During financial crisis in 2008,
USA automobile sector faced survival issue. Major company like GM and other
even went for government loan to survive wherein Ford was trying to survive
without the government support. They had many iconic brand and one of them was
" Jaguar & Land Rovers"
Brand. Based out of UK, Jaguar and Land Rovers got acquired by one company and
then sold to another company and in 2008 nobody was willing to take the risk of
taking that brand over.
At that point of time Tata Sons
Chairman with his visionary eye catches the potential and acquired it in all
cash transaction of $2.3 Bn. At that point of time all criticized or questioned
Mr. Tata move but he was aware that if Tata
Motors wants to go global then branding is very important and he took that
risk.
The first thing he did is to
inflict the confidence within jaguar & Land Rovers team that they can
change everything and he is willing to invest without second thought. The
interesting twist happened when he showed it employee by announcing investment
plan for UK plan for modernization as well as generated thousand of Job in UK
through supplier community of acquired Brand.
The trigger of trust by Mr. Tata
on acquired brand motivated all ranks and best came out of them. By 2011, they
started showing Y-o-Y growth and cutting edge design and received unconditional
positive feedback from auto analyst. Mr.
Tata moved further and did a strategic collaboration with Chinese auto firm
and started producing the acquired brand to capture China market so that brand
awareness and to mitigate the geographical based recession impact.
The downturn in Tata Motors
domestic business and extra ordinary growth of acquired brand helped Tata Motors keep generating $bn of profit
an free cash flow and keep continuing investing in new product line.
It is interesting to note that
Tata Motors acquired iconic brand is generating one and half times of
profitability w.r.t acquisition price. The respectable margin and profitability
enabled Tata Motors to continue upped its arm length in R&D and
modernization of assembly plant which in turn will give exponential return to
its investor.
The UK government and Ford Motor must thank to Tata Motors as well as Mr.
Tata for their conviction in acquired brand and associated resources. Keep
going...
