Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
April 28, 2010 Team Sam Allin, Prakash Hari, Georgina Javor, Federico Ochoa, Gordon Zheng India’s largest automobile company World’s 4th largest truck, 2nd largest bus manufacturer Cars, light to heavy commercial vehicles & engines Tata Group Interests in steel, autos, IT, communications, power generation Financials - 2009 Gross revenues - $6.04 billion - Growth of 46% Equity - $1 billion Sales - 30% growth from 2005 to 2009 Cash flow - $845 million in last 4 years Global expansion Acquisition Joint Venture Political Historically unstable, but stable and thriving economy since 2002 President Lula da Silva Economic GDP - $1.48 trillion ($ 10,514 per capita - PPP adjusted ) Import Substitution Export-Oriented Model Inflation < 4.2% 1USD = 1.8 Real; 1 Real = 25 Rupee; as of 2010 Social Population - 198 million Uneven wealth distribution - Top 20% has 65% wealth Regressive tax system Technological Major industries : Textiles, chemicals, aircraft & motor vehicles Investment in bio-fuel technology, consumes 54% ethanol vs 46% petrol Tata Nano Cheapest car in the world - India MSRP is $2,500 USD Fuel efficiency - 61 mpg / 52 mpg Variants: Diesel, electric, hybrid Brazil Car Market 4th Largest producer and consumer of automobiles in the world Cheapest new car for the Brazilian market: Fiat Millie USD $11,000 Export oriented, with 35% import tariff 1 out of 7 people own a car in Brazil Fiat Millie Joint Venture with Fiat Model on the successful joint venture in India Tata Motors will own the manufacturing plant Distribute via Fiat’s existing dealership network Fiat: 25% market share and strong brand in Brazil Financial Analysis Selling Price $3,750 Cost of Manufacturing Plant $500 million Profit per Car $172 Return on Investment 17.15% (At full capacity) Future access to Latin American Markets Mercosur Trade Agreement - Latin America Min. 60% indigenous manufacture Traded duty free in the region Risks Mitigating Factors Financial/currency Most expenses are up front; eventually, both revenues and expenses will be in Reais (ROI risk remains). Central bank independence. Suppliers Source parts from suppliers both in India and Brazil Joint venture Relationship with Fiat has been mutually beneficial since 2006 Market/Brand Fiat’s support together with Tata’s reputation in India Competition First mover advantage Political Stable political environment over the last 10 years (democracy, checks and balances) PROFIT ANALYZIS Price SOURCES OF FUNDS $ 3,750 Production $ 2,200 Ethanol increase 10% of production $ 220 Fiat commission $ 188 Total variable costs $ 2,608 Contribution margin $ 1,143 fixed cost per car $ 971 Profit per car $ 172 Expected number of cars to be sold Total profit Cash equity from Tata motors $ 250,000,000 Bank financing $ 300,000,000 Total sources of funds $ 550,000,000 Manufacturing plant in Brazil $ 500,000,000 **Other expenses $ 50,000,000 Total uses of funds $ 550,000,000 ROI 42,875,000/250,000,000 =17.15% USES OF FUNDS 250,000 $ 42,875,000