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    Case (Tatatimkencompanylimited)

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    Amar Sai
    The Timken Company plans to acquire a controlling 80% stake in Tata Timken Ltd, an Indian manufacturer of tapered roller bearings, by purchasing Tata's existing 40% share. Tata will receive approximately Rs. 117 crore from the sale. The acquisition will allow Timken to gain greater control over the company and encourage the transfer of new technology. Timken India Ltd, as the company will be renamed, is forecasting future monthly sales based on an analysis of sales data from 2007 to 2010, which indicates low seasonality and a high trend. The vice president must report sales forecasts and recommendations to Timken India, including a time series graph, seasonal index analysis, and January to December forecasts for the next

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    Case (Tatatimkencompanylimited)

    Uploaded by

    Amar Sai
    489 views2 pages
    The Timken Company plans to acquire a controlling 80% stake in Tata Timken Ltd, an Indian manufacturer of tapered roller bearings, by purchasing Tata's existing 40% share. Tata will receive approximately Rs. 117 crore from the sale. The acquisition will allow Timken to gain greater control over the company and encourage the transfer of new technology. Timken India Ltd, as the company will be renamed, is forecasting future monthly sales based on an analysis of sales data from 2007 to 2010, which indicates low seasonality and a high trend. The vice president must report sales forecasts and recommendations to Timken India, including a time series graph, seasonal index analysis, and January to December forecasts for the next

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    The Timken Company plans to acquire a controlling 80% stake in Tata Timken Ltd, an Indian manufacturer of tapered roller bearings, by purchasing Tata's existing 40% share. Tata will receive approximately Rs. 117 crore from the sale. The acquisition will allow Timken to gain greater control over the company and encourage the transfer of new technology. Timken India Ltd, as the company will be renamed, is forecasting future monthly sales based on an analysis of sales data from 2007 to 2010, which indicates low seasonality and a high trend. The vice president must report sales forecasts and recommendations to Timken India, including a time series graph, seasonal index analysis, and January to December forecasts for the next

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    489 views2 pages

    Case (Tatatimkencompanylimited)

    Uploaded by

    Amar Sai
    The Timken Company plans to acquire a controlling 80% stake in Tata Timken Ltd, an Indian manufacturer of tapered roller bearings, by purchasing Tata's existing 40% share. Tata will receive approximately Rs. 117 crore from the sale. The acquisition will allow Timken to gain greater control over the company and encourage the transfer of new technology. Timken India Ltd, as the company will be renamed, is forecasting future monthly sales based on an analysis of sales data from 2007 to 2010, which indicates low seasonality and a high trend. The vice president must report sales forecasts and recommendations to Timken India, including a time series graph, seasonal index analysis, and January to December forecasts for the next

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    © All Rights Reserved
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    Download as docx, pdf, or txt
    of 2

    Tata Timken Company Limited:

    The Timken Company of the US is planning to acquire the controlling stake in Tata Timken Ltd,
    manufacturer of tapered roller bearings. The American company will purchase the Tata’s 40 per
    cent holding in the joint venture to take its own share to 80 per cent. Tata will get about Rs. 117
    crore for the sale. The balance 20 per cent will remain with the public. Tata Timken started its
    operations in 1992. Tata has invested Rs. 26 crore in the venture through the Tata Iron and Steel
    Company (TISCO), which saw prospects of selling its alloy steel to the new bearings maker. The
    venture is the second largest manufacturer of tapered roller bearings in India. But bearings are a
    difficult business. The company accumulated losses of Rs. 50 crore by the end of 1995.

    Tata Timken has an installed capacity of 3 million units (standard bearings and bearings for trucks,
    utility vehicles, and railways). The company undertook a Rs. 32 crore expansion programme,
    which was completed in March 1998. It’s technical and research centre at Bangalore was set up at
    a cost of Rs. 6 crore. The company has plans to invest an additional Rs. 15 crore in expansion.
    Acquisition of Tata’s stake in the joint venture is in line with Timken’s approach the world over.
    The group’s acquisitions include MPB Corporation (now Timken Aerospace and Super Precision
    Bearings), Desford Steel Tubes, and Latrobe Steel Company (now Timken Latrobe Steel). Timken
    is the global leader in tapered roller bearings used in manufacturing of various automobiles and
    trains.

    The Tata group has clarified that it has withdrawn from the joint venture in order to concentrate
    on its core competence. Greater control will also encourage Timken to bring in new technology.
    The decision to part was mutual. The company will be renamed Timken India Ltd. The
    composition of the board will also change. Timken is considering undertaking a market expansion
    plan after the takeover. It is looking at the past sales data to forecast the sales for the future. It is
    looking at the monthly sales of last four years to forecast for the future years.

    Sales (in crores)


    Month 2007 2008 2009 2010
    January 27 34 39 38
    February 28 39 47 49
    March 36 43 49 61
    April 49 57 48 58
    May 38 56 59 64
    June 48 59 67 69
    July 56 64 69 73
    August 62 67 78 86
    September 65 73 84 92
    October 69 76 87 96
    November 78 76 83 95
    December 87 78 98 98
    The vice president of the company has to prepare a report for Timken India summarizing the
    findings, forecasts, and recommendations. He is planning to include the following:

    a) A graph of the time series.


    b) An analysis of the seasonality of the data indicating the seasonal indices for every month
    with comments on the low seasonality and high trend nature of the data.
    c) Forecast sales from January to December for the next year.

    QUESTION:

    Assuming that the January sale for the next year turns out to be Rs. 105 crore, find out the vice
    president’s forecast error. If the error is large, what factors might have contributed to the same?
    What should the vice president do to reduce this error?

    Provide a schedule for updating the system as per your above suggestions.

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