Tata posted an unexpected loss in its fiscal third quarter (down 32 per cent) which, according to Managing Director Ravi Kant, could delay the launch of its Nano budget model indefinitely.
It’s worrying news for the global car industry following the Indian brand’s recent acquisition of Jaguar and Land Rover brands from Ford Motor in June 2008.
Tata temporarily closed some plants in the December quarter to prevent a build-up of stock but as local vehicle sales fell to 98,760 units in the quarter (from 144,608 a year earlier), coupled with a sales fall at Jaguar Land Rover (down to 49,000 from 76,000 year ago), the brand now faced a less than bright future.
Earlier this month, Jaguar Land Rover also announced it would cut 450 jobs.
Chief financial officer C. Ramakrishnan said the company was in discussions with banks to refinance $2 billion of bridging loans, having already paid back $1 billion.
The loans, used to fund the $2.3 billion acquisition last year of Jaguar and Land Rover from Ford, need to be repaid by June.
Tata Motors posted a loss of 2.63 billion rupees ($54 million) in the December quarter, which included a foreign exchange loss of 2.27 billion, from a 4.99 billion profit a year earlier.
Tata said auto demand in India had severely contracted as a result of financial market turmoil and weakening growth.
“I do believe we had the worst in the December quarter, and don’t expect to see [a repeat of] anything like that. We are on a positive trend on the ascendancy curve but it’s going to take time,” Kant said of the Nano, “It’s a fairly complex project.”
No date has been set for the rescheudling of the world’s cheapest car, for now it’s wait and see.