This is an analysis of the news "TATA Motors may struggle to rev up hedging a drag" which appeared on 15th Feb, 2017 following the release of the financial statement for Q3 by TATA Motors.
2. “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
3. THE NEWS
Revenues increased
Net profit falls 96% in Q3
Shares fall 10.3% - biggest decline in 5yrs
Jaguar Land Rover (JLR) misfires
4. 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
5. 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 REST
21.6% 20.6% 19.3% 16.8% 21.7%
6.
7. ANALYSIS ON TATA MOTOR’S
STRUGGLE TO REV UP
Unfavorable marketing expenses
Higher new model launch
Lower wholesale volumes
Surge in Variable cost
10. 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
11. 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
13. 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%
15. POSSIBLE REASONS FOR THE CAUSE-
DOMESTIC
Ouster/Leadership of Mr. Cyrus Mistry
Demonetization effect
Tata Nano Project
16. 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
18. IMPACT OF TATA NANO PROJECT
Drain on financial resources
3000 Crores loss
2,50,000 cars are not on roads
8500 Crores cross holdings
19. IMPACT OF DEMONETIZATION
08th November,2016
Affected commercial and passenger vehicle sales
13% decline in sales
OEM’s were affected
Share price fell
20. SHARE PRICES WITH RESPECT TO THE
EVENTS-BSE/NSE
444
308.25
488
448
493
589
559
521
534.15
457.25
512
436
0
100
200
300
400
500
600
700
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 15/02/2017
SHAREPRICE
DATE
Share price
Tianjin
Explosion
Brexit Raise in sales of JLR Cyrus Mistry Demonetization/US
Elections
Release of Financial
Statements
21. TIME-LINE OF EVENTS
24th Oct 2016 -
ouster of Cyrus
Mistry
23th June 2016 -
Brexit
28th August 2015 –
Tianjan Explosion
8th Nov 2016 –
Demonetization
Nov 2016 – US
Elections(Tax
Policies)
Feb 2017 – Release
of Financial
Statement for Q3
22. 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