JLR drags down Tata Motors to first annual loss in eight years

JLR drags down Tata Motors to first annual loss in eight years
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First Published: Fri, Jun 26 2009. 10 11 PM IST

Smart buy? Jaguar cars at a showroom in Cambridge, UK. Tata Motors will introduce Jaguar and Land Rover vehicles in India on Sunday. Graham Barclay / Bloomberg
Smart buy? Jaguar cars at a showroom in Cambridge, UK. Tata Motors will introduce Jaguar and Land Rover vehicles in India on Sunday. Graham Barclay / Bloomberg
Updated: Fri, Jun 26 2009. 10 11 PM IST
Mumbai: The Indian truck maker that owns Jaguar and Land Rover, Tata Motors Ltd, posted its first annual loss in at least seven years after sales at the luxury units plunged amid the global recession.
The consolidated net loss was Rs2,500 crore in the year ended 31 March, compared with a net income of Rs2,200 crore billion a year ago, the company said in a statement in Mumbai on Friday.
Smart buy? Jaguar cars at a showroom in Cambridge, UK. Tata Motors will introduce Jaguar and Land Rover vehicles in India on Sunday. Graham Barclay / Bloomberg
Year-ago numbers don’t include Jaguar and Land Rover, which Tata bought from Ford Motor Co. in June last year. Sales rose 99% to Rs70,400 crore, it said.
The Jaguar Land Rover unit had a pre-tax loss of Rs1,800 crore as unemployment and the global financial meltdown damped sales in the US and Europe. A rights share offer last year did not attract great interest, it deferred an overseas share issue and had to refinance a $3 billion bridge loan it had taken to buy the two marquee brands.
Bayerische Motoren Werke AG, the world’s biggest maker of luxury vehicles, and Daimler AG have posted losses in each of the past two quarters as the worst recession since World War II pushed the auto industry into its deepest crisis in decades.
The economic crisis has sent two of America’s three big car makers into receivership and is set to plunge Toyota Motor Corp. deeper into loss. “Turning around Jaguar Land Rover is a Herculean task,” said Vikas Sehgal, a Chicago-based partner at Booz and Co., an industry consultant.
“It’s challenging because a company focused on the mass market with basic technologies is trying to turn around a premium marquee brand with complicated technologies and low volumes,” he said.
Mumbai-based Tata Motors’ full-year profit on a stand-alone basis fell 51% to Rs1,001 crore compared with a profit of Rs2,028 crore a year ago, the company said on 29 May.
“Land Rover sales fell considerably,” Tata Motors said in the statement without detailing. “The company has actively responded to the changed situation by taking a number of urgent and long term measures. These include cutting costs drastically.”
Chairman Ratan Tata is slashing investments by as much as 38% in the year to March on slowing economic growth in India, the company’s biggest market for its commercial vehicles.
Tata will begin sales of the Nano, the world’s cheapest car, in July to revive earnings and challenge Suzuki Motor Corp. in Asia’s fourth largest automotive market.
Tata Motors will introduce the Jaguar and Land Rover vehicles in India on Sunday. The company bought the brands from Ford in June last year for $2.4 billion, its biggest overseas purchase.
“The bridge from the Nano to Jaguar XF is probably the biggest that exists in the industry,” Sehgal said. “A $2,500 car and a $100,000 car: no other company in the world has a portfolio that wide.”
Tata Motors gained 0.9% to Rs340.25 at close of trading in Mumbai on Friday. The earnings were detailed after the stock market closed for trading.
Narayanan Somasundaram of Reuters contributed to this story.
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First Published: Fri, Jun 26 2009. 10 11 PM IST