Offering at the lotus feet of our

master
India: Fastest Growing Free Market Democracy

GDP Growth Forex FII Flow FDI Per Capita Inflation

1990 < USD 1 USD 1 million USD 97 USD 9 percent

4.9 % (1993) million
billion 390
USD 309 USD 16.1 USD 12.7 billion 7.8 percent
2008 8.7 %* in 2007-08 till
USD
billion as on billion in 2007- as on
08 December (USD 740 March 29,
Mar 28, 2008 16 billion in
2006-07) 2008 3
 India: Vibrant Economy Driving M&A Activities

Number of Deals and Value In 2007, there were a total of 676

80 1,081 1,200 M&A deals and 405 private
70 70 equity deals…
1,000

Number of deals
60
50 782 800
USD Billion

40 467 600
28.2
30 306
18.3
400 In 2007, the total value of
20
12.3 200 M&A and PE deals was USD
10
70 billion…
0 0
2004 2005 2006 2007
Deal Value No. of Deals

… Total M&A deal value Private equity deals

was close to USD 51 value increased to
billion… USD 19 billion
Growth Drivers:
Globalisation and increased
competition Trends:
Concentration of companies Cross-border deals are growing
to achieve economies of faster than domestic deals
scale
Private Equity (PE) houses have
Cash Reserves with funded projects as well as made
corporate a few acquisitions in India
4
Why India? – Quote Unquote
“India has
evolved into “I have never
“India is now one of the seen India so
truly a land of world's leading dynamic,
opportunity”. technology vibrant and full
centers“. of business
Craig opportunities”.
Barrett
John Redwood By 2032, India Intel
Peter
Economic will be among Corporati
Loescher
Competitiven the three largest on
President
ess Policy economies in the and Chief
Group, UK to India
“We came “The Indian Executive
market has
world. Siemens
for the costs, two core advantages -
stayed for the an increasing presence
quality and are BRIC of multinationals and
Report, an upswing in the IT
now investing for
Goldman
innovation”. exports”.
“India is a Sachs “India is a very
developed exciting market Travyn
- Dan Scheinman,
Cisco System Inc.
country as far as and the luxury Rhall,
intellectual ACNielse
as told to Business car segment is n
Week, August 2005 capital is growing
concerned”.
exponentially
here”.
Mr Paul de Voijs
Jack Welch 5
General Managing
Major M&A Deals Undertaken Abroad by India Inc.

USD 12.1
Tata Steel buys Corus Plc
billion

Hindalco acquired USD 6

Novelis Inc. billion

Tata buys Jaguar and Land USD 2.3

Rover billion

Essar Steel acquired Algoma USD 1.58

Steel billion

Suzlon Energy Ltd. acquires USD 1.6

REpower billion
6
Major M&A and Investments Announcements in India (1/2)

POSCO to invest in building steel

USD 12
manufacturing plants and facilities
in India by 2016 billion

USD 11
Vodafone buys Hutch billion

Plans to establish three USD 2

manufacturing plants to produce
photo-voltaic units billion

Plans to spend on its development USD 1.7

operations in India over the next
four years billion

7
Major M&A and Investments Announcements in India (2/2)

Plans investment in private USD 1

equity in Indian markets billion

Plans investment in private equity, USD 1

real estate, and private wealth
billion
management

Aditya Birla Group increased its USD 0.98

stake in Idea Cellular by acquiring
billion
48.14-percent stake

Mylan Laboratories acquired a USD 0.74

majority stake in Matrix billion
Laboratories

8
 In the year 2008……
• M&A deals in India in 2008
totaled worth USD 19.8 bn
• Less compared to last year which
stood at 33.1 bn $.
• Decline of M&A activity was in
line with the global activity.
• Cross border M&A totaled 8.2 bn
$ compared to 18.7 bn $.
THE DEAL………………
 Ford Motors Company
•Location: Dearborn,
Michigan
•Founded: 1903 by Henry
Ford
•Competitors: General
Motors, Toyota
•Brand names: Lincoln,
Mercury, Volvo, Mazda,
Jaguar and Land Rover
Henry Ford and his Model
•CEO: Alan Mulally T
 Firsts in history
1913 - Assembly Line
“low priced, mass-produced automobile with
standard interchangeable parts.”

• Hiring of African Americans

• Virtual manufacturing
• Focus on safety
• Advantage through fuel efficiency
 Top Seven Auto and Truck
Manufactures Organized by Market
Capitalization
As of April 22, 2008
Company Quote Change % Market P/E Ann. Ann. Net
Change Cap Revenue Income
Toyota Motor 100.56 -3.16 -3.05 181.51B 9.16 234,033.65 16,066.36
Corporation
Daimler AG 78.29 -1.31 -1.65 79.38B 13.03 158,080.17 7,711.65

Honda Motor 31.10 -1.20 -3.72 56.41B 7.86 108,349.45 5,788.49

Co., Ltd.
Nissan Motor 17.07 -0.73 -4.10 34.91B 8.58 100,257.66 4,413.04
Co., Ltd.
PACCAR Inc. 46.72 -3.32 -6.63 17.12B 14.22 15,221.70 1,227.30

Ford Motor 7.65 -0.08 -1.03 16.83B - 172,455.00 -2,764.00

Company
General Motors 20.51 -0.76 -3.57 11.61B - 181,122.00 -43,297.00
Corporation
 Jaguar: The ups and downs
• 1922 - Founded in in Blackpool as
Swallow Sidecar company
• 1960 - Jaguar name first appeared in
1935
• 1975 - Nationalized in due to
financial difficulties
• 1984 - Floated off as a separate co in
the stock market
• 1990 - Taken over by Ford
 Jaguar: The ups and downs
• A statement of ultra luxury
• Holds Royal warrants
• Rarely advertised
• Ford’s formula one entry since 1990s
 The case of Land Rover
• 1948: Land Rover is designed by the
Rover Car co
• 1976: One millionth Land Rover
leaves the production line
• 1994: Rover Group is taken over by
BMW
• 2000: Sold to Ford for £1.8 billion
 The case of Land Rover
• Known for superior off-road
performance
• Used by military for projects and
expeditions
• Safe but less reliable
• Makeover in recent times
 The Deal Process
• 12/06/2007- Announcement from
Ford that it plans to sell Land Rover
and Jaguar.

• August 2007 - Major bidders are

identified
 The Deal Process
Likely buyers
• Tata Motors
• M&M
• Ceribrus capital Management
• TPG Capital
• Apollo Management
 The Deal Process
• India’s Tata Motors and M&M arrive
as top bidders ($ 2.05b & $ 1.9b)

• 03/01/2008 – Ford announces Tatas

as the preferred bidders
• 26/03/2008 - Ford agreed to sell their
Jaguar Land Rover operations to Tata
Motors.
• 02/06/2008 – The acquisition is
complete
 TATA MOTORS – A
SNAPSHOT
• TATA GROUP – 150 YEAR OLD
• Previously Tata Engineering and
Locomotive Company, Telco
• Tata Motors’s break-even point for
capacity utilization is one of the best
in the industry worldwide
• listed on the New York Stock
Exchange in 2004
 Making Waves
Internationally
• NANO will mark the advent of India as a
global centre for small-car production and
represent a victory for those who advocate
making cheap goods for potential
customers at the 'bottom of the
pyramid' in emerging markets.
• International praise came from
Standard & Poor’s, which in December
2006 expressed the view that the “policy
to support its companies and the improved
financial profile of its entities also
enhances the overall financial flexibility of
 Key issues
• Ford acquired Jaguar for $2.5 billion
in 1989.
• Ford acquired Land Rover for $2.75
billion in 2000.
• But the US auto major put the two
marquees on the market in 2007
after posting losses of $12.6 billion in
2006 - the heaviest in its 103-year
history.
 Ford’s standpoint.

• Tony Woodley, joint head of Britain's biggest trade union

says:

• Unite on the takeover.

• 'But with the commitments the Tatas have given to the
future of Jaguar-Land Rover and the long-term supply
agreements for components, we're obviously pleased.
• Jaguar's sales fell 19% to a little below 60,500 units in
2007. But Ford says that is mainly due to the phasing out of
the S-type, which the company stopped selling from
September, and the slowdown in the US, where it sells
around a third of its total volume.
 Why is Ford selling?
• Reports said losses at Jaguar stood at USD 715 million in
2006. jaguar has been a dog i.e. it has not been able to
provide any profit for ford because of the high
manufacturing costs provided in the united kingdom.
• The strong boy Land Rover's profit, on the other hand, was
driven by the record sale of 2.26 lakh vehicles, an 18% YoY
growth in 2007..
• Bringing down production costs and turning around the
company successfully, will be the challenge,” analysts said.
It’s a test that Ford failed.
• Ford is combining both the brands since the products and
manufacturing of vehicles for Land Rover and Jaguar is so
intertwined.
 Ratan tata says
• We aim to support their growth, while
holding true to our principle of allowing the
management and employees to bring their
experience and expertise to bear on the
growth of the business.‘
• 'We have enormous respect for the two
brands and will endeavor to preserve and
build on their
• heritage and competitiveness, keeping their
identities intact,' he said in a statement.
 Why acquire JLR?
Is TATA catching a falling knife…or

• Long term strategic commitment to automotive

sector.
• Opportunity to participate in two fast growing
auto segments.
• Increased business diversity across markets and
products.
• Land rover provides a natural fit for TML’s suv
segment.
• Jaguar offers a range of “performance/luxury”
vehicles to broaden the brand portfolio.
• Benefits from component sourcing,design
services and low cost engineering.
 Tata and the dream…
NEED FOR GROWTH
• In the past few years, the Tata group has led the growing appetite
among Indian companies to acquire businesses overseas in
Europe, the United States, Australia and Africa - some even
several times larger - in a bid to consolidate operations and
emerge as the new age multinationals.
• Tata Motors is India's largest automobile company, with revenues
of $7.2 billion in 2006-07. With over 4 million Tata vehicles plying
in India, it is the leader in commercial vehicles and the second
largest in passenger vehicles.
COMPETITIVE ADVANTAGE
• Tata Motors is vulnerable to greater competition at home. Foreign
vehicle makers including Daimler ,Nissan Motor ,Volvo and MAN
AG have struck local alliances for a bigger presence.
• Tata Motors, which has a joint venture with Fiat for cars, engines
and transmissions in India, is also facing heat from top car maker
Maruti Suzuki India Ltd , Hyundai Motor , Renault and Volkswagen
 Analysts pick
• Analysts indicate that Tata Motors can comfortably finance the
acquisition of Jaguar and Land Rover. The Indian automaker is
sitting on a cash pile of over Rs 6,000 crore and generated free
cash of over Rs 1,000 crore during FY07. It can easily use these
reserves to raise more funds without endangering its finances. At
the end of last financial year, Tata Motors’ debt-to-equity ratio was
a low 0.56, giving it ample head room to raise more funds.
• Over the next 3-4 years, Tata Motors plans to invest Rs 12,000
crore in setting up new units for a small car, trucks and SUVs and
also to expand the capacity of its existing units.
• challenge for Tata Motors. These marquee brands have very high
production costs and require phenomenally high engineering and
research capabilities as they compete with likes of BMW and Audi.
“Taking over the brand is easy, bringing down production costs
and turning around the company successfully, will be the
challenge,” analysts said. It’s a test that Ford failed.
WHAT IS TATA PAYING
FOR ????
 FINANCING WAYS
• Low leverage of the auto biz
provides funding flexibility
• Current ly financed the purchase
through a $3bn, 15month bridge
loan
– It intends to refinance the loan
through long-term funds
• valuable stakes in group
companies
owns $400m of Tata Steel at current
prices
owns stake in Tata Sons (Tata
 KEY ASSUMPTIONS
KEY ASSUMPTIONS

GROWTH RATE 0.09

Terminal Growth Rate 0.03

EBIT as % of SALES 0.069

Discount Rate 0.06

JLR Shareholders Equity 2,456

 Result

• ACTUAL 2.3 BILLION RUPEES

• VALUATION 2.80 BILLION RUPEES

JAYAKRISHNA
SUBRAT
PHANEENDRA
MADHUSUDAN
RANJAN