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 expansionAcquisition 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

Future access to Latin American Markets Mercosur Trade Agreement - Latin America Min. 60% indigenous manufacture Traded duty free in the

region

Selling Price $3,750

Cost of Manufacturing Plant

$500 million

Profit per Car $172

Return on Investment 17.15% (At full capacity)

Risks Mitigating FactorsFinancial/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 SOURCES OF FUNDS

Price $ 3,750 Cash equity from Tata motors $ 250,000,000

Bank financing $ 300,000,000

Production $ 2,200 Total sources of funds $ 550,000,000

Ethanol increase 10% of production $ 220

Fiat commission $ 188 USES OF FUNDS

Total variable costs $ 2,608 Manufacturing plant in Brazil $ 500,000,000

**Other expenses $ 50,000,000

Contribution margin $ 1,143 Total uses of funds $ 550,000,000

fixed cost per car $ 971

Profit per car $ 172

Expected number of cars to be sold 250,000

Total profit $ 42,875,000 ROI 42,875,000/250,000,000 =17.15%