Mumbai: Two of Britain’s most luxurious and elegant auto brands, Jaguar and Land Rover, were on Sunday launched here at prices as rich as their features, although their Indian owner Tata Motors swallowed a Rs2,500 crore loss on account of them.
Tata will sell the Jaguar, which had its origins in a motorcycle sidecar company, XF and XKR series for between Rs63 lakh and Rs92 lakh, while Land Rover’s Discovery and Range Rover would be priced between Rs63 lakh and Rs89 lakh.
“It’s quite a memorable day in the history and heritage of Tata Motors... JLR has been well received and well established in India (in the past), but over the years this brand has been disconnected from India,” Tata group chief Ratan Tata told reporters announcing the launch.
Tata Motors, the country’s largest automobile company, suffered a net loss of Rs2,505.25 crore in 2008-09 mainly on account of JLR that it acquired in March 2008. The expensive JLR marquee suffered on account of the economic meltdown.
“We will measure the response to the brands here and at an appropriate time, we will expand the brand to other cities, which is yet to be determined,” Jaguar managing director Mike O’ Driscoll said.
Asked how many units the company hopes to sell in India, Land Rover managing director Phil Popham said: “These are premium niche brands, so we are looking at relatively small numbers. Our challenge is to establish the brands here.”
About the two brands’ official entry into the country, Tata said: “I think the cars will exhibit the levels of technology and levels of performance here.”
Jaguar originally manufactured sidecars that were attached to motorcycles and was called the Swallow Sidecar Company.
The two brands would give Indian public an opportunity to experience the “pleasure of driving the superior technology” and now “we have decided to extend the penetration of the two brands in India,” he added.
Asked about the current status of JLR asking for financial assistance from the UK government, Tata said: “We are in discussion with the UK government on loan guarantee. We are hopeful that we will find a solution to it. Our funding plans for JLR will progress further...”
“Sustaining downturn is extremely important... I would like to see these two brands to come out of the downturn and the companies will have new vehicles and new models.”...the loan that we are talking to, would be allotted to the company by European Banks,“ he added.
Regarding cutting pension benefits of the JLR employees, Tata Motors vice chairman Ravi Kant said: “The discussion is going to start by the end of this year and will be closed by July next year.”
On sharing, leveraging JLR’s strong markets, like the US, for Tata Motors’ products, the Tata group chief said the company does not have any such plans as the vehicles are in completely different segments.
Tata, however, said: “We will work closely on R&D. We will share intellectual property, but we have never tried to merge the two brands with Tata Motors. Over time, the sophistication of dealing with customers and spares will start to commonalise between the two companies.”
Tata Motors would also decide about assembling the premium cars in India depending upon the business scales by the two iconic brands, he said.
Asked if JLR would look for sourcing opportunities in India in the midst of its profits going down, JLR Chief Executive Officer David Smith said, “As a business sense, we see a whole range of countries, like India, China, North America and Europe. In the past, our team was working in exploring supply base in India, and will explore further.” The company’s focus is to reduce the input costs.
Jaguar and Land Rover had suffered a loss of Rs1,777.35 crore in 2008-09 due to the downturn. The income from JLR sales stood at Rs39,270.70 crore.
“This country (India) is going to play a very important and long role for the two brands. Last year was very difficult due to global economic downturn, which affected the sales premium cars,” Land Rover’s Popham said.
JLR witnessed “excellent” growths in some markets such as Brazil, China and Russia, and is “looking at adding India to it,” he added.
Ratan Tata calls JLR acquisition a ‘terrific decision’
Tata Group chief Ratan Tata on Sunday termed the buyout of Jaguar and Land Rover as a “terrific decision” and hoped to bring back glory for the luxury brands.
“We at Tata Motors are proud to have these brands...it was a terrific decision that we took to bid for these two brands and own them,” Tata told reporters here after launching the premium brands in India.
“...together we can make them go back to the glory that they have quite rightly and deservedly had over the years,” he said.
“We are going through a downturn today that has an unfortunately somewhat condemned Jaguar and Land Rover in perception, that perception is very wrong,” Tata said.
“The two brands are terrific brands. There is a terrific R&D behind them. It is for us to manage to put them into products and bring the products into production,” he said.
The Indian auto major had acquired JLR last year for $2.3 billion from US car maker Ford. To fund this, Tata Motors had taken $3 billion bridge loan.
On the refinancing of the $3 billion bridge loan, Tata Motors has already paid $2 billion and has amended the bridge finance loan agreement, under which the car maker would have to repay the remaining $1 billion by 2010.
Tata Motors had been struggling to raise long term funds to replace the bridge loan. In July last year, it had got the Board approval to raise up to Rs7,200 crore through three simultaneous but separate rights issues.
Subsequently, it came up with two separate issues to raise Rs4,147 crore, which met with cold response from investors and the promoters had to subscribe and increase their stake to 42% from earlier 33%.
Tata Motors then borrowed from public, first time since 1995, which it termed as an ongoing requirement, in December, 2008, offering up to 11% annual interest for a period of up to three years.