Tata Motors in Trouble


Tata Motors in Trouble
Case Code: BSTR314
Case Length: 18 Pages
Period: 2007-2009
Pub Date: 2009
Teaching Note: Available
 Price: Rs.300
Organization: Tata Motors
Industry: Automobiles
Countries: India/UK/US
Themes: Competition, Collaboration, Entry Strategy, Expansion Strategy
Tata Motors in Trouble
Abstract Case Intro 1 Case Intro 2 Excerpts

Abstract

The case highlights the problems faced by Tata Motors, the largest automobile company in India. In late January 2009, Tata Motors was reeling under a severe business and financial crisis. The company had acquired Jaguar and Land Rover (JLR) from the US-based Ford Motors for US$ 2.3 billion in June 2008. To finance the acquisition, Tata Motors raised a bridge loan of US$ 3 billion from a consortium of banks. By the end of January 2009, Tata Motors was yet to pay around US$ 2 billion towards the bridge loan. Moreover, JLR needed further investments, that too quickly, to keep the operations running. Besides this, the commercial launch of Tata Motor's small car Nano required much more time than anticipated.

With the Indian economy showing no signs of revival soon, there seemed to be no immediate possibility of an increase in domestic demand. The Managing Director of the Tata Motors was left wondering if the worst was over for Tata Motors and what he should do to revive the company's performance.

Issues

The case is structured to achieve the following teaching objectives

  • Understand the impact of macroeconomic factors on the business
  • Analyze the recent developments in the global economy due to the ongoing sub-prime crisis and the resultant global financial turmoil
  • Study the effects of global economic slowdown and its impact on the global automobile industry
  • Critically analyze the problems faced by Tata Motors and suggest probable solutions

Contents

Keywords

Tata Motors, Sub-prime crisis, Jaguar, Land Rover, Nano, Economic Slowdown, Recession, Business Revival, Acquisition, Funding Problems, Global financial crisis, Financing the acquisition, Differential voting rights, Indian Automobile Industry, Global Automobile Industry

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