The Hindu Business Line : Tata confident of JLR turning the corner

Snapshot
JLR acquisition was not overpriced, says Mr Ratan Tata
Tata Motors would still go back to Singur, if the situation improved
Launch of the electric Indica not viable in India for now

Paul Noronha

At the AGM: (From right): Mr Ratan Tata, Chairman, Tata Motors Ltd; Mr C. Ramakrishnan, Chief Financial Officer; and Mr Ravi Kant, Vice-Chairman, at the company’s AGM in Mumbai on Tuesday. Mr Tata said that Tata Motors and Jaguar Land Rover will come through this tough period as leaner and more cost efficient companies. “There is an expert opinion that JLR acquisition was high priced. But I would like to refute those comments. Yes, there is a challenge. It is caused by an external phenomenon and it has nothing to do with the product portfolio or management.

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Mumbai, Aug. 25 Tata Motors and Jaguar Land Rover will come through this tough period as leaner and more cost-efficient companies, said Mr Ratan Tata, Chairman of Tata Motors, at its annual general meeting here on Tuesday.

According to him, a year or two was not enough in the life of a corporation to evaluate its success. “There is an expert opinion that the JLR acquisition was highly priced. I would like to refute those comments. Yes, there is a challenge; it is caused by an external phenomenon and has nothing to do with the product portfolio or management,” Mr Tata said.

Asked by a shareholder on the rationale behind the JLR acquisition, the Chairman replied, “For us to develop a high-end high performance vehicle, it will take several years. A single company which gave us hope for a position in the SUV segment and a position in high performance vehicles was this…we would have taken Land Rover, perhaps not Jaguar. But they came together.”

Mr Tata said JRL was profitable in 2007 when the brands were part of Ford Motor Company. “They would not have been profitable had it not been for the downturn. It is unfortunate that external factors affected the company,” he said.

“The slowdown has had a devastating effect on countries, companies, investors and individuals,” he added.

As for the likely breakeven forecast for JLR, he said, “I can’t announce when JLR will break even. That depends on the environment around us.”

He said that Tata Motors would still go back to Singur, the original home for the Nano people’s car, if the situation improved. Tata Motors had to move the plant from West Bengal to Sanand in Gujarat following agitations over land acquisition. “The land is still with us. We will go back to Singur if the situation is not as agitated as it was,” Mr Tata said.

Export prospects

On export prospects for the Nano, he said that many European, African and Asian countries had expressed interest in the car. However, the company’s top priority was the Indian market.

“We have already announced that we would launch the Nano Europa in 2011-12,” he added.

Mr Tata said the company had held talks with Fiat on retailing the Nano in Latin America which, however, was “also going through a downturn”. Tata Motors has, incidentally, invested Rs 640 crore in the joint venture with Fiat to produce cars at a plant near Pune.

He said the launch of the electric Indica was not viable now in India given the high price of its battery.

The company is also upgrading production keeping in mind the new emission standards (Bharat Stage 4) effective April next year. On emission reduction efforts at JLR, Mr Tata said, “JLR has a greater problem than we do as their vehicles are heavy consumers of fuel. They have a five-year programme to take care of this.”

A special word of praise was reserved for SBI. “When commercial banks had reneged on their commitments to us, the one that stood by us was the State Bank of India,” he said.