Tata Motors loses £90m as costs of Jaguar Land Rover debt take toll

Published on Monday 31 August 2009 21:17

THE number of vehicles sold by Jaguar Land Rover plunged by 52 per cent in the first quarter, adding to parent company Tata Motors' woes as the Indian car giant posted a 3.3 billion rupee (£41 million) loss.

The cost of servicing debts weighed heavily on the car maker in the quarter to the end of June.

In the corresponding period last year, Tata Motors made a profit of 7.2bn rupees (90m).

Ravi Kant, Tata Motor's chief executive, said: "With volumes down so much, it's really a challenge.

"We are doing a lot of cost- reduction measures, but we need support from the market."

In July, the company reported stand-alone results. Without the burden of last year's Jaguar Land Rover acquisition, Tata Motors made a quarterly profit of 5.1bn rupees (64m). Sales stood at 162.9bn rupees (2bn), compared with 144.1bn rupees (1.8bn) in the same period last year.

The company has worked hard to manage its growing debt – more than 350bn rupees (4.4bn), most of it incurred to buy and operate Jaguar Land Rover.

Tata Motors took out a $3bn (1.8bn) bridge loan to buy the brand from Ford in June 2008, and has since had to pump in additional funds.

Last quarter, Tata Motors provided 50m to fund Jaguar Land Rover's operating expenses, and is finalising an additional 100m in loans from commercial banks, including Standard Chartered, Bank of Baroda, ING, Bank of Ireland subsidiary Burdale, and GE Capital, executives said yesterday.

Tata has also secured funding from a group of 24 banks to roll over $850m (523m) of the bridge loan it took out in 2008.

Earlier this month, ratings agency Standard & Poor's downgraded Tata Motors because of high debt and the poor performance of Jaguar and Land Rover.