MUMBAI // The acquisition of UK luxury carmaker Jaguar Land Rover has dragged India's Tata Motors into loss for the first time since 2001, the company said yesterday. Jaguar Land Rover lost Tata Motors £306m (Dh 1.8m) in the 10 months leading up to March 30, bringing the company to a total loss for the year of £317m.
"The lightning struck some time in the middle of last year, and there was a huge, unprecedented meltdown," said Ravi Kant, the vice chairman of Tata Motors. "Like for everybody else, the October to December quarter was really horrible." To keep Jaguar Land Rover going, Tata Motors has had to inject some £820m of fresh working capital into the British company during the last 10 months, Mr Kant said: £686m directly from Tata Motors, and the rest from elsewhere in the group.
But he said he hoped the drain on the group would come to an end during the rest of the year. "We've been able to postpone additional cash requirements and we do hope that once we are through the next two or three months; we will be over for the next 16-18 months or so." C Ramakrishnan, Tata Motors' chief financial officer, said Jaguar Land Rover had annual fixed costs of £250m and needed to spend £400m-£450m annually to develop new products.
Mr Kant played down the significance of long-running talks with the UK government over support, saying it did not need the government's guarantee to receive the £340m loan it secured from the European Investment Bank in April. "One option is for the UK government to give a guarantee; the other option is to get guarantee from some specified private banks," he said. Tata last month rejected the UK government's demand for a say over Jaguar Land Rover's chairman and a veto on future job losses as a condition of the guarantee.
Tata's loss contrasted with the strong performance from its main domestic rival, Mahindra & Mahindra, raising questions about Tata's decision to diversify from low-cost emerging-market models into the international luxury market. Mahindra last month reported that its fourth-quarter profit had risen by one-third to $58 million (Dh213m), excluding exceptional items. According to the Society of India Automobile Manufacturers, Indian car sales rose by 2.48 per cent in May, the fourth month of growth in a year.
Global luxury carmakers like Jaguar Land Rover have, on the other hand, all been suffering. Mercedes-Benz's manufacturer, Daimler, lost $1.8bn in the first three months of this year after it saw its car sales plunge 27 per cent last year, and has been forced to sell a $2.7bn stake to the Abu Dhabi International Petroleum Investment Company. Porsche's sales have fallen 28 per cent, and a deal with the Qatar Investment Authority is looming.
Nonetheless, Mr Kant said Tata still believed in the long-term attractiveness of the deal. "We feel that once we are able to get through this difficult and extremely challenging period, Jaguar Land Rover has a very bright future," he said. "It will get through this, turn around and become an extremely profitable company." firstname.lastname@example.org