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Authors: Parizad Dungore (BITS Pilani Dubai Campus)
Originally published in: 2021
Version: 19-Sep-2021
Revision date: 20-Oct-2021

Abstract

A festive occasion embraced Bombay House. Amidst the ceremonial, elegant and gleaming milieu, Adi Parekh, senior accountant for Tata Motors Ltd (TML) though usually placid and confident, was tense. Profit had been recorded last year. However, the current financial situation was grave. Jaguar Land Rover (JLR), a subsidiary of TML had capital expenditure outpaced compared to its operating cash flows over the past two years. The unit had heavily spent on new electrified technologies. Uncertainties like Brexit and US Tariffs had added to the company’s woes. The current cash flows were expected to be negative for the next couple of years. An impairment loss was certain to dampen market sentiments and adversely affect the share price of the company. So, they analyzed the free cash flows of the company to tide over the situation. Their skillful analysis revealed that though JLR had GBP4.4 billion in cash, it had a liability of 8% on its EUR650 million bonds maturing in 2024. Though credit facilities were untapped, the officials understood that an impairment charge was unavoidable. Their accounts showed an impairment charge to the tune of GBP3,105 million as of March 31, 2019.

Teaching and learning

This item is suitable for undergraduate, postgraduate and executive education courses.

Time period

The events covered by this case took place in Dec 31 2018 and 31 March 2019.

Geographical setting

Region:
World/global
Country:
India
Location:
Mumbai

Featured company

Tata Motors Ltd
Employees:
10000+
Turnover:
INR 47031.47 crores
Type:
Public company
Industry:
Autumobile Manufacturer
Other keywords:
Bombay Stock Exchange; Automobile Manufacturer with Global Presence; JLR - Cash Generating Unit

Featured protagonists

  • Adi Parekh (male), Senoir Accounts Manager, TML Unit Mumbai
  • Jennifer James (female), Senior Accounts Manager, TML Unit, Mumbai
  • Rustom Daruwalla (male), Director of Financial Accounting, TML Unit Mumbai
  • Kate Thomas (female), Head, Accounting Depatement, JLR Unit, UK
  • Oscar Green (male), Accountant at JLR, UK

About

Abstract

A festive occasion embraced Bombay House. Amidst the ceremonial, elegant and gleaming milieu, Adi Parekh, senior accountant for Tata Motors Ltd (TML) though usually placid and confident, was tense. Profit had been recorded last year. However, the current financial situation was grave. Jaguar Land Rover (JLR), a subsidiary of TML had capital expenditure outpaced compared to its operating cash flows over the past two years. The unit had heavily spent on new electrified technologies. Uncertainties like Brexit and US Tariffs had added to the company’s woes. The current cash flows were expected to be negative for the next couple of years. An impairment loss was certain to dampen market sentiments and adversely affect the share price of the company. So, they analyzed the free cash flows of the company to tide over the situation. Their skillful analysis revealed that though JLR had GBP4.4 billion in cash, it had a liability of 8% on its EUR650 million bonds maturing in 2024. Though credit facilities were untapped, the officials understood that an impairment charge was unavoidable. Their accounts showed an impairment charge to the tune of GBP3,105 million as of March 31, 2019.

Teaching and learning

This item is suitable for undergraduate, postgraduate and executive education courses.

Settings

Time period

The events covered by this case took place in Dec 31 2018 and 31 March 2019.

Geographical setting

Region:
World/global
Country:
India
Location:
Mumbai

Featured company

Tata Motors Ltd
Employees:
10000+
Turnover:
INR 47031.47 crores
Type:
Public company
Industry:
Autumobile Manufacturer
Other keywords:
Bombay Stock Exchange; Automobile Manufacturer with Global Presence; JLR - Cash Generating Unit

Featured protagonists

  • Adi Parekh (male), Senoir Accounts Manager, TML Unit Mumbai
  • Jennifer James (female), Senior Accounts Manager, TML Unit, Mumbai
  • Rustom Daruwalla (male), Director of Financial Accounting, TML Unit Mumbai
  • Kate Thomas (female), Head, Accounting Depatement, JLR Unit, UK
  • Oscar Green (male), Accountant at JLR, UK

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