Tata Motors and JLR to develop engines, vehicles

Tata Motors has kickstarted a move to jointly develop engines and vehicles with its UK subsidiary, Jaguar Land Rover, over two years after its $2.3-billion acquisition of the British marques.

"Initiatives have been taken on joint development programmes for engines, vehicles and platforms, which would leverage skills of the company (Tata Motors) and JLR, resulting in synergies in operations of the company and its subsidiary," Tata Motors said.

The company informed its shareholders about the development, and sought their approval for raising up to Rs 4,700 crore (Rs 47 billion) in long-term funds.

Tata Motors, however, did not elaborate on the various programmes that have been initiated with JLR and other subsidiaries.

"These would yield substantial savings in the operations of the company and its subsidiaries," it said.

Tata Motors had acquired the two iconic brands from US car giant Ford in 2008 for $2.3 billion.

The company singled out the role played by its non-executive vice-chairman, Ravi Kant, in bringing about synergies between Tata Motors and JLR. In recognition of his achievements, the company's board approved a remuneration of pound 75,000 (about Rs 51 lakh) per annum for Kant.

"As vice-chairman, he (Kant) has been performing a key function in overseeing and coordinating the operations of JLR, besides reviewing the existing manufacturing processes, which would result in substantial cost reduction and rationalisation of platforms," the firm said.

Tata Motors had appointed Kant as advisor with effect from June 2, 2009.

As part of its strategy to expand the company's domestic and global footprint, Tata Motors had announced it would invest about Rs 10,000 crore (Rs 100 billion) in the next two-three years in product development, facility modernisation and other capex purposes.

Earlier, JLR had announced plans to increase sourcing of components from low-cost countries, including China and India, in the coming years to reduce input costs.

"Material cost is a significant challenge and JLR previously said over the next few years it would grow the amount of materials and components it purchases from lower cost countries," a JLR spokesperson had said.

To facilitate sourcing from India and China, JLR had opened purchasing offices in the two countries in 2009.