations and the Middle East.  In 2005 Tata Motors acquired 21% stake in Spanish bus and coach manufacturer Hispano Carrocera.  In 2006 Tata Motors entered into a joint venture with Brazil based Marcopolo S.A. and launched Tata Marcopolo Buses.  Also in 2008 Tata Motors started its first international sales company Tata Motors Thailand.  In 2009 Tata Motors acquired Spanish bus and coach manufacturer, Hispano Carrocera. After this acquisition Tata Motors started manufacturing Starbus and Globus range of buses.  In 2010 Tata Motors acquired 80% stake in Italian design and engineering company, Trilix for 1.85 million euros.  In 2011, Tata Motors Indonesia was fully established as a fully owned subsidiary of Tata Motors.

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 In 2012 Tata Motors launched heavy trucks like Tata Prima in the markets around the World.  In 2014 Tata Motors launched light trucks and buses like Tata Ultra in the international markets.  In 2015 Tata Motors launched a unique skill development programme by the name of “Skill Pro” which was an initiative to train the youth population and transform them into skilled technical professionals and make them ready for employment. Also in 2015 Tata Motors made Lionel Messi as global ambassador to promote passenger vehicles globally.  In 2018 Tata Motors sold its aerospace and defence business to another entity of Tata Group i.e. Tata advanced systems, to utilize their full potential. As of today Tata Motors commercial vehicles can be seen in over 46 countries of Africa, ASEAN and also in Latin America, SAARC and the Middle East. TATA MOTOR’S PV AROUND THE WORLD Tata Motors began manufacturing Passenger Vehicles (PV) in India in 1991. Apart from India the passenger vehicles manufactured by Tata Motors are available in many countries through exclusive dealerships. The various passenger vehicles by Tata Motors like Indica, Manza, Aria, Indigo, Safari Storme, Vista, Bolt, GenX Nano, Tiago, Nexon, Sumo, Hexa, Zest, Tigor are sold in countries like Africa, APAC and Latin America whereas Jaguar and Land Rover are available in Europe. In the text below the important milestones that the company achieved in the PV sector are mentioned.  Asia pacific Region: In 2003 Tata Motors entered into Nepal. It was followed by commencement of operations in 2004 in Sri Lanka, then in Indonesia in 2011, in 2012 in Bangladesh, in Myanmar in 2013 and In Philippines in 2014.  Europe: In 2008 Tata Motors acquired European car maker Jaguar Landrover from Ford Motor Company.  Africa: Passenger vehicles of Tata Motors entered into Africa and South Africa in 2004. Then in 2005 Tata Motors entered into Tanzania, in 2006 in Ghana and in 2014 in Algeria.  Latin America: Tata Motor’s passenger vehicle segment entered in Latin America starting from Uruguay in 2014 and after that entered into Bolivia in 2015.

Expansion Plans and Future Strategies In the next five years Tata Motors is planning to completely overhaul its passenger vehicle portfolio in order to increase sales volume and market share in the highly competitive Indian market. Company’s new products will be based on two architectures OMEGA and ALFA. OMEGA stands for Optimal Modular Efficient Global Advanced and ALFA stands for Agile Light Advanced Architecture. They are planning to have completely different product portfolio by 2023-24. Under the Tata E-Vision Electric Sedan concept the ALFA structure is 4

going to cover all vehicles from 3.7 metres- 4.3 metres and the OMEGA structure is going to accommodate all vehicles from 4.3 metres and above region. The company is striving to get 50% market share in the passenger vehicle sector in domestic market. Company is also trying to expand its overseas markets for both passenger and commercial vehicles. The company is looking for additional volumes from non-SAARC markets driven by growths in Asean, Africa and the Middle East. Currently the knocked down (KD) assembly business facilities are spread across 8 countries and company aims to grow this to ‘other strategic markets’ taking the contribution of KD to almost 20% of its total exports by FY21 compared to 8% in FY18. The company is targeting new international markets for its commercial vehicle business such as Philippines and also in neighbouring markets like Nepal and launch a manufacturing plant in Slovakia. According to the MD and CEO of Tata Motors Guenter Butschek the company’s aim is to “win decisively” in commercial vehicles sector and “win sustainably” in passenger vehicle sector. International Strategy of the company involves identification of new international markets on the basis of demographical and socio-economical features of specific regions which include market’s regulatory, geopolitical and competitive landscape. Shipments to ASEAN have doubled in FY18 as compared to the previous years and it has become the fastest growing region of the company. To expand the global footprint the key areas on which Tata Motors is going to focus are as follows:    

Developing suitable products Driving optimal manufacturing and sourcing Enhancing the overall customer experience Further establishing Tata Motors as a brand across geographies

PESTLE Analysis of Automobile Industry in India

POLITICAL  Government of India formulated an auto policy in India in year 2002 to support selfsustained, integrated and phased growth of the automobile industry in India.  Government has allowed 100% foreign equity investment in the automobile sector and there is no minimum investment criterion.  Government has also granted concessions such as reduced interest rates for financing exports.

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 The National Auto Fuel Policy by the Government made it compulsory that all new four wheeled vehicles in 11 cities must meet Bharat stage III emission norms for conventional air pollutants and comply with Euro IV standards by 2010.  Government ensures a balanced transition to open trade at minimal risk to Indian economy and local industry.  Government is providing assistance to development of vehicles that can work on alternate energy sources.  Indian companies are given a weighted tax deduction upto 150% for in house R&D activities.  Terminal life policy is also formulated for commercial vehicles with incentive scheme for replacement of such vehicles.

ECONOMIC  Economic pressure on the automobile industry is causing automobile companies to reorganise the traditional sales process.  Purchase of more than 90% commercial vehicles is on credit. Availability of finance to commercial vehicle buyers has grown in last few years.  Several Indian firms have entered into partnerships with global players, while some have formed joint ventures with equity participation whereas some others have entered into technology tie-ups.  In FY19 the domestic sale of passenger vehicles have slowed down and the export statistics are also disappointing.  Automotive industry contributes 7.1% to the GDP of India.  Over 19 million people are employed in the automobile sector directly or indirectly.

SOCIAL  Change in lifestyle of people has led to increase in the purchase of automobiles. So, automobile sector has a large customer base to serve.  Nowadays the average family size is of four members which make it favourable to buy a four wheeler.  There is increase in the household income levels.  Indian customers prefer small and compact cars.  Indian customers are judgemental, educated and well informed. They are price sensitive and a lot of emphasis is on the value for money.  Cars priced below USD 12000 are preferred by 80% of the population.  Vehicles priced between USD 7000-12000 form major segments in the passenger car market.

TECHNOLOGY 6

 More emphasis is being laid by the automobile companies on R&D.  Technological solutions are helping in integrating the supply chain which in turn will reduce the losses and increase profitability.  In order to support the growth of automobile industry in India, Government of India is promoting National Automotive Testing and R&D Infrastructure Project (NATRIP).  As Global companies have entered into the Indian market, advanced technologies have developed both in products and production process.  Hybrid cars have entered into the market with the evolution of alternate fuels.  Very few global companies have setup R&D centres in India.  Some major global players like Audi, BMW, Hyundai etc. have setup their manufacturing units in India.

ENVIRONMENTAL  Physical environment such as roads, bridges also affect the use of automobiles.  Increasing number of vehicles on road has increased the level of pollution.  Some alternative fuel or electric vehicles should be used which will help in reducing the level of pollution in big cities like Delhi. LEGAL

 Automotive regulations in India are governed by Ministry of Shipping, Highways and Road Transport.  The automotive sector in India is governed by the Motor Vehicles act, 1988 (MVA) along with the Central Motor Vehicles Rules 1989 (CMVR).  The emission norms and safety standards in India are governed by the Act.  The Indian norms and standards are at par with the international standards.

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Recent News related to the Company

“JLR to drive in multiple electrified vehicles in India starting this year” Tata motors fully owned subsidiary JLR is going to launch electrified vehicles in India including hybrid and battery operated vehicles. By the end of 2019 the first hybrid vehicle from JLR would be launched. In the second half of year 2020 company is planning to launch its first battery electric vehicle Jaguar I-Pace. JLR’s aim is to work for a sustainable future and that’s why they are working on hybrid and electric vehicles. This is a good example of a company working on technology to adapt to the future needs. “No production of Tata Nano for 3rd month in row, no sales in March” The officials of Tata Motors have hinted that they would stop production and sales of Tata Nano by April 2020. In the first three months of year 2019 Tata Motors have not produced or sold any unit of Tata Nano which was once called as “people’s car”. In its current form Nano will not meet the new safety and emissions norm and may require infusion of more funds. In the month of March last year, company produced only 31 units of Nano out of which they were able to sell only 29 units. This year in February Tata Motors had reported zero sales and production of Nano although it was able to sell one unit in the domestic market and there are no reports of any export. In the month of January also this year the scenario was same i.e. zero production and zero sales. Here we can see how the positioning of Nano as a cheap car in minds of people finally led to zero sales and zero production. This is a best example of the social impact on sales of a company.

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References

 https://economictimes.indiatimes.com/industry/auto/no-production-of-tata-nanofor-3rd-month-in-row-no-sales-in-march/articleshow/68692816.cms  https://www.moneycontrol.com/news/business/jlr-to-drive-in-multipleelectrified-vehicles-in-india-starting-this-year-3746001.html  https://www.tatamotors.com/about-us/  https://www.tatamotors.com/blog/international-business/making-our-presencefelt-in-south-africa-with-the-roll-out-of-our-5000th-vehicle/  https://www.moneycontrol.com/news/business/markets/tata-motors-up-27-sincefeb-19-but-analysts-still-cautious-3755301.html  https://timesofindia.indiatimes.com/auto/cars/tata-motors-plans-to-completenew-product-portfolio-by-2023-24-ceo/articleshow/63198388.cms  http://tejas.iimb.ac.in/articles/31.php  https://www.slideshare.net/manishbadhiye/pestle-analysis-on-automobileindustry-in-indiaby-manish-badhiye  https://www.tatamotors.com/blog/international-business/tata-motors-amazingjourney-towards-global-recognition/  https://www.owler.com/company/tatamotors  https://m.moneycontrol.com/stock/tatamotors/TM03/financials/balance-sheet

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