Tata hit by Jaguar Land Rover deal
2009-06-29 08:07
Mumbai - Slumping demand drove Tata Motors into its first annual loss in eight years and India's top vehicle maker warned of more job cuts and plant shutdowns at the loss-making Jaguar and Land Rover unit.
The firm, which controls 60& of the world's fifth-biggest truck and bus market, said it was readying for major belt-tightening, including deferring capital expenditure wherever possible to keep a tight rein on costs.
"The lightening struck some time in the middle of last year, and there was a huge unprecedented global meltdown," vice chairman Ravi Kant told a news conference.
"We have sent people on sabbatical, gone for cheaper low-cost country sourcing and tight control in cash flows, and are assisting JLR (Jaguar Land Rover) for a major belt tightening."
Tata Motors said the Jaguar Land Rover unit it bought in 2008 posted a loss after tax of 306 million pounds ($504 million) in the 10 months of the fiscal year to March 2009 as a brutal global recession crippled car sales, primarily luxury and sports utility vehicles.
JLR sold 167 000 vehicles for the 10 months to March, compared with 246 000 in the same period the year before.
The economic crisis has sent two of America's three big carmakers into receivership and is set to plunge Toyota deeper into loss.
Kant said Jaguar Land Rover's performance was better than expected in the new fiscal year but said further job cuts or plant shutdowns at the unit would depend on how the market situation evolved.
First annual loss in eight years
In India, higher borrowing costs and an economic slowdown put the brakes on vehicle sales for much of 2008-09, 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.
The numbers are not comparable as year-ago numbers did not include 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% to 10.01 billion rupees for 2008/09.
Since completing the Jaguar Land Rover deal, Tata Motors struggled for financing as the global credit crisis and economic downturn cut the availability of funds.
Founders had to bail out a rights share offer last year, the company deferred an overseas share issue and had to refinance a $3 billion bridge loan it had taken to buy the two marquee brands from Ford.
The firm, which this year added the world's cheapest car, the Nano, to a line-up that includes some of the most luxurious, said the final maturity of $1 billion still outstanding on the loan had been extended by 18 months to end 2010.