India’s Tata Motors lifted the lid on the performance of its UK carmakers Jaguar and Land Rover on Friday, revealing huge losses as it warned of “drastic cost-cutting” that could include more job cuts.
The group said the recession’s effect on the luxury marques it bought from Ford in June last year led to a consolidated net loss of Rs25.1bn ($522m) in the year ending March, its first loss in at least seven years.
“There have been 2,000 job losses [at Jaguar and Land Rover],” said Ravi Kant, Tata Motors’ outgoing managing director. “We may be looking at more job losses. We have had temporary shutdowns of the factories and we could be looking at more shutdowns.”
The acquisition of Jaguar and Land Rover marked the high point of a global acquisition spree by Tata Group, India’s largest conglomerate, during the 2006-07 boom, when it also acquired Corus, the Anglo-Dutch steel group.
Tata Motors, India’s largest motor maker, makes most of its revenue from truck sales in emerging markets. It paid $2.5bn for Jaguar and Land Rover in an attempt to move up the value chain but was hit by the global economic crisis.
The group is now locked in difficult talks with the UK government over the provision of a state guarantee for a £340m ($562m) loan from the European Investment Bank that Tata wants to use to provide working capital for Jaguar and Land Rover.
The company said Land Rover sales in the 10 months since it was bought by Tata fell 39 per cent against a year earlier to 127,000 units while Jaguar sales fell 4 per cent to 47,000 units.
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