Tata ropes in specialists to trim costs at JLR

Tata Motors has roped in international consultants Roland Berger Strategy Consultants (based in Munich) and KPMG to help its British car brands Jaguar-Land Rover (JLR) trim costs and help manage cash flow.

Tata Motors Vice-Chairman Ravi Kant said in a press conference in Mumbai yesterday the two consultants had been on this work for two months now. However, he refused to give more details on the exact brief these consultants had been brought in with.

Both Roland Berger and JLR refused to discuss this development and redirected media queries to Tata Motors.

JLR, which had been a profitable venture in the first half of 2008 (while it was still owned by Ford Motor Company), is now a loss-making venture. Since mid-2008, with a severe erosion in demand for luxury cars impacting the business of JLR, the British company posted a loss of Rs 2,400 crore for the 10 months ended March 2009, after it was acquired by Tata Motors.

The fall in demand for luxury and premium cars globally had commenced around the same time Tata Motors came to own JLR. Earlier last month, while announcing Tata Motors’ financial results, Kant had said that JLR would turnaround in two years.

Even before hiring the consultants, JLR had taken some initiatives to cut costs on its own. It has already slashed some 2,200 jobs in the past year. The company will be running the programme at its Halewood plant to find up to 300 additional volunteers, which closes year end, but is not yet functional. This is expected to be implemented after the summer shutdown. The total headcount by year end is expected to be around 14,000, according to a JLR spokesperson.

Cash flow for managing its routine operations too has become an issue in JLR with loans worth £340 million in the pipeline from European Investment Bank awaiting the UK government’s guarantee. Prolonged negotiations between Tata Motors and the UK government over the last four months have not fructified yet.

In February this year, Tata Strategic, a Tata group consulting company, had tied up with Roland Berger to expand their consulting practices in West Asia, South-East Asia and Africa. Roland Berger Strategy Consultants is one of the leading strategy consultants in the world and the biggest with European origin with 36 offices in 25 countries.

The consultancy is an independent partnership, exclusively owned by its 180 Partners. In 2008, the 2,000 employees of Roland Berger Strategy Consultants generated revenues of $1 billion.