New Delhi, July 09: Tata Motors has said its British
luxury auto brands Jaguar and Land Rover, which have posted
over Rs 1,700 crore annual losses, will turn profitable in two
Company`s Vice-Chairman Ravi Kant said the acquisition of
the two marquees was not over-priced.
"You can`t say that the price we paid for was
over-priced. In fact out of USD 2.3 billion that we paid for
it, USD 600 million went to the pension fund. So Ford actually
got only USD 1.7 billion. So I don`t think we over pay for
it," Kant told a news channel.
He said the two iconic brands would come back on track
and would start making profits again within two years.
"I am quite sure and very positive that in two years
time, when this company starts making profits, then we can
have this discussion again and find out whether we over paid
for the acquisition of this company," Kant said.
JLR was officially launched in India last month.
At the end of 2008-09, income from JLR sales stood at Rs
39,270.70 crore, while the loss from its operations (before
interest, exceptional items and tax) stood at Rs 1,777.35
Tata Motors too suffered a net loss of Rs 2,505.25 crore
in 2008-09 mainly on account of JLR.
The Indian auto major had acquired JLR last year for USD
2.3 billion from the US car maker Ford. To fund this, Tata
Motors had taken USD three billion bridge loan.
Tata Motors had been struggling to raise long-term funds
to replace the bridge loan. It has already paid USD two
billion and has amended the bridge finance loan agreement,
under which the car maker would have to repay the remaining
USD one billion by 2010.
Since the buyout, nearly 2,000 employees at JLR have
been laid off and Tata Motors hinted at more job cuts.
When asked about the financial viability of the Tatas`
Nano, touted as the world`s cheapest car, Kant said, "We have
not embarked on a project which is going to be a loss making
project. I can assure you this project is a commercially
"We will be getting cash flow very soon and we will be
getting a full break-even in a short period of time."
Conceived in 2003, the Nano project has cost Tata Motors
over Rs 2,000 crore. The company shifted the manufacturing
plant from Singur in West Bengal to Sanand in Gujarat
following fierce political opposition. The new facility would
have an annual capacity of 2.5 lakh units.
In March, Tata Motors unveiled the much-hyped Nano in the
country. Offered at an ex-factory price of Rs 1-lakh, the
deliveries of the small car would start from next month. The
company short listed 1.55 lakh customers for handing over the
cars in two phases.