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Introduction to the Industry

Describe about the Principles of Financial Market for Telga and Syntonic Companies.

The core aim of this report is to give a financial analysis of Tata Companies group in conjunction with Talga and Syntonic companies. Tata group is a global enterprise comprises of more than one hundred companies and associate partners like Syntonic and Talga. While Talga deals with production and processing of graphite, Syntonic Company provides communication services such as mobile phones and data to various consumers. Tata is linked to ASX through these two enterprises. By giving a brief history of the company, the report will identify the relationship between Tata, Talga and syntonic and acquire their details as per ASX. This history will also help in determining the company’s present status and factors that are likely to affect directional changes in the value of the company and hence, its share price. Through the Top-down analysis, the report will describe Tata from a broader perspective (macroeconomics trend) regarding annual revenue, market, and GDP and relate it to setline companies by making comparisons (Vyatkina et al., 2016). From a Bottom-up analysis, the report will intend to air the microeconomic progress picture of Tata from Talga and Syntonic view (Kleinnijenhuis et al., 2016). Here, most of the analysis will be based on steel/graphite and communication companies rather than Tata as a whole. Bottom-up analysis and the Top Down analysis will be given through measurements of accounting ratios and the overall performance of Tata.

Introduction to the Industry

The chosen company is Tata enterprise group, an international company founded in 1868 by Jamsetji Tata. The Tata enterprise consists of more than 100 companies operate independently. However, these associated companies are served by one headquarter located in India. Tata umbrella extends to over 100 nations uniformly distributed on the six continents. Notably, the chief investment that holds the company is Tata Sons. This principle investor is also the leading promoter of Tata enterprises. Approximately 66% of capital equity share from Tata Sons is raised by the philanthropic trust; it supports social services amenities such as healthcare, livelihood generation and education. Others include culture and art (Gooptu, 2016).

In 2015-2016 financial year, a combined revenue of Tata group is $ 103 billion.  Despite being under the same headquarter, each enterprise functions independently under the management, guidance, and supervision of private shareholders and board of directors. Tata group of companies has 29 businesses that are listed publicly with a general capitalization of $ 116 billion, imposing a US$ value of 62.5 on the enterprise (DAMODARAN, 2011). In respect to scale, significantly, some of the known Tata groups are Tata Steel, Tata Teleservices, Titan, India Hotels, Tata Motors, Tata Chemicals and Tata power (Tata Steel Group SWOT Analysis, 2014). In its operations, factors that are likely to influence directional changes in the value are politics, demands of stakeholders and the process environment (D&D HARLEY PERFORMANCE KITS, 2009). These factors can be managed through appropriate strategies. Strategically, Tata group has extended links to Syntonic and Talga Graphene who are both listed on ASX under recognitions SYT and Talga respectively.

Talga Graphene

Talga is a resources limited company dealing with graphite and development of graphite. It also entails exploration and production of graphite. Operation segments of Talga Resource Company comprise of evaluation and graphite exploration in Sweden, prospecting and assessment of gold in Australia, and graphite research and development in Germany. The company’s graphite investment projects include Jalkunen, Pajala, Vittangi and Raitajarvi. Talga Company also owns two iron ore investments namely; Vittangi and Masugnsbyn, (Montgomery, 2014). Besides, it has around four gold projects in the western part of Australia. In recent news, Talga Resource Limited came in partnership with Tata group; it signed a collaboration contract with Tata Steel Uk Limited to partner in exploration and supply of graphite (Haldipur, Singh, and Vishwanath, 2015). In the same line of partnership, the two companies would engage in processing and application. About Talga and Tata Steel, paint and coating market spends more than 40 million tons of raw materials per year while focusing on the use of 52 million tons in next year (Tata Steel Group SWOT Analysis, 2016). In approximate, this project is intended to spend $ 186 billion. Furthermore, the objective of the bulk of the market is to manage corrosion for an estimate made a cost of US $ 2.2 trillion or a yearly 3% of Gross Domestic Product (GDP) (Tata Steel Group, 2015). Talga’s work with Tata Steel has demonstrated that incorporation of graphite in coating offers high-performance mechanisms of preventing corrosions (Tata Steel Group SWOT Analysis, 2016). Besides, their products are environmental friendly hence, imposes a strong drive in creating anti-corrosion innovation.

Syntonic is an international wireless company founded in 2013, headquartered in Bellevue, Washington. The syntonic company is committed to dealing with the production of mobile and other communication technology services (Nott, 2016). The company provides connection services to apps and cell phones. Besides, Syntonic also offer DataFlex; a device that eases communication services by lowering mobile costs advances business intelligence and enhancement of network security. DataFlex operator also facilitates the access to websites reducing mobile data charges. To enhance communication further, which resulted in revenue increment by 50% (Forbes, 2000). In their partnership, the two companies have agreed to promote their collaboration with the license of syntonic communication technologies to attract an estimate of 23 billion US dollars market opportunities on data.

To strengthen their partnership, Syntonic has given Tata perpetual global license entitling the former to offer data services through the use of a label of syntonic version. This agreement transformed Tata’s yearly subscription to a perpetual license including annual maintenance and a one-time license conversion payments. This shift from subscription to a continued license is expected to impose an impact of the reduction of short-term debt and at the same time more than 50% fees on long-term. Globally, Tata communication network together with Syntonic makes access to around 240 nations and territories resulting in 99.7% of the globe’s GDP (ARUN KUMAR and MEENAKSHI, 2011). This statistics transforms into millions of business operating to serve billions of people across the world.

Syntonic

Mission Statement

Tata, through its satellite companies and partners; Syntonic and Talga, works jointly with a mission of changing lives of communities and people that are reached by their services. In combination, Talga and Tata's vision have an idea of redefining performance parameters and becoming the global steel and graphite benchmark for creating value and corporative citizenship. In their mission statement, the company strives to use materials and personnel effectively to transform the global industry. On the other hand, Tata communicating together with Syntonic states categorically in their mission to invent the world's next biggest idea in communication technology; an idea that is meant to make communication more effective than never.

This segment of the report entails analysis of Tata Group macroeconomic performance and hence drawing a picture of how the base looks economic-wise (Tvardovskiy et al., 2015). The performance is based on Tata’s GPD, interest rates, and annual revenue. Historically, top-down analysis of Tata states it had an annual revenue of US$ 62.5 dollars.  In the current financial year, the group’s enterprise have a capitalization of $ 116 billion. For example, Tata’s financial firm, Brand Finance which is based in the United Kingdome valued the group’s brand at $ 11.4 billion resulting in a 57th position as far as top 100 global brands are concerned. Being a multinational company, Tata enterprise operations are stretched in seven sectors which have earned the company’s outstanding respect, especially in the motherland, India.

Having 27 publicly listed companies with a combined market capital of $ 60 billion and 3.2 million shareholder base, Tata’s progress in the line of business is evident. Tata also has various types of loans which are subjected to favorable interest rates. For example, any loan applied online by salaried customers attracts a current interest rate of 9.45%. Loans including or up to a Rs. 1.5 Crs is a subjected to interest rates of 9.50 to 9.55 %. This type of loan includes other customers who are not salaried. It also applies to loans over Rs. 1.5 Crs which are determined an interest rate ranging between 9.50% - 9.60%.  In respect to Tata and other related industry in India, customer inflation is likely to continue hence, create Monetary Policy that eases interest rates for customers (Cormier, 2005). As growth is expected from the evident interest rates, 50 bps rate is set to be provided in the current financial year. Therefore, the interest rates will be lowered gradually. Talga and Tata Steel, paint and coating market spends more than 40 million tons of raw materials per year while focusing on the use of 52 million tons in next year. In approximate, this project is intended to spend $ 186 billion. Furthermore, the objective of the bulk of the market is to manage corrosion for an estimated cost of US $ 2.2 trillion or a yearly 3% of GDP (PAUL, 2010). Talga’s work with Tata Steel has demonstrated that incorporation of graphite in coating offers high-performance mechanisms of preventing corrosions. Besides, their products are environmental friendly hence, imposes a strong drive in creating anti-corrosion innovation. The GDP analysis places Tata somewhere significant enough to affects India’s GDP. As a group company, Tata enterprises exert about GDP of 358, 793 hence, contributes firmly in the 16% of the states GPD held by top five businesses in India. This performance reflects how the satellite companies such as Tata Steel in conjunction with Talga, and Tata Teleservices and Syntonic are performing.  Therefore, the top economic picture is determined by the performance of the base.

Mission Statement

In this section, the paper investigates Tata from a lower perspective by giving a macroeconomic picture (Byeon et al., 2016). This entails discussing its steel and telecommunication companies which have recently sign contracts to Talga and Syntonic respectively. Therefore, the economic analysis is based on the performance of these two partnerships which will hence, be used to reflect on the transformation of the overall firm (Siemann, Herrmann, and Galashan, 2016). Tata’s mineral industry dominated by Tata Steel recorded financial delivery of 3.5 MT and 6.94MT for 2016 fiscal year and quarter respectively. The company’s turnover was approximately Rs 117,152 and Rs 29,508 scores for the same year and quarter respectively. Recently, the firm has stated an equity dividend declaration of Rs 8 per share. Despite working in a relatively muted market, the mining company was able to achieve a recommendable strong growth quarter. Therefore, this reflects that when the market operations are smooth, broad and effective, more revenue would be attracted to the company. Furthermore, the company’s strong growth is portrayed through the extreme sale in automotive and unique product marketing which reached as high as 1.45 MT. About the global firm’s performance, these record contributed around 15% of the company’s targeted transformation. Therefore, the mineral sector is significant; its activities should be made more efficient to boost Tata’s transformation. The partnership with Talga will help in acquiring more shares and reach more markets. To sum up, a partnership between Tata Steel and Talga is a contributor to the Tata’s revenue, GDP and hence, global transformation. From a bottom-up analysis, the industry contributes around 15% of Tata’s revenue.

Communication is one of the areas in which Tata group invest substantially. Recently, Tata Telecommunication Company has come in partnership with Synoptic to enhance communication in the world by offering communication services through mobile phones, mobile data, and related services. Based on history, NTT DoCoMo, a giant telecommunication company in Japan picked approximately 26% equity from Tata Telecommunication for around 130.7 billion, equivalent to 1.9 billion US dollars. The Tata’s communication business have not been successful as such; it intended to sell 100% of their shares due to a loss of 1.3 billion US dollars. This loss can give a poor transformation picture for the entire company. However, by a partnership with Synoptic the company aims at stretching its market to enhance performance productivity. However, this implies that the firm is the telecommunication industry is not as productive as other businesses hence; Tata group should make little investments in this particular business. To sum up, this bottom-up analysis shows that Tata group’s transformation depends on in the performance of lower companies such as steel and communication enterprises. On viewing the mining industry (steel), a sound is projected; it contributes around 15% of the group’s revenue. Therefore, the firm should utilize its investment if this industry. However, the bottom-up analysis carried on the telecommunication services reveal that Tata benefits the least from the industry; hence, it should invest minimally in this very company. However, its partnership with Synoptic helps it to maximize its shares, access more markets which in turn can be of revenue benefit.    

Top-down Analysis

This report has taken a financial analysis of Tata Companies group in conjunction with Talga and Synoptic companies. The report identified Tata as a global enterprise comprising of more than 100. In recent partnership, the team has stretched links to Synoptic and Talga to enhance its productivity in telecommunication and mining respectively. By giving Top down analysis, the report observed that Tata as a group makes 99.7% of the globe’s GDP and recording annual revenue of-of US$ 62.5. The company has also established distinct interest rates; any loan applied online by salaried customers, attracts a current interest rate of 9.45%. Loans including or up to a Rs. 1.5 Crs is a subjected to interest rates of 9.50 to 9.55 %. Currently, Tata has $AUD value of $2850 AUD.

In its business operations, several factors influence directional changes in value and its share price. Factors include legal systems, defined expectations of various stakeholders and politics. In response, the company has established appropriate strategies such as innovation and environmental strategies to ensure that the value affordability is maintained.  Through the top-down analysis, the project has analyzed the Tata from a macroeconomic perspective, revealing that Tata is in a significant economic position; it exert about GDP of 358, 793 hence, contributes firmly in the 16% of the states GPD.  The paper went further to analyze Tata from a microeconomic angle, bottom-up analysis. By so doing, satellite companies of the group i.e. Tata Steel and Tata Teleservices and their current partners Talga and Synoptic respectively. Relating with ASX, these partners were intended to give partial data for the benefit of the report. The bottom-up analysis showed that more investment should be made in the mining industry than on communication because the former contributes more revenue to the company than the latter. The report finalized by providing a recommendation of operation transformation benefit as stated bellow.

The performance of Tata is recommendable. However, it is supposed to double or triple if possible, or at worst remain consistent not unless the company realizes its mission. Therefore, the following are a financial recommendation that might hold the organization’s performance. To begin with, the company should blend top-down, and bottom-up analysis approaches to boost the general performance of the firm. Using a top-down analysis to transform the overall programs and planning of the company (Byeon et al., 2015). Through top-down analysis, the company will identify areas that need to be adjusted. Such areas include reducing or increasing costs of productions depending on the trend in sales, improving revenue, or even combining business and financial ratios to ensure that the company’s performance is a value adding activity (KAZMI and KAZMI, 2008).

Even though this approach may appear time wastage, but the very fast effort that is taken to analyze the company through this method helps related bodies such as banks to assist in defining a realistic transformation plan for the firm. In this respect, banks, in particular, can come in and trace the base level program from factors that lie at the top hence, assist in by setting appropriate direction that the firm should take to boost its performance.

The top-down analysis eases the creation of appropriate plans, effectively enough to improve intervention areas and transform initiatives. On the other hand, bottom-up analysis enables the firm to have a real check of the organization (Kleinnijenhuis et al., 2016). This approach unearths problems and related hindering factors that can be adjusted to enable the realization of the targeted transformation. It provides driving objectives and integrated approach that can be used to plan and implement comprehensive programs within the organization. Therefore, it is recommendable for Tata to utilize the two types of methods for determining the transformation of the firm; use of top-down analysis should be accompanied by bottom-up analysis to act as a supplement.

The second recommendation is the elimination of inefficiencies to find the root of challenges that exists within the firm. Getting a solution to the substantial challenges such as poor planning at the base enables the company to determine key areas whose interventions can add value. About the top-down analysis technique, the Tata group will be able to classify the base of inefficiencies and take appropriate actions after that. Appropriate measures include forging links that are likely to miss between business operations and financial performance that determines the firm’s revenue and GDP.

References

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