New Delhi: Fuelled by improved volumes and
expected recovery in the global economy, Tatas-owned British
marquees Jaguar Land Rover are expected to break-even by
financial year 2011, says a brokerage report.
Further, a break-even scenario for the luxury car maker
could substantially boost the earnings of its parent Tata
"We expect a recovery in JLR volumes by FY11, led by the
anticipated recovery in the global economy as well as new
"We believe the twin effect of volume-recovery and
aggressive cost cutting measures would likely lead to
break-even for JLR by FY11," brokerage firm IDFC SSKI said in
Tata Motors acquired JLR from American car maker Ford
Motor last year for about USD 2.3 billion.
JLR has been severely hit by the ongoing financial
turmoil and has witnessed falling sales. Moreover, Tata Motors
reported a loss of Rs 2,300 crore for the fiscal year 2009,
primarily bogged down by the losses at JLR.
"Given the substantial stress on Tata Motors Ltd`s
earnings on account of losses at JLR (TML posted a Rs 23
billion loss in FY09 due to the Rs 22 billion loss at Jaguar
Land Rover), even a break-even situation at JLR is expected to
significantly boost Tata Motors Ltd`s earnings going forward,"
the report said.
The brokerage firm in its report expects JLR to fund its
own financing requirements in the coming months.
Last week, Tata Motors said it has arranged funds for
"With the positive trend in the external environment in
financial markets and improvement in general liquidity, these
arrangements (the funding requirements for JLR) have been and
are expected to be concluded without necessitating guarantees
from the UK government, for which discussions had been ongoing
for some time," Tata Motors said in a statement on August 11.
The companies also anticipate the long-term loan of 340
million pounds from the European Investment Bank, sanctioned
to JLR, to be secured in the coming weeks.
"These developments signal increased easing of credit as
well as rising comfort on JLR`s business prospects going
forward. Hence, we expect JLR to be able to fund its own
financing requirements going forward," the report noted.