Ratan Tata defends JLR acquisition
Tata Motors Chairman Ratan Tata today said the global financial crisis has posed challenges to marquee brands Jaguar and Land Rover (JLR), but the $2.3-billion acquisition of the iconic brands was "worthwhile".
"There has been a lot of commentary, expert opinion alluding that JLR acquisition was too high priced and endanger our well-being. I emphatically refute this. Yes, there could be challenges; it's not caused by the product or portfolio. It's caused by the global phenomenon," the Tata Motors Chairman said at the company's annual general meeting here.
"The acquisition was very much worthwhile. One or two years is not anything in the life of a corporation. What you see is not because of acquisition, but what followed it," he added.
Home-grown auto major Tata Motors had on June 2, 2008 completed the JLR acquisition from US automobile giant Ford Motor Company for a net consideration of $2.3 billion.
The global meltdown and high fuel prices, especially after September 2008 which saw vehicle financing and demand drying up, impacted the auto industry worldwide.
The two British brands were profit making in 2007 and in the first half of 2008, Tata said.
However, in the first 10 months post-acquisition ending March 31, 2009, JLR's sales volumes fell by 32 per cent over the same period in previous year resulting in a net loss before tax of 281 million pound.
Tata said the JLR acquisition gave Tata Motors a space in the high-end sports utility vehicle segment and access to technology.
Tata Motors, he said, was looking at buying Land Rover, which has been the mainstay of army and police vehicles in many countries, but the offer came along with Jaguar.
"I am confident that Tata Motors and JLR would come out of this (slump). We have to face challenges in cutting costs and improving margins. Several initiatives are in place both in Tata Motors and JLR," he said.
"We are seeing signs of recovery. I really believe that the auto industry will take its place back. There have been some encouraging signs on JLR as well."
Tata also said efforts have been made to leverage and disinvest some resources, but did not give details.