Mike Stevens | Jul 4, 2009

INDIAN AUTO MAKER Tata Motors' newest acquisitions, Jaguar and Land Rover, appear to be doing more harm than good for the company right now.

Despite strong sales of Tata products in India, the two British marques have been hit hard by the economic downturn and are spreading red ink over Tata's books.

Tata’s end of financial year results, incorporating Jaguar and Land Rover for the first time, reveal that India’s largest car company is carrying a loss for the first time in seven years.

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While the domestic division in India managed to make a profit, the group as a whole reported a loss of 25.1 billion rupees (AU$661.8 million). Tata chairman, Ratan Tata, remains positive about the company’s new assets however.

“It was a terrific decision that we took to bid for these two brands and own them,” Mr Tata told reporters attending the launch of the Jaguar and Land Rover brands in India.

“We are going through a downturn today that has unfortunately somewhat condemned Jaguar and Land Rover in perception, [but] that perception is very wrong.”

Globally Land Rover sales have fallen 39 percent, Jaguar figures are down four percent, bolstered somewhat by the launch of the XF range.

In Australia the June 09 VFACTS figures reveal that Land Rover has sold 377 vehicles (YTD), down 27.9 percent; Jaguar however saw a slight increase with 437 sales (YTD) - representing a gain of 4.8 percent on the same period in 2008.

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Some analysts are putting a positive spin on Tata’s results. Forced into rationalising its operations, the Indian firm has upped its off-shore sourcing from 23 to 35 percent, mainly from cheaper emerging markets, as well as cutting 2000 positions within the company.

Tata is currently seeking a £340 million (AU$697.9 million) loan from the European Investment Bank to support the two British brands, however it is estimated that up to AU$1.2 billion dollars could be required with additional funds required in coming years.

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