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| JLR pulls Tata Motors' net into the red |
| BS Reporters / London/Mumbai Jun 27, 2009, 00:26 IST |
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 Tata Motors (TM) posted a net loss for the first time in eight years, of Rs 2,505 crore for the year ended March 31, 2009, thanks to Jaguar Land Rover of Britain, its problematic acquisition.
A severe erosion in demand for luxury cars impacted the business of JLR, which posted a loss of Rs 2,400 crore for the 10 months starting June 2008, when it was acquired. TM had reported a net profit of Rs 2,167 crore for the year 2007-08, when the JLR financials were absent.
JLR was strongly profitable (Rs 4,770 crore net) in the 18 months to May 31, 2008, when it was owned by For Motor Company of the US.
TM officials warned of further job cuts in JLR, with more plant shutdowns. The company has already laid off about 2,000 workers, while its current employee strength is about 15,000.
Ravi Kant, Vice Chairman, TM, said, “We are helping JLR to react in a crisis situation. There may be more job losses, with more plant shutdowns. We have postponed additional cash requirements for JLR.”
Net sales for TM last year were Rs 70,370 crore, a growth of 98.74 per cent, as against Rs 35,408 crore posted in the earlier year.
The combined sales of JLR was 167,000 units in June-March, a drop of 32 per cent against 246,000 units sold during the same period in the previous year.
Apart from more layoffs and shutdowns, TM says it is also looking at sending JLR employees on a sabbatical, sourcing cheaper components and introducing tight cash control in operations.
JLR has secured an in-principle ‘green loan’ loan of Rs 2,700 crore from the European Investment Bank (EIB), but is yet to receive the mandatory guarantee from the UK government or any private bank against the loan. A JLR spokesman said talks with the government on this are on. Once the loan is approved, it is enough to take care of JLR’s operational requirements for the next 16-18 months, added officials.
Tata Motors has also repaid Rs 480-720 crore of the Rs 4,800 crore loan they had managed to roll over till December 2010.
Regarding the pension liability which TM is required to pay to JLR employees, the company stated the current valuation has reached 25,400 crore, as against the required payout of about 23,800 crore.
The payout has to be concluded by July 2010. Tata will be talking to JLR’s employees and trustees on this, said its Chief Financial Officer, C Ramakrishnan.
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