Financialre Engineering Newppt 100920023921 Phpapp02

7/27/2019 Financialre Engineering Newppt 100920023921 Phpapp02

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Submitted to:-

Submitted by :Shrikant S Panikar


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According to Michael Hammer and James Champy (1993).

The fundamental rethinking and radical redesign of business

processes to achieve dramatic improvements in critical contemporary

measures of performance, such as cost, quality, service, and speed.

Maximizing customer value and minimizing consumption of resourceswhile delivering the products and services.

According to Thomas H. Davenport (1993).

Encompasses the envisioning of new work strategies, the actual

process design activity, and the implementation of the change in all its

complex technological, human and organizational dimensions.


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Financial Re-engineering is done for various

business reasons and those could be...

Poor financial performance,

External competition,

Erosion of market share, or

Emerging market opportunities.


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Financial Re-engineering is not limited to, but also includes

Organizing Around Processes:-

- Formation of teams to perform an entire process- Eliminate/minimize hand-offs

Process Improvement:-

- Opportunity Driven- Incremental

Product and Service Opportunities:-

- Customer:- How can the customers wants and needs be betterunderstood?

- Product / Service:- What improvements or added value canbe made to products and services?


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Operational Goals:-

- Quantify the redesigned business process

- Address The process as a whole as well as Individual activities

Business Process Goals:-

- Set performance levels for the entire business process in term of:

(1)Financial:- How much does/will the process cost to perform?

(2)Organization:- What will the organizational structure look like?

Deliverable Goals:-

Set performance levels for interim and ultimate process deliverables

in terms of:

(1)Quality

(2)Efficiency

(3)Cost


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MYTH

It is not rightsizing or downsizing .

It is not about reorganizing the organization .

It is not the effort of a single leader .

Empowered Team members, use of groupware & coexist .

REALITY

Cost cuttings often lead to Layoffs, outsourcing & downsizing. Identification of focused business process clusters reorganized the

organization

Reengineering is often found to be a strategy of a narcissistic style ofleadership

In fighting communication challenges, survivors management & theresistance for reengineering by the professionals are oftenunderestimated .


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March 26, 2008Tata Motors Ltd. of India agreed to

acquire the entire share capital ofLand Rover and Jaguar

Cars Ltd from Ford Motor Co.

The two transactions are estimated to have a combined value

of an estimated $2.3 billion.

The purchase consideration includes the ownership by Jaguar

and Land Rover or perpetual royalty-free licences of all

necessary Intellectual Property Rights, manufacturing plants,

two advanced design centres in the UK, and worldwide

network of National Sales Companies.


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Value Capture

The deal value of $ 2.3 b is almost equal what Ford paid for

the brand of Jaguar alone(approx $ 2b). The opportunity tobuy brands like Jaguar and Land Rover ,which are rated

among the top luxury brands in their respective segments, for

cheap doesnt come knocking every time.

Fast Growing Market Segment With about 30% growth rate, the luxury car segment is the

top growing segment in India and has already seen the entry

of biggies like Audi and Porsche. With established

distribution network in India, Tata Motors can offer top-ratedproducts for these segments. Though the absolute numbers

may be small and would reduce due to the current downturn,

the gains would be huge when the economy turns around and

the salaries rise.


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Deal Financing Tata Motors financed the deal through a bridge loan of $ 3

billion arranged through a consortium of 8 banks. It intended

to refinance that loan though a mixture of domestic andinternational equity issues and debt. However because of the

liquidity crunch, a deal now will be more expensive than

they'd initially planned for.

Key Risk Factors The key risk after this acquisition would be the performance

of JLR. Any drop in profitability would have an impact on

Tata Motors consolidated financials.

A prolonged downturn in commercial vehicle demand wouldstretch domestic profitability and cash flow.

Further downturn in the global auto industry.

Increasing cost of capital and liquidity crunch can hit

bottom-line of Tata Motors much more severely.


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Tata bought the companies because they believed that thesetwo brands have a lot of growth potential in terms of revenue

and sales. In the first 10 months of 2008 Land Rover's US sales fell by

37 per cent to 25,377 compared to the same period in 2007.Jaguar's sales in the same period helped by the new XF sedanwere not as badly hit but its sales still fell 3.6 per cent to

12,575. At the same time while Jaguar's UK sales rose 11 per cent

against last year's same period, Land Rover's sales fellalmost 27 per cent to 30,241 units.

Not surprisingly then like GM, Ford Motor, Mercedes andBMW suffering the downturn in the West, China, Russia andIndia seem bright spots for JLR also.


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Tata's confidence in JLR may not be misplaced. This year inRussia, Land Rover has turned out to the leading premium

brand. Its sales grew 79 percent to 17,439 in the first 10months of 2008 while Jaguar saw a more than 60 per centgrowth to 1,423 units.

Tata expects China to be Land Rover's No. 5 market this year

and Jaguar's seventh largest, while Russia likely to be LandRover's No. 3 and Jaguar's No 2 market.

JLR's immediate priority is to set up a distribution network in

India for both brands and the company feels that it can sell2,000 to 3,000 units here to come on level with otherpremium brands such as BMW and Mercedes within two tothree years.


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Thank You for Your

Time.

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Financialre Engineering Newppt 100920023921 Phpapp02