Tata Motors has denied reports that it is planning to sell Jaguar and Land Rover brand. These speculations come at a time when Jaguar Land Rover (JLR) has reported losses to the tune of $3.4 billion while share prices of Tata Motors have also fallen.
Tata Motors had acquired JLR from Ford Motor Company in 2008 for net consideration of US$ 2.3 billion. Tata Motors also derives close to 80 percent of its revenues from JLR and is hence highly dependent on the UK luxury vehicle brand.
There is no truth in the rumours that the company is seeking to divest its stake from JLR despite the fact that JLR has reported loss. Losses has resulted in JLR going on a cost cutting spree, with over 4,500 jobs axed late last year. These losses resulted in a fall of 17 percent in Tata Motors stocks which led to a cut in earnings by around 35 percent.
A major reason for losses incurred by JLR are the Brexit, US China trade war and a general slowdown in global economy. China which has been the biggest market for JLR saw sales volumes dip by as much as 47 percent which caused a deep impact on company sales.
Tata Motors reported its biggest ever quarterly loss by $4 billion last month due to lower sales in China. JLR total debt increased to $6.15 billion in the third quarter of FY19 as compared to $5.01 billion in the same period of the previous year while operating profits also dipped substantially.
Reuters reported recently that French car maker Peugeot is open to talks of purchasing JLR. This is what Peugeot spokesperson said, “On principle we are open to opportunities that could create long-term value for PSA Group and its shareholders.”
This is what Tata said, “As a matter of policy, we do not comment on media speculation, but we can confirm there is no truth to these rumors.”
