Tata Motors posts first annual loss in 7 years

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Mumbai: Tata Motors reported its first annual loss in seven years, buffeted by a slump in global demand and losses at the Jaguar Land Rover (JLR) unit it acquired in 2008 for $2.5 billion (roughly Rs 12,000 crore).

The company on Friday reported a consolidated loss of Rs 2,505.25 crore for the year ended March 31, 2009, against a stand-alone profit of Rs 2,167.70 crore a year ago. But the total income grew by 99% to Rs 70,938.85 crore compared to Rs 35,660.07 crore (Tata Motors alone) in the same period last year.

“This is the first time the company is announcing consolidated results with JLR. JLR had made a profit in 2007 and continued to do so in the first half of 2008,” said Ravi Kant, vice-chairman, Tata Motors. He added that the company is making “JLR stand on its own feet and will undertake major belt-tightening measures.”

As part of the cost-cutting measures, Tata is looking at sourcing components for JLR from low-cost countries and trimming its capital expenditure plans. On an average, JLR capex plan stands at around 650 million pounds (around Rs 5,149 crore), including tooling and product development.

The company said further job cuts and plant shut-downs could be on the radar. Around 2,000 JLR employees have already lost jobs and the current strength stands at 15,000. “For cost-cutting measures, we have sent people on sabbatical and now have a tight control on cash flows. Various restructuring methods are undertaken wherein we are postponing certain projects that are not very important. We have also shut down some plants and will shut down more, if required,” added Kant.

The JLR unit has posted a net loss of 281 million pounds (around Rs 2,218 crore) in the 10 months of the fiscal year to March 2009. There has been a 32% drop in the overall sales of JLR during this period, to 1.67 lakh units from 2.46 lakh units, said C Ramakrishnan, chief financial officer, Tata Motors. While the fall in sales of Land Rover was 40%, the sales of Jaguar fell just 4%. Major markets such as North America and the UK saw a huge drop in demand. Russia and China, however, showed some signs of growth.