Jaguar Land Rover surge drives Tata through the billion pound barrier

JAGUAR Land Rover was the star turn for its Indian parent Tata Motors last year, the British unit busting the billion pound earnings barrier as Tata more than trebled its profits.

It was a remarkable turnaround at the British subsidiary, having made a profit of just 32 million in the 2009-10 financial year. The UK improvement was driven by higher sales volumes, improvements in profit margins, and the weakness of sterling, which helped a boom in exports.

Dr Ralf Speth, chief executive of Jaguar Land Rover, said the turnaround was "a very positive indicator for our business and reflects consumer confidence in our brands and the continued efforts of the entire Jaguar Land Rover workforce".

However, Speth added: "This is a solid performance but we must remain focused on delivering a strong, sustainable business model for the future.

"To that end, we have committed more than 1bn a year over the next five years to the creation of new and exciting products which will strengthen Jaguar Land Rover's position in the global marketplace."

Mumbai-based Tata Motors bought the British marques from American car giant Ford in 2008 for $2.3bn (1.4bn), and is opening its first assembly line for Jaguar Land Rover in India today. Exports of the British subsidiary shot up 51 per cent in the year to end-March 2011. This included a jump in export revenues of 70 per cent to China, 32 per cent to Russia and 21 per cent to North America.

It helped total profits at Tata more than treble to 92.7bn rupees (1.3bn), with parent group revenues up by a third to 1.2 trillion rupees.

The jump in the UK unit's profits helped pay down Tata's debts by almost two-thirds to 233m. Carl-Peter Forster, chief executive of Tata Motors, India's biggest automotive company, said: "Jaguar Land Rover is now a strong, profitable and innovative competitor in the premium car industry.

"The company's significant contribution to (the parent's] earnings reflects a commitment to product excellence."

Tata said it had also benefited from higher sales at home, as it also announced a five-for-one stock split to make its shares more liquid.

The group, also India's largest truck and bus maker, said it expected increased infrastructure investment in the country to boost demand for commercial vehicles.

"The improved profitability was driven by better volumes and pricing across markets," C Ramakrishnan, chief financial officer, said. However, the group said higher fuel costs and interest rates are expected to curb demand for cars in India, the world's second-fastest growing auto market after China, with growth pegged at 12 to 15 per cent for this fiscal year.