Geneva, Switzerland: Jaguar Land Rover Plc, which Tata Motors Ltd pulled out of a potential bankruptcy by acquiring it, aims to increase its already high contribution to the Indian automaker’s revenue as well as share engines and processes.
Tata Motors paid $2.3 billion to acquire the legendary British firms from Ford Motor Co. when the collapse of the mortgage market in the US in 2008 set off a financial crisis and no one was in any mood to lend to it.
JLR now already contributes over 90% to Tata Motors’ consolidated profit. In the December quarter though, Tata Motors’ profit fell 52.21% from a year earlier to Rs.1,627.5 crore because of declining sales at home and reduced contribution from the UK unit.
Ralf Speth, chief executive of Jaguar Land Rover, in a press briefing on Tuesday vowed to increase contribution to Tata Motors.
“Without the Tata Group, Jaguar Land Rover would not have been alive. We did not get any help from the UK government. Not even a letter of support. What Tata Group then did was phenomenal. They made the turnaround happen,” Speth said in Geneva. “We owe them everything and are trying to pay back for the trust they had in us.”
Tata Motors and JLR will benefit from each other by sharing engines and understanding various processes, he said, adding that JLR will also seek support from other Tata group companies, including Tata Consultancy Services Ltd, India’s largest software services firm.
“The two companies are very different in the segments that we operate, but there is a possibility to create direct synergies,” Speth said.
“There are a lot of opportunities. Maybe in the future we can share one of our engines with Tatas. We are developing our engines (four-cylinder and 2-litre engines) and one of them can be shared with them,” he said, adding that the engines could be manufactured in India at a later stage. “In addition to that we are in the process of understanding each other’s processes in terms of products or qualities or whatever.”
JLR clocked a growth rate of 32% in India in 2012, Speth said, but declined to offer a forecast for this year because of the increase in customs duty from 75% to 100% on imported luxury cars, announced in the budget on 28 February.
“We have to see the conditional elements in the duty but...of course, our cars will become more expensive,” he said.
JLR said it is increasing its investment in the UK to about Rs.4,132 crore this year, more than a 40% increase over the investment in 2012, for a new engine manufacturing factory. It will also invest Rs.22,730 crore on new product development.
In India, JLR will introduce four new or refreshed products this year, increasing its product offering in the country to nine. JLR plans to introduce at least eight new or refreshed cars in 2013 globally, four of which, including the F-type sports-car, will make their way to India this year.
The company sold 357,773 units globally in 2012, 30% more than in the previous year.
“India will become an even more interesting market in the future. The question is about the time and economic and political conditions. But at the end of the day, it’s an interesting place to be in,” Speth said.
On whether JLR intends to make cars from scratch in India, Speth said his responsibility is to keep a close eye on all growing markets.
“Therefore, we are interested in all these kind of opportunities and if it pays off then we will be stupid not to do,” he said.
The writer’s trip to Geneva was sponsored Tata Motors.