Tata Motors posts loss. Nano launch might be delayed

Tata Motors has posted a loss of 263 crores for the December quarter. The previous loss posted was of 153 crores in 2000-01. Tata Motors is not the only company which is facing some uncertain future in this heavily intertwined global economy.

The big 3 automakers in the US are facing an uncertain future. Some even say that the Detroit companies might not even see the whole of 2009. They might be bailed out, re-structured, merged and do whatever it takes to keep the pride of America going. But the bottom line is they cannot continue with the same they have done so far.

Not even the world’s largest car maker Toyota is spared from the brutal economy. Toyota posted its first loss in 70 years. Toyota is known for its adaptation to the needs of the consumers which placed it at the number one spot ahead of General Motors only recently.

Toyota’s Prius is one of the most talked about hybrid vehicle. Not even that kind of innovation saved Toyota. To get through the tide Toyota is looking for $1.4 billion in savings per year. It is recommending the workers to take the stairs to save electricity. Workers are wearing sweaters to reducing the heater costs. The press meets are done in the parking lot.

That is the Toyota way of doing things. Tata Motors is taking a cue from Toyota book. It has pledged to reduce the costs by 1000 crores in the next 3 years. Is that enough? May be not. Given the cash situation company it has much more is required.

Consolidated debt of Tata Motors is at 25,000 crores. This includes the debt incurred by the Jaguar-Land Rover acquisition. This does not include the write-off of the Nano plant fiasco. Adding to the worries is the delay of Nano. Speculations are that Nano’s launch might be delayed by a year.

It says high raw material cost and the credit crunch has put them in this position. The debatable choice of acquiring JLR should be included to that list.

All is not bad news for Tata Motors. It has received an order from Delhi Transportation Company for 1625 ultra low-floor buses. The order is worth 2200 crores. Though good news, this order alone cannot pull the company out of its debt. There has to be more and it has to be fast.

*Image source : Pakitt