Tata Motors Ltd., which spent $2.4 billion acquiring the Jaguar and Land Rover brands from Ford Motor Co. (NYSE:F) a year ago, just reported its first annual loss in
at least seven years as the recession strangled sales in its luxury unit. Tata lost about 25 billion rupees ($520 million) for the fiscal year. It had a net profit of Rs21.68 billion in the previous fiscal year.
For Ford, it was a timely divestiture on the eve of the financial crisis. Tata, which is now trying to cut costs (but denied
fundraising rumors), is more known for subcompacts, trucks and buses, not luxury vehicles. In March, it launched the Tata Nano. It's a few days away from introducing Jaguar and Land Rover -- which actually made a profit in the first half of 2008 -- in India.
A Bloomberg report, which noted the Jaguar Land Rover unit had a pretax loss of Rs18 billion, quoted an industry consultant saying that turning around the unit is "challenging because a company focused on the mass market with basic technologies is trying to turn around a premium marquee brand with complicated technologies and low volumes."
As long as we're talking Tata, it's worth mentioning that Tata Steel, the world's No. 6 steelmaking company, hasn't hit a balance between yesteryear's soaring commodity prices and the bottom of the global economic downturn. Reeling from restructuring costs and low demand as shrinking steel inventories have yet to be replenished by potential buyers, the Indian steel giant reported a
60% drop in profit for the full year ended in March. And it lost Rs45.3 billion in its most recent quarter.
Tata Steel
said there was "severe demand contraction" in Europe. It also said 2,045
jobs are at risk. Tata Motors may also look to job cuts. -
Baz HiralalGo to the story
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