Further, a break-even scenario for the luxury car maker could substantially boost the earnings of its parent Tata Motors.
“We expect a recovery in JLR volumes by fiscal year 2011, led by the anticipated recovery in the global economy as well as new model launches.
“We believe the twin effect of volume-recovery and aggressive cost cutting measures would likely lead to break-even for JLR by fiscal year 2011,” brokerage firm IDFC SSKI said in a report.
Slowdown effect
Tata Motors acquired JLR from American car maker Ford Motor last year for about US$2.3 billion.
JLR has been severely hit by the ongoing financial turmoil and has witnessed falling sales. Moreover, Tata Motors reported a loss of Rs 2,300 crore for the fiscal year 2009, primarily bogged down by the losses at JLR.
“Given the substantial stress on Tata Motors Ltd’s earnings on account of losses at JLR (TML posted a Rs 23 billion loss in fiscal year 2009 due to the Rs 22 billion loss at Jaguar Land Rover), even a break-even situation at JLR is expected to significantly boost Tata Motors Ltd’s earnings going forward,” the report said.
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