The only thing keeping Tata Motors alive and kicking is its British acquisition

Shine on you crazy diamond.
Shine on you crazy diamond.
Image: AP Photo/Jae C. Hong
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Quarter after quarter, it’s the same story for Tata Motors: Jaguar and Land Rover (JLR) to the rescue.

On Nov. 09, Tata Motors announced that the company’s profit for the July-September quarter grew nearly three fold on the back of higher sales at JLR. During the quarter, JLR’s revenue grew by over 11% to £6.3 billion (Rs53,862 crore), helped mostly by growing retail sales. Once again, the British carmaker had come to the rescue of its Indian mothership.

Tata Motors acquired JLR for over $2.4 billion almost a decade ago in 2008, in what was then seen as an audacious attempt by an Indian automaker to make its mark in the global automotive arena. Since then, the marquee British brand has gone on to become the main cash cow for Tata Motors’ floundering fortunes, contributing over 75% of the company’s turnover in recent quarters.

“JLR is essentially Tata Motors now,” said Deepesh Rathore, co-founder of automotive consultancy Emerging Markets Automotive Advisors. “Analysts don’t look beyond JLR’s performance now. The reason is that JLR also has the best margins amongst Tata Motors’ businesses. The other businesses, like domestic passenger cars, are too small or cyclic (like commercial vehicles).”

Tata Motors has been facing a prolonged crisis in its home market, with the automaker struggling to sell its passenger cars in the subcontinent. The company’s market share, too, has seen a decline. It currently accounts for about 5.2% of the Indian passenger car market, making it the sixth-largest car maker in the country.

Since last year, however, Tata Motors has been in the midst of a turnaround plan that includes new and more reliable products, and a focus on better customer experience. The company now claims that the turnaround has begun to work with revenues growing 30% without JLR’s contribution during the quarter, while operating profits rose 189%.

“In terms of overall financial performance, high volumes, favourable product mix and rigorous cost reduction has led to a positive standalone earning before interest and tax (EBIT) and hugely narrowed losses,” a spokesperson for Tata Motors told Quartz. “Since this is the first quarter that the turnaround strategy has been fully implemented, the results going forward will only get better.” This year, the company also won a contract from the Indian government to supply electric cars.

“With our turnaround plan in full action, we are seeing encouraging results and we will continue to drive sustainable profitable growth to meet our future aspirations,” Guenter Butschek, CEO of Tata Motors, said on Nov. 09. But all that will be nothing without JLR.