India Watch : Cuts loom as JLR swings Tata Motors to first loss in 8 years

Automotive News Europe/Reuters, 26th June, 2009

MUMBAI (Reuters) — Slumping demand and poor results from Jaguar and Land Rover swung Tata Motors Ltd., India’s top vehicle maker, to its first annual loss in eight years. The company, which bought the British premium brands from Ford Motor Co. in 2008, said it was readying for a major belt-tightening as it looked to cut costs.

Tata Motors reported that the Jaguar Land Rover unit posted a net loss of £281m ($463m) in the 10 months of the fiscal year to March 2009 that the automaker was on its books, as a brutal global recession scuttled sales of cars, primarily luxury models and SUVs.

The economic crisis has sent two of the Detroit 3 into bankruptcy protection and is set to plunge Toyota Motor Corp. deeper into loss. The new president of Toyota on Thursday warned that the auto industry faces two more tough years. In India, higher borrowing costs and an economic slowdown put the brakes on auto sales for much of 2008-2009, though sales have improved since February.

Tata Motors reported a consolidated net loss for the year to March 2009 of 25.05 billion rupees ($520 million) versus net profit of 21.68 billion rupees a year ago. Net sales rose to 703.70 billion rupees versus 354.09 billion rupees.

Tata Motors reported a consolidated net loss for the year to March 2009 of 25.05 billion rupees ($520 million) versus net profit of 21.68 billion rupees a year ago. Net sales rose to 703.70 billion rupees versus 354.09 billion rupees.

The numbers are not comparable as year-ago numbers did not include results from Jaguar and Land Rover, or other assets that Tata Motors bought and sold in the year. Last month, the company reported net profit from Indian operations fell 50.7 percent to 10.01 billion rupees for 2008/09.

Since completing the Jaguar Land Rover deal, Tata Motors has struggled for financing as the global credit crisis and economic downturn cut the availability of funds. 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 brands from Ford.

The firm, which has a lineup of the world’s cheapest car, the Nano, to some of most luxurious, said it had agreed to extend the final maturity of $1 billion by 18 months to the end of 2010.

[Source: Automotive News Europe/Reuters]

Clive Goldthorp

About the Author:

Clive claims that his interest in the BMC>MG story dates back to his childhood in the 1960s when the family’s garage premises were leased to a tenant with an Austin agency. However, back in the 1920s and 1930s, his grandmother was one of the country’s first female Garage Proprietors so cars probably run in his genes! Admits to affairs with Alfa Romeos, but has more recently owned an 06/06 MG TF 135 and then a 15/64 MG3 Style… Clive, who was AROnline’s News Editor for nearly four years, stood down from that role in order to devote more time to various Motor Racing projects but still contributes articles on as regular basis as his other commitments permit.

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