Demand Forecasting Of Tata Motors

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?     The company's 23,000 employees are guided by the vision: "To be best in the manner in which we operate, best in the products we deliver, and best in our value system and ethics."

    Tata Motors Limited is India's largest automobile company, with consolidated revenues of Rs.70,938.85 crore¶s (USD 14 billion) in 200809. It is the leader in commercial vehicles in each segment, and among the top three in passenger vehicles with winning products in the compact, midsize car and utility vehicle segments. The company is the world's fourth largest truck manufacturer, and the world's second largest bus manufacturer. Established in 1945, ranked 19th in global production with 798,265 vehicles. India, as a region, is experiencing one of the highest growth rates in the world. Tata Motors' presence indeed cuts across the length and breadth of India. Over 4 million Tata vehicles ply on Indian roads, since the first rolled out in 1954. More than 800 million automobiles and light trucks are on the road worldwide with more than 70 million new vehicles sold in 2008. The company's manufacturing base in India is spread across Jamshedpur (Jharkhand), Pune (Maharashtra), Lucknow (Uttar Pradesh), Pantnagar (Uttarakhand) and Dharwad (Karnataka). Following a strategic alliance with Fiat in 2005, it has set up an industrial joint venture with Fiat Group Automobiles at Ranjangaon (Maharashtra) to produce both Fiat and Tata cars and Fiat powertrains. The company¶s dealership, sales, services and spare parts network comprises over 3500 touch points; Tata Motors also distributes and markets Fiat branded cars in India.

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Tata Motors, the first company from India's engineering sector to be listed in the New York Stock Exchange (September 2004), has also emerged as an international automobile company. Through subsidiaries and associate companies, Tata Motors has operations in the UK, South Korea, Thailand and Spain. Among them is Jaguar Land Rover, a business comprising the two iconic British brands that was acquired in 2008. In 2004, it acquired the Daewoo Commercial Vehicles Company, South Korea's second largest truck maker. Tata has been actively acquiring and joint venturing with other companies during the past five years. The purchase of Daewoo Commercial Vehicles (2004), a minority investment in Spanish bus and coach manufacturer Hispano Carrocera (2005), an alliance with Fiat, a joint venture with Brazilian bus and coach manufacturer Marcopolo and with Thailand¶s Thonburi Automotive Assembly Plant Company (2006). 2008 heralded two major events: the purchase of Britain¶s icons Jaguar Land Rover and the launch of the Tata Nano, the ³People¶s Car´ for 100,000 rupees or approximately $2,100. Seating 4, the Nano is a mere 10 feet long and has a 4 gallon fuel tank. These events have given Tata Motors its ³15 seconds of fame´.

      




6 Tata Motors rolls out the 500,000th Passenger Car from its Car Plant Facility in Pune 6 Branded buses and coaches - Starbus and Globus - launched 6 Tata Motors acquires 21% stake in Hispano Carrocera SA, Spanish bus manufacturing Company 6 Tata Ace, India's first mini truck launched 6 Tata Motors wins JRD QV award for business excellence. 6 The power packed Safari Dicor is launched 6 Introduction of Indigo SX series - luxury variant of Tata Indigo 6 Tata Motors launches Indica V2 Turbo Diesel. 6 One millionth passenger car produced and sold

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6 Inauguration of new factory at Jamshedpur for Novus 6 Tata TL 4X4’India's first Sports Utility Truck (SUT) is launched 6 Launch of Novus range of medium trucks in Korea, by Tata Daewoo Commercial Vehicle Co. (TDCV) 

6 Tata Motors vehicle sales in India cross four million mark 6 Tata Motors unveils new long wheel base premium Indigo & X -over concept at Auto Expo 2006 6 Indica V2 Xeta launched 6 Passenger Vehicle sales in India cross one-million mark 6 Tata Motors and Marcopolo, Brazil, announce joint venture to manufacture fully built buses & coaches for India & markets abroad 6 Tata Motors first plant for small car to come up in West Bengal 6 Tata Motors extends CNG options on its hatchback and estate range 6 TDCV develops South Korea's first LNG-Powered Tractor- Trailer 6 Tata Motors and Fiat Group announce three additional cooperation agreements 6 Tata Motors introduces a new Indigo range 

6 Construction of Small Car plant at Singur, West Bengal, begins on January 21 6 New 2007 Indica V2 range is launched 6 Tata Motors launches the long wheel base Indigo XL, India's first stretch limousine 6 Common rail diesel (DICOR) engine extended to Indigo sedan and estate range 6 Tata Motors and Thonburi Automotive Assembly Plant Co. (Thonburi), announce formation of a joint venture company in Thailand to manufacture, assemble and market pickup trucks. 6 Roll out of 100,000th Ace 6 Tata-Fiat plant at Ranjangaon inaugurated 6 Launch of a new Upgraded range of its entry level utility vehicle offering, the Tata Spacio. 6 CRM-DMS initiative crosses the 1000th location milestone

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6 Launch of Magic, a comfortable, safe, four-wheeler public transportation mode, developed on the Ace platform 6 Launch of Winger, India¶s only maxi-van 6 Fiat Group and Tata Motors announce establishment of Joint Venture in India 6 Launch of the Sumo Victa Turbo DI, the new upgraded range of its entry-level utility vehicle, the Sumo Spacio 6 Tata Motors launches Indica V2 Turbo with dual airbags and ABS 6 Launch of new Safari DICOR 2.2 VTT range, powered by a new 2.2 L Direct Injection Common Rail (DICOR) engine. 6 Rollout of the one millionth passenger car off the Indica platform. 

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Ace plant at Pantnagar (Uttarakhand) begins production. Indica Vista ± the new generation Indica, is launched. Tata Motors' new plant for Nano to come up in Gujarat. Latest common rail diesel offering- the Indica V2 DICOR, launched. Indigo CS (Compact Sedan), world¶s first sub four-metre sedan, launched. Launch of the new Sumo -- Sumo Grande, which combines the looks of an SUV with the comforts of a family car. Tata Motors unveils its People's Car, Nano, at the ninth Auto Expo. Xenon, 1-tonne pick-up truck, launched in Thailand. Tata Motors signs definitive agreement with Ford Motor Company to purchase Jaguar and Land Rover. Tata Motors completes acquisition of Jaguar Land Rover. Tata Motors introduces new Super Milo range of buses. Tata Motors is Official Vehicle Provider to Youth Baton Relay for The III Commonwealth Youth Games Pune 2008. Indica Vista ± the second generation Indica, is launched. Tata Motors launches passenger cars and the new pick-up in D.R. Congo.



6 Tata Motors begins distribution of Prima World truck 6 Tata Motors launches the next generation all-new Indigo MANZA 6 FREELANDER 2 launched in India

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Tata Marcopolo Motors' Dharwad plant begins production. Tata Motors launches Nano - The People's Car Introduction of new world standard truck range. Launch of premium luxury vehicles - Jaguar XF, XFR and XKR and Land Rover Discovery 3, Range Rover Sport and Range Rover from Jaguar and Land Rover in India.

 Tata Motors is a manufacturer that is relatively unknown in the U.S. yet has a compelling story. And a SWOT analysis of Tata Motors offers lessons for every business owner.


  


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6 The Nano is Tata¶s iPod. Great engineering and design in a rulesbreaking product that has generated global awareness and admiration  6 The brand is very well established in the economy segment 6 Tata¶s management is strengthened by the collective experience of its partners and acquired companies ± this includes general management, marketing, sales and operations 6 Tata¶s buying power is enhanced and leveraged through its size 6 Tata is making smart acquisition and partnering decisions so far. Local management teams remain in place vs. installing Tata leaders from afar. 1+1 = 3, seems to be working so far # 

 

6 Tata Motors is not well positioned in the luxury segment. This is not a problem during recessionary times but a lack of diversification can hurt during better times 6 Most of the automobiles Tata manufactures are based on older platforms 6 The Company¶s manufacturing practices trail competitors $$%   

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6 The Nano could sell well in other geographic markets. Expanding markets such as China may find the Nano just the answer 6 Jaguar and Land Rover provide Tata with an opportunity to establish itself in the luxury segment
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6 Powerful competitors for the luxury market including Honda, Toyota, Ford and Mercedes-Benz are beginning to push into the Indian market 6 Tata¶s competitive price advantage will be under pressure as environmental regulations are tightened 6 Rising material costs will create pressure to increase prices 6 There is a trending rise in diesel fuel costs which will hurt Tata¶s line of products. 6 Other competing car manufacturers have been in the passenger car business for 40, 50 or more years. Therefore Tata Motors Limited has to catch up in terms of quality and lean production. Sustainability and environmentalism could mean extra costs for this low-cost producer. This could impact its underpinning competitive advantage. Obviously, as Tata globalises and buys into other brands this problem could be alleviated. Therefore, the company has done a very good job in the past five years of strengthening its position in the market. It appears to have an excellent opportunity for future success but like all businesses, faces significant challenges.

      

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514.05 11,855.15

385.41 6,458.39

%- % /  Owner's fund Equity share capital Share application money Preference share capital Reserves & surplus

385.54 7,428.45

382.87 5,127.81

361.79 3,749.60

& % /  Secured loans Unsecured loans Total

5,251.65 2,461.99 2,022.04 822.76 489.81 7,913.91 3,818.53 1,987.10 2,114.08 2,005.61 25,534.76 14,094.51 10,852.94 8,447.52 6,606.81

  % /  Fixed assets Gross block Less : revaluation reserve Less : accumulated depreciation Net block Capital work-in-progress Investments

13,905.17 25.07 6,259.90 7,620.20 6,954.04 12,968.13

10,830.83 25.51 5,443.52 5,361.80 5,064.96 4,910.27

8,775.80 25.95 4,894.54 3,855.31 2,513.32 2,477.00

7,971.55 26.39 4,401.51 3,543.65 951.19 2,015.15

6,611.95 3,454.28 3,157.67 538.84 2,912.06

-% 

  Current assets, loans & advances Less : current liabilities & provisions Total net current assets Miscellaneous expenses not written Total

10,836.58 10,781.23 10,318.42 9,812.06 7,248.88 12,846.21 12,029.80 8,321.20 7,888.65 7,268.80 -2,009.63 2.02

-1,248.57 6.05

1,997.22 10.09

1,923.41 -19.92 14.12 18.16

25,534.76 14,094.51 10,852.94 8,447.52 6,606.81

  Book value of unquoted investments Market value of quoted investments Contingent liabilities Number of equity sharesoutstanding (Lacs)

12,358.84 4,145.82

2,117.86

1,648.57 2,480.15

558.32

2,530.55

1,323.08

1,550.00 1,260.05

5,433.07 5140.08

5,590.83 3855.04

5,196.07 3853.74

2,185.63 1,450.32 3828.34 3617.52

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? -0 Operating income

25,660.67 28,767.91 26,664.25 20,088.63 17,199.17

'1$   Material consumed Manufacturing expenses Personnel expenses Selling expenses Adminstrative expenses Expenses capitalised Cost of sales Operating profit Other recurring income Adjusted PBDIT Financial expenses Depreciation Other write offs Adjusted PBT Tax charges Adjusted PAT Non recurring items Other non cash adjustments Reported net profit Earnigs before appropriation Equity dividend Preference dividend Dividend tax Retained earnings



19,039.41 1,171.59 1,551.39 1,224.15 1,867.05 -916.02 23,937.57 1,723.10 841.54 2,564.64 704.92 874.54 51.17 934.01 12.50 921.51 79.75 15.29 1,016.55 2,399.62 311.61 34.09 2,053.92

20,931.81 1,230.14 1,544.57 1,179.48 1,982.79 -1,131.40 25,737.39 3,030.52 359.42 3,389.94 471.56 652.31 64.35 2,201.72 547.55 1,654.17 374.75 2,028.92 3,042.75 578.43 81.25 2,383.07

19,529.88 1,200.36 1,367.83 1,068.56 1,488.16 -577.05 24,077.74 2,586.51 887.23 3,473.74 455.75 586.29 85.02 2,346.68 660.37 1,686.31 227.15 -0.07 1,913.39 2,690.15 578.07 98.25 2,013.83

14,376.11 929.82 1,143.13 759.54 1,042.52 -308.85 17,942.27 2,146.36 685.18 2,831.54 350.24 520.94 73.78 1,886.58 524.93 1,361.65 167.23 1,528.88 2,094.54 497.94 69.84 1,526.76

12,101.28 830.45 1,039.34 598.75 911.73 -282.43 15,199.12 2,000.05 399.94 2,399.99 234.30 450.16 67.12 1,648.41 415.50 1,232.91 4.04 -1.54 1,235.41 1,601.21 452.19 63.42 1,085.60

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0 /-  ! is the activity of estimating the quantity of a product or service that consumers will purchase.



Demand forecasting for the year 2009-10 is done using 
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)based on past five years sales figures.

Year




 




Sales in cores (Rs.)

percentage increase(%)

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17,199.17




d

 


20,088.63




d

 


26,664.25

d


d

 


28,767.91




d

 


25,660.67

 




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Sales i cr res 







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 d


 

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Year d d d d d


    









Sales in X X^2 XY cores(Y) 17,199.17 


20,088.63 d



d
26,664.25 

d
28,767.91


 

25,660.67 
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d 
VY=118380.63 VX=15 VX^2=55 VXY=380744.17





Equation for the line: 4567 Y intercept and slope of the line using : V4 56V7 V74V756V78 Substitute the values from the table in above equations: º’º’ 9 45º6 ::94º56

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by solving above, we get 4º9:  649  "  0  " ;º   <   567

 - / 2005 15995.43+2560.23(1) 18555.66 2006 15995.43+2560.23(2) 21115.89 2007 15995.43+2560.23(3) 23676.12 2008 15995.43+2560.23(4) 26236.35 2009 15995.43+2560.23(5) 28796.58 2010 15995.43+2560.23(6) º 9º 





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? ;  6 Tata Motors Net Revenue in 2008-09 lower at Rs.25660.79 crores, and Net Profit lower at Rs.1001.26 crores, was due to market upheaval. 6 There was severe demand contraction in the automobile industry. 6 Revenues for the year were Rs.25660.79 crores compared to Rs.28739.41 crores in 2007-08, a decline of 10.7%. The Profit before Tax was Rs.1013.76 crores compared to Rs.2576.47 crores in 2007-08, a decline of 60.7%. The Profit after Tax for the year was Rs.1001.26 crores compared to Rs.2028.92 crores, a decline of 50.7%. 6 The demand contraction was triggered by high interest rates and unavailability of finance throughout the year, particularly in the October-December quarter post the global financial market upheavals.

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6 The fall in volumes (sales) combined with peak input prices and high interest rates, brought margins under pressure. 6 Tata Motors consolidated performance in 2008-09 has been hit by the Jaguar-Land Rover (JLR) acquisition as the company reported a loss for the first time in eight years at Rs. 2,505 crore against a profit of Rs. 2,167 crore in the previous year. The numbers are not comparable as the previous year¶s figures did not include that of Jaguar-Land Rover. 6 For the year, Tata Motors reported an operating loss (consolidated) of Rs. 658 crore against an operating profit of Rs. 3,401.14 crore. 6 JLR had made a profit in 2007 and continued to do so in the first half of 2008, but the global meltdown, especially after July 2008 with vehicle financing and demand drying up, impacted the auto industry worldwide, including Jaguar-Land Rover.  


  

'2 6 The company accelerated cost reduction measures and proactively managed working capital to contain the impact as best as it could. 6 Tata Motors had already laid off 2,000 workers at its JLR facilities and shut different plants and could consider further lay-offs. 6 Work on low cost sourcing and tight control over cash flows. 6 Stimulus packages from the Government in the last quarter of the year have to an extent helped regenerate overall sales, as in the automobile industry, but growth is yet to revive to earlier levels.