When Jaguar Land Rover (JLR), which cost Tatas $2.5 billion (Rs12,500 crore in 2008), dragged Tata Motors into the red with a consolidated net loss of Rs2,505 crore in the recession-ridden 2008-09, many dubbed this acquisition as a foolhardy step of a cash-rich Indian corporate. Two years down the line, Tata Motors turned around to post a record Rs9,273 crore-profit with JLR contributing 60% of its Rs1,23,133 crore revenue and much more to the bottomline in 2010-11.
While critics swallowed their words, Ratan Tata's dream of catapulting Tata Motors into a global automotive giant seems not too far from fruition. While his other dream — a people's car which will take scooter-driven families to proud car owners — stutters with varied production, safety and marketing challenges, JLR has successfully waded through the troubled waters of slowdown in the West.
JLR, which was facing plant shut down not long ago, has expanded production, opened a new assembly plant in India and is now building a Rs2,760-crore (£355 million) engine plant to make advanced low emission 4-cylinder JLR petrol and diesel engines.
This comes amid progressing talks over a joint-venture plant in JLR's fastest growing market China and an encouraging 18,000 pre-launch booking for the upcoming smaller Range Rover — Evoque.
The new plant fits into the long-term strategy of JLR to develop fuel-efficient smaller engines and a 25% reduction in joint fleet average CO2 emissions.
More importantly, the new plant will relieve JLR of constraints in engine supply from Ford when its sales volume is poised to cross 300,000 units with the addition of Range Rover Evoque, Jaguar XF and new Freelander.
The sales volume was 26% up at 243,000 last fiscal. In the first five months this fiscal, despite its key market Europe giving trouble signals, the cumulative sales is up 10% at 102,451.
Ralf Speth, CEO of JLR said the company would annually invest £1.5 billion (Rs11,200 crore) for the next five years.
Much to the delight of slow down-hit British government, the new engine plant is expected to create 2,000 direct employment.