Offering at the lotus feet of our

master
India: Fastest Growing Free Market Democracy

GDP Growth Forex FII Flow FDI Per Capita Inflation

1990 4.9 % < USD 1 USD 1 million USD 97 million USD 9 percent
(1993)
billion 390
2008 8.7 %* USD 309 billion USD 16.1 billion USD 12.7 billion in
USD 7.8 percent
2007-08 till
as on Mar 28, in 2007-08 as on March
2008
December (USD 16 740 29, 2008
billion in 2006-07)
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 1,000 equity deals…

Number of deals
60
782 800
50
USD Billion

40 467 600
28.2
30 306 400
20 18.3
10 12.3 200 In 2007, the total value of
0 0 M&A and PE deals was USD
2004 2005 2006 2007 70 billion…
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
“India is now “I have never
evolved into
truly a land of seen India so
one of the dynamic,
opportunity”.
world's leading vibrant and full
technology Craig of business
Barrett
John Redwood centers“. Intel opportunities”.
Peter
Economic By 2032, India Corporati
Loescher
Competitiven on
will be among President
ess Policy and Chief
the three largest
Group, UK Executive
economies in the Siemens
“We came to India world. “The Indian market has
for the costs, BRIC
two core advantages -
stayed for the Report, an increasing presence
quality and are Goldman of multinationals and
now investing for Sachs an upswing in the IT
innovation”. exports”. Travyn
- Dan Scheinman, “India is a
Cisco System Inc. developed “India is a very Rhall,
ACNielse
as told to Business country as far as exciting market n
Week, August 2005 intellectual and the luxury
capital is car segment is
concerned”. growing
Mr Paul de Voijs
Jack Welch 5
General exponentially
Managing
Major M&A Deals Undertaken Abroad by India Inc.

USD 12.1
Tata
Tata Steel
Steel buys
buys Corus
Corus Plc
Plc billion

USD 6
Hindalco
Hindalco acquired
acquired billion
Novelis
Novelis Inc.
Inc.

Tata USD 2.3

Tata buys
buys Jaguar
Jaguar and
and Land
Land
Rover billion
Rover

Essar USD 1.58

Essar Steel
Steel acquired
acquired Algoma
Algoma
Steel billion
Steel

Suzlon USD 1.6

Suzlon Energy
Energy Ltd.
Ltd. acquires
acquires
REpower billion
REpower
6
Major M&A and Investments Announcements in India (1/2)

POSCO
POSCOtotoinvest
investininbuilding
buildingsteel
steel USD 12
manufacturing
manufacturingplants
plantsand
andfacilities
facilities billion
in
inIndia
Indiaby
by2016
2016

USD 11
Vodafone
Vodafone buys
buys Hutch
Hutch billion

Plans USD 2
Plansto
toestablish
establishthree
three
manufacturing
manufacturing plants toproduce
plants to produce billion
photo-voltaic units
photo-voltaic units

Plans USD 1.7

Plansto
tospend
spendon onits
itsdevelopment
development
operations
operationsininIndia
Indiaover
overthe
thenext
next billion
four years
four years

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

Plans USD 1
Plans investment
investment inin private
private billion
equity in Indian markets
equity in Indian markets

Plans USD 1
Plansinvestment
investmentininprivate
privateequity,
equity,
real estate, and private wealth billion
real estate, and private wealth
management
management

Aditya USD 0.98

AdityaBirla
BirlaGroup
Groupincreased
increasedits
its
stake in Idea Cellular by acquiring billion
stake in Idea Cellular by acquiring
48.14-percent
48.14-percentstake
stake

Mylan USD 0.74

Mylan Laboratories
Laboratories acquired
acquired aa
majority billion
majority stake
stake in
in Matrix
Matrix
Laboratories
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 % Change Market Cap P/E Ann. Ann. Net
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 Co., 31.10 -1.20 -3.72 56.41B 7.86 108,349.45 5,788.49
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 Tata
Motors.”
 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 Group’s holding
company) worth at least $600m
 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