PROJECT REPORT ON “Effect of Declining Market on TATA Motors” BY NILESH R. MANGHWANI AM 26 P.G.D.M (MRKT) 2008-2010 SINHGAD INSTITUTE OF BUSINESS ADMINISTRATION AND RESEARCH PUNE- 411048 ACKNOWLEDGEMENT Writing is a solitary task. However turning of millions of bytes of information requires ann army of talented folks . I have been fortunate enough to be assisted by many talented and caring people. And I wish to express my appreciation all those help has been most valuable. To all these truly outstanding people , and many others too , my warm personal regard . I am indeed grateful to my Director Mr. Sunil Kumar and Guardian Mr. Vishal Bhole and class co-ordinator Mrs. Manisha Landefor providing me the necessary guidance and faciliility required for completiotion of thithis project and for being an effective source of inspiration. I am thankful to the library for providing the necessary magazines and journals without which the completion of this project would not be possible .. Your’s Faithfuly Nilesh .R. Manghwani C E R T I F I C A T E This is to certify that the Project title Effect of Declining Market on TATA Motors is a bonafide work carried out by NILESH R. MANGHWANI student of P.G.D.M (MRKT) of of Sinhgad Institute of Business Administration and Research, Pune for fulfillment of a project report . He has worked under our guidance and direction. His work is found to be satisfactory and complete in all respect. DDiirreeccttoorr PPrroojjeecctGGuu iiddee MMrr.SSuu nniilKK uummaarr MMrr.VV iisshhaalBB hhoollee Date: Place: SIBAR, PUNE TABEL OF CONTENTS 1.1. Global Economic Downturn…………………………………………… 11 2.2. Impact of US Recession in India………………………………………. 11 3.3. Impact of Recession on Automobile Industry…………………………. 22 4.4. The Indian Automobile Industry Today……………………………….. 44 5.5. TATA Motor llr td Overview…………………………………………….. 55 6.6. Various Products of TATA Motors…………………………………….. 17 7.7. Other TATA Services……………………………………………………211 8.8. Share Holding Pattern of TATA Motors………………………………...22 9.9. Snapshot Analysis of Company : SWOT………………………………..22 10.Recent Business Decisions………………………………………………233 11.Marketing Strategies……………………………………………………..25 12.Human Resource Strategies……………………………………………...31 13.Operation Strategies……………………………………………………..34 14.Indian Automotive Players(Financial strategies)………………………..36 15.Conclusion………………………………………………………………46 16.Bibliography…………………………………………………………….47 GLOBAL ECONOMIC DOWNTURN Definition: A recession is a decline in a country's gross domestic product (GDP) growth for two or more consecutive quarters of a year. A recession is also preceded by several quarters of slowing down. Causes: An economy which grows over a period of time tends to slow down the growth as a part of the normal economic cycle. An economy typically expands for 6-10 years and tends to go into a recession for about six months to 2 years. A recession normally takes place when consumers lose confidence in the growth of the economy and spend less. This leads to a decreased demand for goods and services, which in turn leads to a decrease in production, lay-offs and a sharp rise in unemployment. Investors spend less as they fear stocks values will fall and thus stock markets fall on negative sentiment. Impact of a US recession on India: Indian companies have major outsourcing deals from the US. India's exports to the US have also grown substantially over the years. The India economy is likely to lose between 1 to 2 percentage points in GDP growth in the next fiscal year. Indian companies with big tickets deals in the US would see their profit margins shrinking. The worries for exporters will grow as rupee strengthens further against the dollar. But experts note that the long-term prospects for India are stable. A weak dollar could bring more foreign money to Indian markets. The whole of Asia would be hit by a recession as it depends on the US economy. Asia is yet to totally decouple itself (or be independent) from the rest of the world. Impact of Recession in the Automobile Industry Global recession has devastated the global auto industry with pinching effects on the Indian auto industry. India is a strong and growing economy but the hit of recession has put red marks on the entire balance sheet of the Indian economy. Among the leading car manufacturers, General Motors and Ford were the first one to file for bankruptcy. GM is struggling to stay alive and claims that the company has just enough cash to continue its operations. Even the merger talks of GM and Chrysler have been officially brought to a halt because of the liquidity crunch. U.S sales have fallen down by 32% which has directly affected the Indian car industry where GM has recorded a fall of 45%, Ford of 30% and Chrysler down by 35%. All the three major car manufacturers have reported declined growth after the hit of recession. After the industry experienced a heavy fall in the month of August due to inflation, September proved to be a promising month with things setting out at the right place. Then again the market went in the negative terrain swayed by the wind of recession. October usually is considered to be the best month for car sales because of the festive season. Unfortunately, this year it proved to be a curse for the Indian auto industry. At one end of the spectrum, car manufacturers like Tata Motors, GM, Hyundai, Ford, Renault,, Mahindra, and Maruti Suzuki are investing huge amounts to establish new production plants and line up launch of cacar models. At ththe ototheher enend of ththe spspecectrtrum, SIAM has cucut down the growth foforerecacast of automotive sales from 12.5% to 9.5%. This initiative taken by SIAM further forced few car manufacturers like Tata Motors and Maruti Suzuki to cut down their production which further took away the job of almost 300 workers. Even Mahindra-Renault reduced the number of production units of their Logan. In addition, the severe liquidity crunch in the U.S market has also forced many of the car buyers to cut upgrades to bigger cars and many are pushed back from buying new cars. With deteriorating car sales, even production has gone down to a great extent, which has eventually put a negative impact on the auto component industry. In October, overall car sales declined to about 9.05% over October 2007 and the car production fell down to about 12.32%. Further to that even the month of November was not successful in bringing some charm to the industry. Infact, November recorded the steepest fall in car sales in the past five years. Maruti Suzuki recorded a fall of 27%, Mahindra & Mahindra recorded a fall of about 40%, and Tata Motors showed 12% decline in the car sales. It is also said that the recent Mumbai terror attack and the cyclonic rain in South India have added to the woes of Indian car manufacturers. The Indian Auto Industry Today In 2009 estimated rate of growth of India auto industry is going to be 9 percent. Auto industry in India has been hit hard by ongoing global financial recession. Sales figures of India automobile industry for December 2008 have shown devastating after effects of global financial slowdown. However, there is still hope for automobile industry of India in 2009 as there are certain factors working in its favor. India is blessed with a middle class, which is getting economically stronger with every passing day. This class is being touted as potential consumers for India auto industry in years to come. Indian economy has been, more or less, able to withstand tremors of global financial meltdown. Even though its rate of growth has slowed down considerably, there are hopes of an economic revival. Work force of auto industry of India is relatively well trained. All these factors indicate that there could be a decent future for India auto industry in days Hyundai, a major automobile establishment of South Korea, has put in large sums of money in India automobile market. As per its estimates, India auto industry could become a major center for small car manufacturing organizations in future. There are some other automobile companies of world who have shown interest in India auto market. Major names among these are General Motors, Skoda Auto and Mercedes-Benz. These companies have major plans lined up for India auto industry and are likely to invest a huge amount of money in India automobile market India domestic auto industry has been passing through a tough phase in 2008 and such a trend is supposed to continue in 2009 as well. Leading members of India auto industry have forecast a difficult path in 2009. Shinzo Nakanishi, managing director of Maruti Suzuki, has said that 2009 would present them with a number of challenges. Tata Motors Limited Overview Tata Motors Limited, formerly known as TELCO (TATA Engineering and Locomotive Company), is a multinational corporation headquartered in Mumbai, India. It is India's largest passenger automobile and commercial vehicle manufacturing company. Part of the Tata Group,, and one of the world's largest manufacturers of commercial vehicles. The OICA ranked it as the world's 20th largest automaker , based on figures for 2006. Tata Motors was established in 1945, when the company began manufacturing locomotives. The company manufactured its first commercial vehicle in 1954 in a collaboration with Daimler-Benz AG, which ended in 1969 Tata Motors was listed on the NYSE in 2004, and in 2005 it was ranked among the top 10 corporations in India with an annual revenue exceedingINR 320 billion. In 2004, it bought Daewoo''ss truck manufacturing unit, now known as Tata Daewoo Commercial Vehicle, in South Korea.