Tata Motors Limited is India’s largest AutomobileCompany established in 1945. And headquartered in Mumbai, it was formerly knownas TELCO. Furthermore, the parent company is Tata Group. The mission of thecompany is we innovate mobility solutions with passion to enhance quality oflife. The values of the company included integrity, teamwork, accountability,customer focus, excellence and speed. The Company is involved in manufacture ofmotor vehicles. The Company is involved mainly in the business of automobileproducts containing of all types of commercial and passenger vehicles,including financing of the vehicles sold by the Company.
The segments of thecompany include automotive operations and all other operations. The Company’sautomotive segment operations include all activities relating to thedevelopment, design, manufacture, assembly and sale of vehicles, includingvehicle financing, as well as sale of related parts and accessories. In theautomotive segment, the Company manufactures and sells passenger cars, utilityvehicles, light commercial vehicles, and medium and heavy commercial vehicles.
The Company’s all other operations segment mainly includes informationtechnology (IT) services, and machine tools and factory automation services. In addition, Tata Motors have assembly plants and automanufacturing units in different cities of India, including Sanand, Lucknow,Pantnagar, Jamshedpur, Pune and Dharwad. They have facilities in Thailand, UK,South Africa and so on. The company has joint venture with Marcopolo formanufacturing buses. The design and research & development centre of thecompany located in India, the UK, Italy and Korea strive to innovate newproducts that achieve performances that will fire the imagination of GenNextcustomersNowadays, The Company operates in over 160 countriesacross the world. And they are more than 60000 employees work in the company (Tata Motors, 2018).
Jaguar Land Rover (JLR) is the UK’s largest automotivemanufacturing business, and it built around two iconic British car brands: LandRover, the world’s leading premium all-terrain vehicle and Jaguar, one of the world’spremier luxury sports cars. After Tata Motors acquired Jaguar and Land Roverfrom Ford in 2008, it merged the two marques into a single company and itssuccess has flourished, with memorable vehicles and innovative technologiesthat add to a long-lasting legacy.The origins of Jaguar can be traced back to a companythat began by making motorcycle sidecars in 1922.
The Swallow Sidecar Companylater started building automobiles and moved to Coventry, switching its name toJaguar after the Second World War. It produced premium saloons and sports cars,including the legendary XK120.Around this time, Rover started to develop a newall-terrain vehicle, inspired by the American Jeep. Lightweight and rustproof,the first Land Rover was clad in aluminium alloy, due to the post-war steelshortage, and cost £450. It introduced 4×4 capabilities to road cars and wassoon adopted by the military as well.So popular was the new car that British Leyland madeLand Rover a standalone company in 1978. Very little about the first RangeRover was altered over the years – 1981 introduced a four-door, while a dieselarrived in 1986.
As the Range Rover became seen as more upmarket, the LandRover Discovery was launched in 1988 as a third model in the range.After splitting from British Leyland, Jaguar becameindependent again in the 1980s, before being purchased by Ford in 1989. LandRover, meanwhile, was bought by BMW in 1994, which expanded the range furtherby introducing the Freelander. It then joined Jaguar under Ford in 2000, withthe two companies becoming closely linked, sharing engineering knowledge andfacilities (JAGUAR LAND ROVER LIMITED, 2016).In 2008, the two were bought by Tata Motors, India’slargest automobile manufacturer, and officially joined together as one companyin 2013. Sales and profits have risen year on year, with more exciting chaptersin the histories of these two brands still to be written (Tata Sons Ltd, 2018). Question2In March 2008, Ford sells Jaguar and Land Rover (JLR)to Tata Motor around 10billion pound.
And it happened a few months before acollapse in global demand in the international car market. Furthermore, TataMotors financed the takeover with $3billion of a new long-term loan. Then, theprice that paid by Tata Motor was approximately half of the Ford paid to buyJaguar and land Rover. Ford had continued to incur heavy losses in JaguarBecause it hard to turn the business and make it successful. This deal took over a year to agree by both side andit may have helped with the post-merger integration. Tata realized that itwould continue to need the support for the Ford.
This is because Ford is themain supplier of car components of these two brands, which are Jaguar and LandRover. In addition, Tata Motor did not make a lot changes inthe business. They claimed that staff, trade unions and the UK government hadbeen kept informed about the proposed takeover and supported the move.Finally, this deal has been endorsed by the tradeunions, which secured a commitment from Tata Motors to continue with JLR’sproduction plans until the end of 2011. In the same time, this included thedevelopment of the new models of the products (Riley, 2012).The motives of mergers and acquisition is acquiringJLR would provide significant potential for revenue synergies and includinggiving Tata Motors a greater international distribution, broader product rangeand better customer service skills. This is because JLR is came from luxuryproducts, the customers are different with the Tata Motors.
In addition, JLR isfamous around the world of the brands. They are having different customerservice skills with others brand. So, this is unique way of the JLR.Next is Tata Motors gains access the world-classengineering capability.
This is because Tata Motors acquired JLR, so they canaccess the engineering and involved in the research and development centre. Inthe same time, Tata Motors can use of the JLR’s technical to development newmodel of the vehicles. This will be a benefit for Tata Motor acquire JLR (Chandran, 2008).Third is strengthens relationship between Tata Motor’steel and motoring business. JLR is the luxury and famous brand around theworld. So, this can lead Tata Motors to become more successful in the world. Besides, acquisition would help the company to enterinto the higher premier segment of the global automobile market.
As mentionedby the last point, JLR is a brand and it famous around the world. In thisacquisition will help Tata Motors enter the higher premier market and let morepeople know about the Tata Motors. JLR had two advance design studios and latesttechnology as a part of the deal. This would provide Tata Motors access to thelatest technology which will also allow Tata Motor to improve their coreproducts in India (Laddha, 2016). For a long term, Tata Motors can get more benefitsfrom the JLR after acquired JLR.
This is the win-win situation for the both side.There are some examples of motive of mergers andacquisition. First are the tax benefits. Mergers are also adopted to reduce thetax liabilities. When merging with a loss-making entity, the company with ahigh tax liability cans et off the accumulated loses of the target against itsprofits, gaining tax benefits. A good example for the tax benefits is AshokLeyland Information Technology (ALIT). ALIT was acquired by the HindujaFinance, a group company, so that it could set off the accumulated loses in ALIT’sbooks against its profits.
Second is access to funds, this is because often acompany find it difficult to access funds from the capital market. Thisdeprives the company of funds to reward its grow objectives effectively.Examples of access to funds is TDPL, TDPL merged with Sun Pharma since TDPL didnot have finds to launch the new products.Entry into new markets also one of the motive inmerger and acquisition. Mergers are often looked upon as a tool for hasslesentry into new markets. Under normal conditions, a company can enter a new, butmay have to face inflexible competition from the existing market.
In the sametime, entry a new market also a big challenge of the company (NGUYEN, et al., 2012).