Tata Names Cyrus Mistry as Ratan Tata's Successor

Cyrus P. Mistry, deputy chairman of Tata Sons Ltd.

Tata Sons Ltd. said board member Cyrus P. Mistry will succeed Ratan Tata as chairman next year, a surprise choice that ends more than a year of speculation over who would run India’s biggest business group.

Cyrus Mistry, 43, whose family is the single biggest shareholder of the group will assume the role of deputy chairman and take over as head of the group in December 2012, according to an e-mailed statement from the company yesterday. Tata in August 2010 set up a five-member panel to find a successor to Ratan, who will retire after two decades running the Mumbai-based company.

In Mistry, Tata has picked an insider who belongs to the same Parsi community as the founders and whose family owns 18 percent of the group holding company. Mistry, largely unknown outside his father’s construction business, will have a year to boost his profile under the guidance of Ratan Tata, the architect of the group’s emergence as a global company through his acquisitions of Corus Group and Jaguar Land Rover.

Billionaire Father

Mistry, an engineer from the Imperial College of Science, Technology and Medicine in London, began working for the company Shapoorji Pallonji & Co., controlled by his father, billionaire Shapoorji Pallonji Mistry, in 1991. Cyrus did his masters in management from the London Business School.

“I am aware that an enormous responsibility, with a great legacy, has been entrusted to me,” Mistry said in an e-mailed statement yesterday. Mistry declined to comment for this report, according to spokesman Ray.

Tata makes cars from the $73,700 Jaguar XJ to the $2,800 Nano, produces steel, salt and grows tea served at the Tata-owned Boston Ritz Carlton. The group accounts for almost 5 percent of India’s gross domestic product.

‘End to Uncertainty’

“One of the main decisions they will have to communicate to the market is if they want to keep growing by buying other businesses,” said Walter Rossini, who helps manage 200 million euros ($267 million) in Indian equities at Aletti Gestielle SGR SpA. “I think they will focus more on efficiency and productivity.”

The Tata group has more than 100 operating companies with 31 listed on the Indian stock exchanges with total revenue of $83.3 billion in the year ended March 31, 2011, according to its website. Overseas revenue accounted for 58 percent of total, or $48.3 billion. The group companies together employ more than 425,000 people.

“I have been impressed with the quality and caliber of his participation, his astute observations and his humility,” Ratan Tata said about Mistry in the statement. “I will be committed to working with him over the next year to give him the exposure, the involvement and the operating experience to equip him to undertake the full responsibility of the group on my retirement.”

Ratan Tata’s step-brother Noel was among the likely candidates to take over as chairman, the Economic Times reported on Nov. 11.

‘Jury Still Out’

“Obviously the jury is still very much out,” on Mistry’s abilities, said Andrea Goldstein, who studied the Tata Group as a senior economist at the Organization of Economic Cooperation and Development in Paris. “He’s very young, which could be very good - so he’s being groomed to take this position. Let’s see if he’s ready to do that.”

Mistry and the Tatas follow the Zoroastrian religion and belong to the small Parsi community, which originated in Persia and found sanctuary centuries ago in India. The Tata group was founded by Ratan’s great grandfather Jamsetji Nusserwanji Tata, who started a textile-trading business in 1868 and then built the country’s first steel mill and hydroelectric plant. He also built The Taj Mahal Palace & Tower hotel in Mumbai, which was damaged in the November 2008 terrorist attacks.

Ratan made his first purchase overseas in February 2000 when he paid $407 million for U.K.-based Tetley Group - the biggest by an Indian company at that time. He followed with 65 more mergers or purchases in India and abroad, totaling more than $20 billion, the most by any Indian group, according to the group’s website.

Mistry will be the second person outside the Tatas to lead the group, according to the company’s website.

“I have known him since he was a baby,” Parmeshwar Godrej, a board member of Godrej Properties Ltd. and wife of billionaire Adi Godrej, said in a phone interview yesterday. “The whole family is very shy and reserved. I’m sure he will do a great job.”

Source: Bloomberg

Tata Motors aims to raise $750 mln via overseas borrowing

Tata Motors

Tata Motors plans to raise $750 million or Rs 3,675 crore via overseas borrowing to trim debt and meet the working capital needs, Business Standard website reported.

The external commercial borrowing or ECB with a spread of six years will be priced about 350 basis points above the London Interbank Offered Rate, stated sources familiar with the transaction. Largest bank State Bank of India is one of the arrangers for the deal.

The largest automotive company had a consolidated debt of Rs 14,500 crore at the end of June. Meanwhile, the company’s stand-alone debt stood at Rs 13,700 crore according to disclosures made by the company.

A company spokesperson said, “We do not have any guidance to provide you with. Suffice it to say that, as a prudent practice, Tata Motors raises debt capital from time to time to increase its debt maturity profile and reduce its interest cost.” The company’s net automotive debt equity at the consolidated level stood at 0.69 at the end of June, at par with 0.68 at the end of March.

Tata Motors which owns the UK’s premium and luxury brands like Jaguar and Land Rover has managed to bring down its net automotive debt considerably over the past two years, when it stood at Rs 23,750 crore with a debt-equity ratio of 4:1. For Tata Motors, this will be the second big-ticket fund raising event after its $1.6 bilion bond issue for JLR.

The automobile company is eyeing newer markets for expanding its passenger and commercial vehicle operations. Tata Motors and JLR had announced their plans to spend $561 million in building an engine plant in central England in September.



Both companies will jointly spend £1.5 billion over the next five years on new product development and expansion of engine range. Tata Motors is the largest automobile company and is a leader in commercial vehicles. It has products in compact, midsize car and utility vehicle segments.

Source: Stock Market Digital

Tata Motors DVR: Steep discounts

If track record is anything to go by, prices of differential voting rights are likely to move up.

Tata Motors’ differential voting rights (DVR) shares are currently quoting at a steep 45.5 per cent discount to the ordinary shares of the company. In other words, at Rs 181, the ordinary shares are trading at a premium of Rs 82 a share, compared to the DVR shares. Typically, DVR shares trade at lower prices as these have limited voting rights but enjoy higher dividends vis-a-vis ordinary shares. In the case of Tata Motors’ DVR, the holders have a tenth of voting rights but enjoy an additional five per cent dividend, compared to holders of ordinary shares.

While there are no benchmarks, at what price should they trade? In the case of Tata Motors DVR, since its listing in December 2008, the discount on an average has been 34 per cent. However, in the last three years the discount has never breached the 46 per cent level, which is where its DVRs are now trading. If this historical trend holds, either Tata Motors’ share price will fall, or the DVR share price will rise from current levels to narrow the gap. It has happened in seven to eight occasions in the past, and every time the discount has touched 46 per cent, the DVR share price has recovered. Even if the gap has to reduce to its historical average of 34 per cent, the DVR share price should move up by at least Rs 21 per share from the current Rs 98.80. In terms of valuations as well, analysts believe that there is enough room for the DVRs to appreciate, and the risk-reward equation is favourable currently. “Considering the fundamentals and the current valuations, there is not much downside for the Tata Motors’ share price,” says Deven Choksey, managing director of K R Choksey.

Moreover, at the current levels the DVR is offering good dividend yield. In FY12, analysts are expecting a dividend of Rs 4.40 per share for the ordinary share; the company paid a dividend of Rs 4 per share (adjusted for stock split) for FY11. Considering the five per cent additional dividend, DVR holders should get Rs 4.5 per share, which translates into a dividend yield of almost 4.55 per cent as against the dividend yield of 2.43 per cent, in case of ordinary shares.

In terms of price to earnings, DVRs (at four times of the estimated earnings for FY13) are available at half the valuation of ordinary shares. For those considering Tata Motors as an investment, DVRs could be a good option. Even for those holding ordinary shares, switching to DVRs should prove rewarding. In both cases, it becomes risky if the discount widens beyond the 46 per cent level.

Source: Business Standard
  

Tata Motors Ltd to announce Q2 results on Nov 14, 2011; Analysts Estimates

A meeting of the Board of Directors of Tata Motors Ltd will be held on November 14, 2011, to consider the audited Standalone Results as well as the unaudited Consolidated results (with limited review) for the second quarter ended September 30, 2011 of the Accounting Year 2011-2012 (Q2).

Tata Motors Sept qtr PAT seen up at Rs 2134.1 cr: Emkay

Emkay Global Financial Services has come out with its earning estimates on automobiles sector for the quarter ended September 2011. According to the research firm, Tata Motors September quarter net sales are expected to go up by 20.7% at Rs 34741.4 crore, year-on-year, (YoY) basis.

The company's net profit is expected to go up 1.1% at Rs 2134.1 crore on YoY basis.

Tata Motors Sept qtr PAT seen up at Rs 2325 cr: KRChoksey

KRChoksey has come out with its earning estimates on automobiles sector for the quarter ended September 2011. According to the research firm, Tata Motors September quarter net sales are expected to go up by 16% at Rs 31188 crore, year-on-year, (YoY) basis.

The company's net profit is expected to go up 17% at Rs 2325 crore on YoY basis.

Tata Motors Sep qtr PAT seen at Rs 1973cr: Angel Broking

Angel Broking has come out with its earning estimates on automobile sector for the quarter ended September 2011. According to the research firm, Tata Motors September quarter net sales are expected to go up by 21% at Rs 34581 crore, year-on-year (YoY) basis.

The company's net profit is expected to go down by 11.2% at Rs 1973 crore on YoY basis.



Source: MoneyControl

Tata Motors Share trading at big discount: Reuters

LONDON: Tata Motors is in no rush to replace its CEO, who stepped down on Sept. 9. It is not the only gap at India's largest auto maker. Shares in the firm, which also owns Jaguar and Land Rover, trade at a big discount to peers. A new CEO might find value by integrating the business more fully.



Tata Motors' market value has slumped 30 percent over the past six months. Its enterprise value sits at a paltry 3.2 times estimates of 2012 EBITDA, based on data from InFinancials. The equivalent number for Ashok Leyland, an Indian competitor, is 6.3. JLR is perhaps better compared to BMW which has a ratio of 7.6.

The market values Tata Motors at around $10 billion. Yet JLR alone would be worth around $13 billion if its value matched its peer group. The rest of Tata Motors may fetch $7 billion if it was put on a par with its other Indian automakers. True, it is easy to miss important differences of detail when drawing parallels such as this. But is Tata Motors really worth no more than half that which peer comparisons suggest it could be?

Concerns over JLR's future sales in the UK and US in light of the current economic climate partly explain the share price discount. Given the level at which shares in the firm trade, a demerger can't be ruled out. There were rumors earlier this year that JLR might be listed separately in London. But the alternative is to work harder at finding real benefits of running the two units together. Costs shared in development of new engine technology and in building markets in other emerging economies -- especially China -- are a start, but no more than that.



Tata acquired JLR in 2008. It deserves credit for returning the upmarket marques to profit. And the 1.15 billion pounds Tata paid Ford now looks like a bargain. But instead of soft peddling on replacing Forster and running the two units as parallel concerns, Tata ought to step up the search for a new CEO. And fight harder for the synergy benefits that underpinned the logic of the JLR purchase in the first place. 

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)

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Tata Motors: Must Buy
Tata Motors Shares split 1:5 from 13 Sep 2011

Tata Motors hired SBI to Raise $500 Million Loan From Banks

Tata Motors Ltd. (TTMT), the Indian owner of Jaguar Land Rover, hired State Bank of India to help it borrow $500 million in a term loan, according to a person familiar with the matter.

The two-part facility consists of a $200 million portion which matures in five years and a $300 million portion which matures in seven, the person said, asking not to be identified as details are private.

Lenders committing $20 million or more to the five-year loan will receive margin and fees for a so-called all-in payment of 260 basis points more than the London interbank offered rate while those contributing that amount or more to the seven-year facility will receive a rate of 280 basis points more than Libor, the person said. Tata Motors will use the proceeds for general corporate purposes, the person said.

Meetings to market the loan to other lenders will be held in Taipei on Sept. 5, Singapore on Sept. 6 and London on Sept. 21, the person said. Other meetings may also be arranged in Dubai, the person said.

State Bank of India (SBIN) expects to complete syndication in mid October and Tata Motors will likely sign the loan later that month, the person said.

Tata Motors resumes production of Tata Nano at Sanand

Earlier today, Tata Motors released a press report stating that the production at their unit in Sanand near Ahmedabad has resumed. About a fortnight back, Tata Motors had shut down the production at the Sanand unit completely.

Though Tata Motors is now saying that the Sanand unit was shutdown in order to carry out some urgent maintenance activity. According to Tata Motors spokesperson, "Production at Sanand plant has resumed after a temporary suspension for about a fortnight."

Tata Motors is the 3^rd largest car manufacturer in India currently. So by shutting down their entire manufacturing unit for 2 weeks they in a way slowed down their growth rate in the country. According to the spokesman, the reason behind shutting down the unit was done due to , "This (suspension of production) was done for maintenance and to rationalise and align inventory."

But we do not think that Tata Motors would have suffered huge losses due to the shutdown as sales of Tata Nano are already on a decline. Tata Nano sales as the month of July, declined by 64%, compared to sales made in July 2010.

Tata Motors Shares split 1:5 from 13 Sep 2011

Automobile giant Tata Motors Tuesday proposed to split its shares worth Rs.10 each into five shares with the value of Rs.two each.

"The board of Tata Motors has approved Sep 13, 2011 as the record date, for the purpose of sub-division of the ordinary shares and 'A' ordinary shares, both having face value of Rs.10 into five shares having face value of Rs.2 each," the company said in a statement.

According to the company's regulatory filing at the Bombay Stock Exchange (BSE), its annual general meeting (AGM) passed a resolution for sub-division of 70,00,00,000 ordinary shares and 20,00,00,000 'A' ordinary shares into 3,50,00,00,000 ordinary shares and 1,00,00,00,000 'A' ordinary shares both of Rs.2 each.

Tata's Nano, Ace to roll out of Brazil, Indonesia, East Europe

 

World's cheapest car Tata Motors' Nano and the company's popular light commercial vehicle (LCV) Ace are set to roll out from new factories around the world, as early as next year.

In order to increase global penetration, Tata Motors is planning to set up assembly operations in Indonesia and Brazil, apart from Eastern Europe, Mr Ratan Tata, Tata Motors' Chairman, told shareholders at the automaker's annual general meeting (AGM) here on Friday.

“We are looking at assembly facility for passenger vehicles in South-East Asia (Indonesia) and some parts of Eastern Europe. We're looking at how to maximise penetration for the Nano and the Ace,” he said “We're also looking at Latin America (Brazil). We plan to grow both in India and in other countries.”

Mr Carl-Peter Forster, Tata Motors' Managing Director and Group Chief Executive Officer, told Business Line on the sidelines of the AGM that the company's global assembly plans, starting with Indonesia, could begin “likely by next year.”

To counter the erratic domestic monthly sales performance of the Nano (between 3,000-7,000 units on average and peak of 10,012 units in April, 2011), the company has started exports, starting with Sri Lanka and Nepal. It is also starting solo Nano distribution centres in smaller towns. 

Total domestic sales of the Nano has crossed one lakh units since the 2009 launch, but the company's 2.5 lakh unit per annum capacity plant at Sanand is currently lying under-utilised.

Asked by shareholders about the future of its manufacturing and distribution joint venture with Fiat in India, Mr Tata said both Fiat and Tata Motors are “re-looking at the contractual obligations, in order to make it more realistic for both parties.”

“Yes, it is showing losses. The venture was setup with the assumption that we will manufacture together and market their products … the volumes did not work because of the downturn and did not take off the way we thought,” he said. 

Mr Tata said that the company is taking several steps to increase its market share. These include more advertising, innovative marketing strategies and increasing its dealer network especially in smaller towns and rural areas. 

On global new product plans, he said that both Tata Motors and Jaguar Land Rover are working on hybrid and electric cars. Tata Motors will be launching an electric car in UK and Norway soon, a small city car based on Pixel concept which will have to both electric and petrol power trains. 

Source: Tata's Nano, Ace to roll out of Brazil, Indonesia, East Europe by next year

Tata Motors: Must Buy

Investors with a long-term perspective can buy the Tata Motors stock. At the current market price of Rs 801 it trades at a PE of about 5.5 times its trailing twelve month consolidated earnings. Improved cost structure, product and market mix at JLR (Jaguar Land Rover), a low debt-to-equity ratio and focus on the less cyclical domestic LCV ( light commercial vehicle) market strengthen the case for investment. Unease about moderation in the domestic auto industry and a slowdown in JLR’s key markets of US and Europe coupled with broader market volatility has seen the stock hit its 52-week low of Rs 785 earlier this month. The first quarter results too have been sedate , with the consolidated year on year net profit growth at less than one percent.

With the steep correction in the stock price, the apprehensions seem to have been factored in. Moreover, JLR has continued to do well operationally with a top line growth of 20 per cent year on year and EBITDA margins, at around the same 15 per cent recorded in the June 2010 quarter. Retail sales grew by 7 per cent, in volume terms during this period. JLR’s 3 per cent year on year drop in profits has been due to an unfavorable revaluation of foreign currency denominated assets and liabilities and higher taxes. One-time costs such as expenses incurred on the issue of bonds and pre-payment charges on high-cost debt repaid have also capped profit growth.

Better product, market mix

Going forward, questions on the financial stability of some countries in Europe and concerns on the raising of the debt ceiling in the US might slowdown the volume growth for JLR in these regions. Both UK and Europe has seen demand soften in the first quarter While the first quarter volumes have been partly affected by the impending launch of the MY12 (model year 12) products and engine constraints for Jaguar, the company hopes to mitigate the risk of a slowdown by rebalancing its product and market mix. September 2011 would see the launch of the Range Rover Evoque, a compact SUV, and an entirely new segment for JLR. The Evoque already has about 18000 booking worldwide. The 2012 Jaguar XF will also be launched shortly along with other refreshed JLR products. In terms of markets, the company is focusing on emerging markets like Russia and China. Having grown at 55 per cent and 48 per cent respectively in the first quarter, these emerging markets currently bring in about 22 per cent of the total volumes. On the operating front too, the company is better equipped to handle a slowdown than last time having brought about variety reduction in materials, standardisation of parts across models and platforms, improved sourcing from low cost destinations (at over 20 per cent currently) and setting up assembly plants in countries like India . The consolidated net debt to equity in the core automotive business (excluding the finance arm) has also been brought down to 0.69 as on June 30.

Domestic initiatives

Back home, the company has grown better than the industry in both the Medium Heavy Commercial Vehicles (MHCVs) and the S&LCV ( Small and Light Commercial Vehicles) segments in the first quarter, growing by 5.5 per cent and 19 per cent. Considering the high interest rates, slow industrial output and the flat freight rates, a further moderation in the CV industry is on the cards. But infrastructure spending and the catching on of the hub and spoke model may keep demand for tippers and trailers going. It is also banking on the strong demand for the less cyclical SCVs to bring in volumes. Capacity expansions for Ace/Magic, and the ramp up of Ace Zip and Magic IRIS is expected to provide further impetus to growth. Competitive pressures on the passenger car segment, however, remain. The company hopes regain lost market share by expanding dealer networks to semi-urban/rural areas, by more focused promotion efforts and through launches such as the Aria two-wheel drive, Vista refresh, new Safari and Manza limited edition. The softening of commodity prices also indicates that margins pressures for the standalone entity may ease up from hereon.

Tata Motors - Q1FY12 Standalone & Consolidated Result

Tata Motors Limited

NSE: TATAMOTOR

BSE:  500570

NYSE: TTM

Nasdaq: TTM

Standalone & Consolidated result for the Q1 FY12.

Standalone Result

• The standalone gross revenue of the Tata Motors Ltd increased 14.4 % to Rs. 12925 Cr for the quarter ended 30th Jun 2011 against Rs. 11297 Cr for the quarter ended 30th Jun 2010. But the same is significantly lower by 17.9% than the previous quarter (Quarter ending 31st Mar 2011 has net sales of Rs. 14,632 Cr).  
• The standalone net profit of the Tata Motors increased insignificantly by 1.4% to Rs. 401.28 Cr for the quarter ended 30th Jun 2011 against Rs. 395.72 Cr for quarter ended 30th Jun 2010. But the same is significantly lower by  30.0 % than the previous quarter (Quarter ended 31st Mar 2011 has net profit of Rs. 573 Cr).

Our analysis on standalone result of Tata Motors:

1. The standalone revenue & net profit has always declined for Tata Motors in the first quarter of the Financial Year in the past 4 Years. Hence it is not a major issue.
2. Tata Motors said cost pressures, including commodity price increase, resulted in a reduction in the operating margins to 8.4% (against 11.28 % in the same quarter of previous financial year),  and an Operating Profit (EBITDA) of Rs. 999 crores in the quarter, declining by 15.0% over Rs. 1,175 crores in the corresponding quarter of the previous year.
3. Tata Motors' sales (including exports) of commercial and passenger vehicles for the quarter stood at 197,606 units, representing a growth of 3.8 %.
4. In the domestic market, commercial vehicles sales increased 13 per cent to 113,186 units as against 100,186 units in the same quarter of previous financial year. The company's market share in commercial vehicles reduced to 60.1% as against 61% in the same quarter of the previous financial year.
5. In the domestic market, Passenger vehicles sales (including Fiat, Jaguar & Land Rover vehicles) declined  10.7 % to 69,529 units as against 77,858 units in the same quarter of previous financial year. The company's market share in commercial vehicles reduced to 11.9 % as against 13.3 % in the same quarter of the previous financial year. 

Consolidated Result

• The net revenue of the group increased by 24.1 % to Rs. 33572 Cr for the quarter ended 30th Jun 2011 as against Rs. 27056 Cr for the quarter ended 30th Jun 2010. But the same has declined against the previous quarter by 6.1 % (Net sales for the quarter ending 31st Mar 2011 stood at Rs. 35848 Cr).
• The net profit of the group increased by 0.55 % to Rs. 1999.62 Cr for the quarter ended 30th Jun 2011 as against Rs. 1988.73 Cr for the quarter ended 30th Jun 2010. Net profit declined by 24.47 % QoQ (Net profit for the quarter ending 31st Mar 2011 stood at Rs. 2638 Cr).

Our analysis on consolidated result of Tata Motors:

1. Similar to the standalone case, the net profit of the group has always declined in the first quarter of the financial year from past 3 yrs, though this may be the biggest fall. 
2. JLR revenue rose 19.9% to 2.712 billion Pounds in Q1 FY12 against 2.262 billion Pounds in Q1 FY11. Cost pressures and impact of exchange rates resulted in a marginal reduction in the operating margins to 15.1%. EBITDA rose 16.9% to 408 million pounds in Q1 June 2011 over Q1 June 2010. Profit after tax fell 3.09% to 219 million pounds in Q1 June 2011 over Q1 June 2010. 
3. n May 2011, JLR successfully completed issue of 7-year and 10-year Bonds aggregating GBP 1 Billion, part of which has been used for refinancing of existing loans and general corporate purposes.
4. A new vehicle assembly plant was inaugurated in Pune, India, in May 2011. The facility at present is assembling Land Rover's Freelander 2 vehicles supplied in Complete Knock Down (CKD) form, from the Halewood manufacturing plant in Liverpool.
5. Tata Daewoo Commercial Vehicles Company reported net revenues of Rs. 880 crore and a profit after tax of Rs. 16 crore for Q1 June 2011.  
6. Tata Motors Finance, the company's captive financing unit, reported net revenue of Rs. 240 crore and a profit after tax of Rs. 49 crore for Q1 June 2011.
7. JLR sold 62090 units in quarter against 57,153 units (rise of 8.63 %).
8. Jaguar has announced the new 2.2 litre diesel engine in the 2012 model year Jaguar XF and has also confirmed its decision to build the C-X75 hybrid supercars. The much awaited Range Rover Evoque, being launched in September 2011, has received significant expression of interest and around 18,000 bookings. It already received the "Car of the Year" award from the UK's largest auto magazine, AutoExpress.
9. The company incurred heavy more marketing expenses in the quarter for the promotion of new vehicle Range Rover Evoque.

Tata bring Jaguar Land Rover back on Track

When Tata, the Indian company known for the world’s cheapest car, took over British luxury brand Jaguar Land Rover, concern spread. However, profit and sales are up by a quarter. 

 

British luxury car maker Jaguar Land Rover (JLR) is building profits fast, increasing turnover and launching crucial new models at an unprecedented rate.

The Range Rover Evoque will probably become the biggest-selling Land Rover model, and has received a near-rapturous press and public reception. Jaguar has just launched its four-cylinder diesel version of the excellent XF saloon, which will go head-to-head with the bestselling versions of the BMW 5-series and Audi A6 across Europe.

Jaguar has also committed itself to launching, next year, a new sports car smaller and cheaper than the XK. Those in the know say that it’s not retro, but it goes a long way to recapturing the desirability of the E-type. And after that comes a small Jaguar family car to tackle the huge BMW 3-series market.

Finally, in a display of confidence, Jaguar is taking orders for 250 examples of a supercar based on the styling of the C-X75 concept car that wowed the 2010 Paris motor show. Priced at a staggering £700,000, it’s going to be a highly fuel-efficient hybrid. The company is also committed to hybrid versions of its regular vehicles, starting with the all-new Range Rover, due in 2012.

Even without any of these new models, JLR’s annual report, issued this week, showed that in the year to March 31, revenues were up 51 per cent to £9.9billion, profit after tax up 24 per cent to just over £1billion, and vehicle sales up 26 per cent to 241,000. It employs 18,000, and is taking on 1,000 engineers this year.

Yet in mid-2008, when the company was taken over by its present owners Tata of India, commentators were largely pessimistic. People said boutique car companies needed the backing of huge conglomerates to get necessary purchasing economies and technological backing. JLR had been part of Ford, so could call on the parent’s environmental technology, or the safety research of fellow Ford subsidiary Volvo (now Volvo is Chinese-owned).

JLR’s main competitors, BMW and Mercedes, make more than a million cars a year each. Audi also makes a million, and it’s part of the VW Group, an order of magnitude larger again.

There seemed very little scope for synergy between Jaguar and Tata Motors. It’s one of the world’s largest truck and bus makers, and builds the Nano, the world’s cheapest car. But not much in between.

And yet, as Carl-Peter Forster, a former BMW director who’s now Tata Motors’ chief executive, says of JLR: “Since I came here I’ve learned that the most overrated virtue in the motor industry is synergy.” He says that JLR can work in canny ways with suppliers to access mundane yet important technologies such as transmissions for hybrid cars. Meanwhile, its engineers can develop unique selling points, such as its industry-leading lightweight aluminium body structures.

JLR’s success appears to hinge on the support of Ratan Tata, chairman of the Tata Group. He shows a close and, insiders say, positive interest in model development. And – thanks to his $70billion conglomerate that ranges through cars to steel to IT and consulting – he has pockets deep enough to pay.

“The Jaguar and Land Rover brands are undervalued”, says Forster. “So JLR is investing £1.5billion per year over the next five years in developing and tooling up for new products. As a percentage of turnover, this figure is higher than the industry norm.” Actually, it’s probably higher than regular stockmarket shareholders would stand for. Just as well JLR’s shareholder takes a long view.

In the Ford days, investment was always done on the basis of whether it would in itself bring a return.
“You can’t develop a premium brand purely from a business case,” Forster says. “It’s difficult to create emotional pull in a brand, but Jaguar and Land Rover already have it. That’s why it’s worth investing.”

Source: Jaguar Land Rover is back on track