Concerned at the performance of the loss-making unit acquired last year, Tata Motors has appointed two consultants to advise Jaguar Land Rover (JLR) on cost cuts, set targets for breaking even and using cash flow effectively.
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“We are going ahead with their proposals and this is going to improve the cost reduction efforts in JLR,” vice chairman Ravi Kant told Reuters.
Tata yesterday said it had improved first quarter operating margin to 11.4% from 7.1% a year ago, while operating profits were up almost 48% to INR7.3bn.
Pretax profit grew 58.8% to INR5.48bn and after tax profit was up 57.5% to INR5.13bn.
But the results did not include Jaguar Land Rover operations, a spokesman told just-auto.
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By GlobalDataThe automaker posted an annual loss for the fiscal year to March 2009 of INR25bn (US$520m) versus net profit of INR21.7bn a year before, blamed the slump on a sales fall at Land Rover as the global downturn bit.
Tata also revealed that JLR posted a net loss of GBP281m (US$460m) in the 10 months of the fiscal year to March 2009 that it was on the books.
“On a standalone basis the company is doing well. The domestic business is good. But the two concerns are JLR and its ridiculously high debt-to-equity ratio,” India Infoline auto analyst Jatin Chawla told Reuters.
Of the original US$3bn bridge loan taken to buy JLR, Tata Motors has $850m to go, having recently paid off $150m with funds from its sale of a 1.5% stake in Tata Steel.
It also raised $500m from Nano advance orders last April plus $884 million through debentures to pay off part of its bridge loan and has extended the maturity of the remaining amount to the end of 2010.
“We will look at capital raising at an appropriate time. We are committed to improving the capital structure of the company and going to the market, but no decision has been taken yet,” chief financial officer C Ramakrishnan told Reuters.
