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Tata Group

Tata Group is world's renowned group with a group revenue of 83.3 Billion$. This Presentation is a brief summary of all about Tata Group as a whole and some of their major business sectors.

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Tata Group

  1. 1. TATA Business Sector Analysis Team Symbiosis
  2. 2. AGENDA Portfolio • TATA Group – An Introduction Assessment • Financial Analysis • Comparison Across Sectors Business Sectors • Sector Analysis Globalization – Financial Overview – Strategic Overview – Global Overview • Tata Globalization Strategy – Current Focus – Way Ahead
  3. 3. TATA GROUPAn Introduction
  4. 4. TATA Group Revenue $ bn
  5. 5. Where lies the future?? Tata’s statement leaves Mistry with twoRatan Tata has given his options: to run it like Ratan Tata – bychosen successor, Cyrus physically being present as chairman of allMistry, the option of runningthe group differently once he flagship companies such as Tata Steel, Tatatakes over at the end of this Motors, TCS, Indian Hotels, et al- or to run ityear. like JRD Tata, at arm’s length. JRD allowed his key managers to run their companies as if they were the owners.
  6. 6. Tata Group – Leading the WayBackground • 140-year-old • 100 operating companies - 31 publicly traded • 425,000 employeesLeaders • India‘s largest private-sector employer; Biggest taxpayer; Greatest foreign-exchange earner • Indias largest private steel manufacturer • Largest chain of luxury hotels; Largest private power utility • Largest Indian IT companyFinancials • Accounting for 5.2% of India’s GDP • Revenue amounting to a whopping USD 83.3 billion in 20; Profit has grown at a CAGR of 18.8% • Group revenue has grown at a CAGR of 15.1%Accolades • Pitch Marketing Summit 2010 - Tata DOCOMO in value for money, and Tata Magic and Tata Swach in bottom of the pyramid‘. • Tata Power won three awards at the CMO Asia Awards 2011 for excellence in Brand and Marketing • Tata Chemicals wins at prestigious Employer Branding Award 2012
  7. 7. Business SectorsInformation technology and •The Tata group has well-established enterprises in the fields of software and other information systems, telecommunications and industrial automation. communications: Engineering products and •The Tata group has a robust presence in engineering, with operations in automobiles and auto components and a variety of other engineering products and services. services: •The Tata group is among the global leaders in this business sector, with operations in steel and Materials: composites. •The Tata group has widespread interests in the hospitality business, as also in insurance, realty and Services: financial and other services. •The Tata group is a significant player in power generation and is also involved in the oil and gas Energy: segment. •The Tata group has a strong and longstanding business in watches and jewellery, and a growing Consumer products: presence in the retail industry. •The Tata group is one of the largest producers of soda ash in the world. Additionally, it has interests Chemicals: in fertilisers and in the pharmaceuticals business.
  8. 8. Business Sectors Information ConsumerTechnology and Engineering Materials Services Energy Chemicals productsCommunications Titan, Tata TCS Tata Motors Tata Steel Indian Hotel Tata Power Infiniti Retail Chemicals Tata Voltas Tata Capital Teleservices Tata Sky
  9. 9. BUSINESS SECTORSLargest companiesTata SteelTata MotorsTata ConsultancyServicesTata PowerTataCommunicationsTata TeleservicesTata ChemicalsTata GlobalBeveragesTitanVoltasTata AutocompsystemsIndian hotels-100 operatingCompanies
  10. 10. Profitability Growth Matrix 450% 400% ConsumerR 350%etu 300%rn 250% Engineeringon 200% ChemicalsAs Materialss 150%ets 100% Communications & IT 50% Energy Services 0% 10% 15% 20% 25% 30% 35% 40% CAGR Past 10 Years
  11. 11. Group Today- Market value >Market Capitalisation of 31 listed companies on Feb 23,2012 $95.78 bn >Over 7.3% of Bombay Stock Exchange’s market cap >3.6 mn shareholders 60 50.09 50 40 305 LARGESTCOMPANIES 20 17.31 9.19 10 5.39 4.05 0 TCS Tata Motors Tata Steel Tata Power Titan Industries 5 Largest Companies Market value in bn $
  12. 12. Market capitalisationof Tata companies ason March 1, 2012 Name of the Company Rs Cr $ billion Tata Consultancy Services 239,023 48.56 Tata Elxsi 655 0.13 Tata Communications 6,715 1.36 Tata Motors 84,933 17.26 Voltas 3,739 0.76 Tata Steel 44,339 9.01 Taj Hotels, Resorts and Palaces 5,157 1.05 Tata Power 27,500 5.59 Tata Global Beverages (Tata Tea) 7,616 1.55 Titan Industries 20,322 4.13 Trent 1,846 0.38 Tata Chemicals 9,165 1.86 Rallis 2,446 0.5 Note: Exchange rate $ = Rs 49.22
  13. 13. Return on AssetsAsset Breakup Revenue Break-up Consumer Products Consumer Chemicals Chemicals Products Engineering Engineering Services Services EnergyEnergy Communicatio ns and IT Materials Communicatio ns and IT Materials
  14. 14. Export Focus for Sectors Export Intensity (Export/Sales)Exports (in Rs. million ) Consumer 45% Chemicals Products Energy Services 40% 35% Materials 30% 25% 20%Engineering 15% 10% 5% 0% Communicatio ns and IT
  15. 15. Export Intensity 15%E 10%xpo Chemicals 5%rt Energy 0%Int -5%e Engineeringn Consumers -10%it Communications & ITy Materials -15%Gr -20%ow Servicest -25%h -30% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Export Intensity
  16. 16. Globalization StrategyTATA GROUP
  17. 17. Basis for Globalisation Strategy
  18. 18. Globalisation Various Motivation Routes for globalization Sustainability Globalization
  19. 19. Globalisation • Competing with foreign companies in Expansion into domestic environment and holding a leadership position is also an indicator foreign domains? of globalisation • Firms in smaller countries like Holland (Philips) have no other option than to Leveraging the move into foreign markets Domestic Market • However for Indian firms, the domestic market itself provides huge opportunity Globalisation for • Ego Reason the sake of • Misguided globalisation
  20. 20. Why Globalisation? • “Unless you have the ability to hit the foreigner in his home market, he will always have an advantage when he attacks you in your domestic market”Strategic Reason • Demand Side Economies of Scale (Market Seeking Multinational) • Seek More Markets • Domestic Markets are saturated • Faster growthEconomies • Supply Side Economies of Scale • Fixed cost is not affected of Scale • Economies of Scale on R&D, manufacturing and branding
  21. 21. Why Globalisation?Resources andCapabilities• Technology Government Risk• Superior Human Regulation Diversification Resources and Taxation• Innovation
  22. 22. Various Routes to GlobalisationExport• Transport Costs• Tariff Barriers• Free Trade Agreements Set-up Subsidiary • Marketing • Manufacturing Full Scale Operations • Joint Venture or Alliance • Independent Operations
  23. 23. Sustainability Growth Markets – Brazil, India, China, Russia • IndiaManufacture abroad • 1 bn population – 5 times US• Japanese car makers • Threat: Diversification by• Tata Nano Chinese Seek markets apart from US and EU • Deficit countries • Aggressive Selling does not make sense • Technology and Capital
  24. 24. ENERGYSECTOR ANALYSIS
  25. 25. Energy SectorSector Overview• A significant player in power generation and Oil and Gas segment• Energy sector contributes just 6% of Tata Group’s total revenueTATA Power• Established in 1911 as the Tata Hydro-Electric Power Supply Company• India’s largest power utility in the private sector• Presence in generation, transmission, distribution and trading• Installed power generation capacity of over 3,182 MWAreas of business• Operates across the entire power value chain • Generation • Transmission and Distribution(NDPL) • Trading and consultancy(TPTC)• Increasing focus on renewable energy, particularly wind and solar power
  26. 26. Strengths & WeaknessesStrength• India’s largest power utility in the private sector• Presence in generation, transmission, distribution and trading• Potential for growth in this sector (demand exceeding supplyWeakness• Still a low level contributor in the overall share• Distribution, financing and manpower are other concerns• High AT&C losses and slow rate of discom reformsOpportunities• Planned Capacity Enhancement in XIth and XIIth 5-year plan• Focus on Solar Energy and other renewable sources of energy• Nuclear energy is shaping up in a big way in India lately• low “power penetration” levels indicate large demandThreat• Captive power seems the way ahead for power intensive / power dependant mission critical industries• Supply constraints for domestic coal• Equipment shortages in the core components of Boilers, Turbines and Generators• Land Acquisition and Environment Clearance• Huge financial investment for UMPPs
  27. 27. FinancialsRevenue Market Share of top 10 power Co • Energy sector contributes just 6% of Tata Group’s total revenue • Operating Revenue was lower at Rs. 7,098.27 croreRate of Return • Operating Profit was higher by 65% • PAT of Rs. 938.76 crore, as against Rs. 922.20 crore for the previous yearGrowth Rates • Growth of 2% in PAT; 65% rise in Operating profit • 2% decline in revenueMarket Share • 8.25% of top 10 players of Industry NTPC Power Grid CorpExport Intensity = Exports as % of Sales Reliance Power NHPC • Approximately 5% in the FY 2012-13 Tata Power Adani Power
  28. 28. Global Network Tata Power : Global StridesBP Solar Power Geodynamics PT Kaltim Prima Coal and PT Arutmin• UK • Australia Indonesia• Joint Venture • 10 per cent • Indonesia • $37.5 million • 30 per cent equity stake
  29. 29. Tata Power – Global Foot PrintGlobal Revenue Set-up Subsidiary Full Scale Operations• India – 67 % (2010-11) • Tata Power Trading Company Ltd. • Tata BP Solar India Ltd. (TBSIL)• International – 33 % (2010-11) • Tata Power Delhi Distribution Ltd • PT Kaltim Prima Coal • Maithon Power Ltd • PT Arutmin Indonesia • PT Itamaraya Tbk.
  30. 30. Tata Power – Business Result •Operating Profit Margin : 23.62 %Profit Margin •Net Profit Margin : 10.36 % •Return on Capital Employed : 10.35 % Rate of •Return on Net Worth : 14.67 % Return •Debt to Equity : 1.75 Leverage •Interest Coverage Ratio : 4.64 Ratio •Assets Turnover Ratio : 0.97 Turnover •Investments Turnover Ratio : 17.17 Ratio •Market Share – 12 % •Market Share Opportunity - HighMarket Share •Strength of Assets & Competencies - High
  31. 31. Pillars of SustainabilityTechnology Innovation Environment Ethics Usage of purified and better Coal based plants at pithead or Increasing focus on renewable quality coal which reduces CO2 Replenishment of natural coastal locations which are sources of energy emission resources by afforestation untapped Renovation, modernisation, up- Lack of necessary infrastructure to Competition to domestic players Rehabilitation of displaced rating and life extension of old transport and store fuel, high cost from foreign Pvt. players as 100% population thermal and hydro power plants. risk involved in transporting fuel FDI permitted Hydel power potential of 150,000 large coastline of 7500 Kms for Community development MW is untapped as assessed by Emphasis on achieving reduced T realising on-shore & offshore programmes for employees and the Government of & D losses wind, highest solar irradiance of 5 their families trillion kWh/yr
  32. 32. MATERIALSSECTOR ANALYSIS
  33. 33. MaterialsContributes 33% to the overall financial makeup of the groupMain businesses:- • Tata Metaliks Ltd. • Tata Sponge Iron Ltd. • Tata Steel Ltd. • Tayo Rolls Ltd. • Tinplate Co. Of India Ltd.Tata Steel contributes maximum to this sector
  34. 34. Tata Steel 35 32.8 32.1 30 26.6 25 22.8 20 15 10 5 0 FY08 FY09 FY10 FY11 Tata Steel Revenue 10-11 ($26.6 bn)
  35. 35. Strengths & WeaknessesStrengths• Sixth largest steel producer in the world• Self-sufficient in iron ore through its captive mines• It is 60% self sufficient for coking coal• Bought 19.9% stake in New Millennium Capital Corporation, Canada for iron ore miningWeaknesses• The steel industry being a cyclical industry goes through peaks and troughs• For Corus operations, needs to source raw materials through contracts with mining companies in UK and the Netherlands• Demand in countries like the US, Japan and South Korea has plateauedOpportunities• Countries like China and India with robust growth are going to be large consumers• Finishing facilities in places where customers exist• Primary manufacturing facilities in places where manufacturing is competitiveThreats• Soaring Freight cost• Shortage of iron ore and coking coal in the world• Other private players like Essar Steel, Jindal Steel etc focusing on expansion of operation and production in India• Entry of global players like Posco Steel and Arcelor-Mittal increasing competion in domestic market
  36. 36. Tata GlobalGlobal Strides Steel: Network January 2007 : 2005 February : April 2006 : Millenium March 2007: NatSteel Asia Pte Corus UK Steel Thailand Rawmet Singapore 100 per cent 67.11 per cent in $167 Industries, India 100 per cent (wholly- Sixth largest steel million (Baht6.5 in Rs101 crore owned) in S$468.10producer in the world billion) millionRaw materials security through joint ventures in Thailand, Australia, Mozambique, IvoryCoast (West Africa) and Oman19.9% stake in New Millennium Capital Corporation, Canada for iron ore mining
  37. 37. Tata Steel – Global Foot PrintGlobal Revenue Set-up Subsidiary Full Scale Operations• India – 26 % (2010-11) • Tata Steel Europe: • Corus UK - 100 per cent• International – 74 % (2010-11) • NatSteel Holdings • NatSteel Asia Pte Singapore • Tata Steel Thailand • Tata Ryerson etc.
  38. 38. Tata Steel – Business Results •Operating Profit Margin : 13.46 %Profit Margin •Net Profit Margin : 7.49 % •Return on Capital Employed : 12.84 % Rate of •Return on Net Worth : 25.37 % Return •Debt to Equity : 1.76 Leverage •Interest Coverage Ratio : 4.53 Ratio •Assets Turnover Ratio : 1.04 Turnover •Investments Turnover Ratio : 5.46 Ratio •Market Share – 13 % •Market Share Opportunity - ModerateMarket Share •Strength of Assets & Competencies - High
  39. 39. Tata Steel: Strategy for the New WorldThe value chain of steel can be divided into two parts - primary steel-making and finishingTata Steels strategy is based on breaking up this value chain and putting each part where itsthe most cost-effectiveSo primary steel will be produced in India, where there are large deposits of iron oreBut the Asian markets, now a key focus for Tata Steel, will be better addressed by takingthese mi-finished steel to these countries for finishing and then selling thereFor Example, for now, Jamshedpur will provide the semi finished steel for the NatSteelbases. Tomorrow, it could well come from Iran or Ukraine; these countries have abundantiron ore and are therefore ideal for primary steel making
  40. 40. Prospective Target Market: South AmericaSouth America has a number of the world’s largest- and most competitive - depositsof alumina, bauxite, copper, iron ore, nickel, and zinc. Thus huge opportunities formultinational mining companies abound.The overall political and institutional risk for foreign investments in the mining sectoris relatively low in most of Latin America, especially compared with the risks in someother places that have attractive mineral reserves.Global demand drives the markets for copper, iron ore, and the like, so the region’scomparatively slow growth has little effect on them.More attractive growth opportunities can be found in South America in green-fieldinvestments rather than through acquisitions of existing assets.Except for countries such as Bolivia and Venezuela, which are hostile to foreigninvestment, most of Latin America welcomes multinationals, imposing fewrestrictions on foreign companies and reasonably low royalty and tax rates.
  41. 41. Realize that risks differ by country Act decisively and do not wait Build, don’t buyTest project proposals against specific risks Go local
  42. 42. Technology Innovation Environment Ethics Usage of purified Community and better quality Increasing focus on developmentcoal which reduces MARKETING STEEL renewable sources programmes for CO2 emission of energy employees and their families Difficult: Replenishment of 1. Highly natural resources by Commoditized afforestation 2. Well known product attributes Solutions: Effective Mix Management which involves segmenting the market to match customer requirements with company capabilities
  43. 43. ENGINEERINGSECTOR ANALYSIS
  44. 44. Tata Motors 30 27.6 25 20.5 20 15.4 15 8.8 10 5 0 FY08 FY09 FY10 FY11 Tata Motors Revenue 10-11 ($27.6 bn)
  45. 45. Tata MotorsIndia’s largest automobile companyLeader in commercial vehicles in each segmentWorld’s 4th largest truck manufacturerWorld’s 2nd largest bus manufacturerOver 5.4 mn units plying on Indian roadsFirst Company from India’s Engineering Sector to be listed in NYSETata Motor’s innovation revolves around low cost, for which more than 400,000 qualify for the TG.In its innovation strategy TATA Motors use help of European Partners such as BASF, which suppliesplastic componentI.D.E.A. of Italy helps in the design aspectFuture outlook: India to be a global centre to drive low cost innovation
  46. 46. Strengths & WeaknessesStrengths• Recent acquisition leading to internationalization - Jaguar/Land Rover, Daewoo Commercial Vehicle company, Hispano Carocerra• Successfully entered countries having a demand similar to India like South Africa, Thailand and Argentina• Engineering Orientation – Processes & Systematic manner of executionWeaknesses• Areas of improvement needed in product reliability, service network and channel reach• Myopia of operating in seller’s marketOpportunities• Light Commercial Vehicle : Consistent growth rate of 20% in past 5 yrs• Medium and Heavy Commercial Vehicle – Expected growth of 10 % for next 5 yrs• Fuel Efficient & Hybrid vehiclesThreat• Small no. of large companies with intense competition
  47. 47. Tata Motors : Network Strides Global GlobalCompany name Country Relationship type Contribution or changes to the value chain due to thisMarcoPolo Brazil JV Core competency in designing buses and coachesJaguar Land Rover UK Acquisition (2008) Exceptional design and engineering capabilitiesTata Daewoo South Korea Acquisition (2004) Heavy Commercial VehiclesCommercial VehicleCompanyTata Motors European UK 100 % subsidiary Design engineering and theTechnical Centre development of products for the automotive industry.Hispano Carrocera Spain 21 % stake of TM Bus Manufacturing
  48. 48. Technology • In Product Development Knowledge Based Engineering Tools • Enhanced digital collaboration with Vendors A mild-hybrid on the Ace • Improved fuel injection systemsInnovation • Prima World Truck Variants in Ace platform • The Aria, India’s first indigenously developed crossover vehicle Variants of the Nano • TDCV: development and introduction of the first Liquefied Natural Gas (LNG) tractor trailerEnvironment • Golden Peacock Award for Safety & Environment • National Award for Energy Conservation • Working on developing Diesel and CNG hybrid solutions for city bus applications in IndiaEthics • Replenishment of natural resources by afforestation • Rehabilitation of displaced population • Community development program for employees and their families
  49. 49. Tata Motors – Global Foot PrintGlobal Revenue Set-up Subsidiary Full Scale Operations• India – 38 % (2010-11) • Tata Motors Thailand • Jaguar Land Rover• International – 62 % (2010-11) • Tata Motors European • Tata Marcopolo Motors Technical Centre • Tata Daewoo Commercial • Hispano Carrocera S.A etc. etc.
  50. 50. Tata Motors – Business Results •Operating Profit Margin : 13.67 % •Net Profit Margin : 7.48 %Profit Margin •Revenue : 27.6 Billion $ •Return on Capital Employed : 25.24 % Rate of •Return on Net Worth : 48.74 % Return •Debt to Equity : 1.72 Leverage •Interest Coverage Ratio : 5.87 Ratio •Assets Turnover Ratio : 2.08 Turnover •Investments Turnover Ratio : 9.21 Ratio •Market Share - 61.1% CVBU; 12.5% PCBU •Market Share Growth - Moderate OpportunityMarket Share •Strength of Assets & Competencies - High

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