Tata motors - Q3, 2016-17 Financial Statement Analysis
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“TATA MOTORS MAY STRUGGLE TO REV UP”
Source: economic times dated 15-02-2017
An Analysis by : 1. ABISHEK SANTHOSH RAJ A 2. ANOOP RAJAN MATHEW 3. DARSHANA GOGOI 4. GANESH KUMAR 5. JOSEPH ARNOULD MARIAN 6. MADDI BHADHRI NADH
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THE NEWS
Revenues increased Net profit falls 96% in Q3 Shares fall 10.3% - biggest decline in 5yrs Jaguar Land Rover (JLR) misfires
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TATA MOTORS
Established in 1945 by J R D Tata CEO : Guenter Butschek Chairman : Natarajan Chandrasekaran Headquarters : Mumbai Subsidiaries: JLR, Tata Daewoo, Tata
Hispano Net worth: $12.7 billion
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JAGUAR LAND ROVER (JLR)
Acquired by TATA Motors in 2008 Contributes 83% of TATA Motors’ total revenue Manufacturing units in UK, Slovakia, India and China No 1 manufacturer in UK Sales :
EUROPE CHINA UK US REST21.6% 20.6% 19.3% 16.8% 21.7%
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ANALYSIS ON TATA MOTOR’S STRUGGLE TO REV UP
Unfavorable marketing expenses Higher new model launch Lower wholesale volumes Surge in Variable cost
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INCREASE IN EXPENSES
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POSSIBLE REASONS FOR THE CAUSE- GLOBAL
Tianjin Explosion Brexit Trump effect
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IMPACT OF TIANJIN EXPLOSION
28th August 2015, Port Tianjin, China 5800 JLR’s destroyed Incurred a loss of £154 mn Spent £85 mn on recovery in FY16-17
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IMPACT OF BREXIT
8 operations of JLR in UK Estimated decrease in Revenue: £ 1.10
billion 10% levy on exports to Europe 4% levy on import of components Fall in pounds sterling Fall in share price
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2015-2016 2016-2017126000
128000
130000
132000
134000
136000
138000
140000
Sales units of JLR-Q3
Sales: 6700 units decrease(5%)
2015-2016 2016-20170
10
20
30
40
50
60
70
80
90
100
Tax Paid
mn pounds
80% increase in tax
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IMPACT OF DONALD TRUMP
US taxation policies- Border tax adjustments
Negative impact for automakers for sales US accounts for 20% of subsidiary JLR May hit EPS by 50%
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SHARE PRICES WITH RESPECT TO THE EVENTS-NASDAQ
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POSSIBLE REASONS FOR THE CAUSE- DOMESTIC
Ouster/Leadership of Mr. Cyrus Mistry Demonetization effect Tata Nano Project
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IMPACT OF CYRUS MISTRY
Focused more on increasing EPS Invested £3.1 billion in product creation Lost £ 65 billion (TATA group) : poor
investments Set up innovation centres globally Introduced 8 new products in FY 16-17 Stock fell by 16.4% after his ouster
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INVESTMENT BY CYRUS MISTRY ON R&D
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IMPACT OF TATA NANO PROJECT
Drain on financial resources 3000 Crores loss 2,50,000 cars are not on roads 8500 Crores cross holdings
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IMPACT OF DEMONETIZATION
08th November,2016 Affected commercial and passenger vehicle
sales 13% decline in sales OEM’s were affected Share price fell
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SHARE PRICES WITH RESPECT TO THE EVENTS-BSE/NSE
22/8/2015 24/8/2015 23/6/2016 24/6/2016 1/8/2016 1/9/2016 24/10/2016 27/10/2016 11-Nov 15/11/2016 9/2/2017 15/02/20170
100
200
300
400
500
600
700
444
308.25
488448
493
589559
521 534.15
457.25
512
436
Share price
DATE
SHAR
E PR
ICE
Tianjin Explo-sion Brexit Raise in sales of JLR Cyrus Mistry Demonetization/US Elec-
tionsRelease of Financial State-
ments
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TIME-LINE OF EVENTS
24th Oct 2016 - ouster of
Cyrus Mistry
23th June 2016 - Brexit
28th August 2015 – Tianjan
Explosion8th Nov 2016 –
DemonetizationNov 2016 – US Elections(Tax
Policies)
Feb 2017 – Release of Financial
Statement for Q3
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BIBLIOGRAPHY
The Economic Times Indian Express Business Line Tata motors press release for Q3 JLR Automotive, Annual Report
2015-16 Financial statement of Tata
Motors till Q3
www.tatamotors.com www.forbes.com www.theguardian.com www.moneycontrol.com www.google.com www.nasdaq.com
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THANK YOU