Tata plans big for Jaguar and Land Rover

Tata Motors is planning to spend big bucks on the luxury cars, Jaguar and Land Rover. India's biggest vehicle maker Tata is planning to spend around Rs 7,300 crore this year towards the research and development (R&D) expenses on JLR. This is about 10-11 per cent of the two brands’ annual revenue. The research and development expenses are expected to reach up to 8,800 annually.

Before JLR was sold to Tata Motors for Rs 10,200 crore in early 2008, the erstwhile owners of JLR, Ford Motor Company had planned to spend only Rs. 3,200 crore (exchange rate of 2008) towards the research and development for the two brands.

Commenting on the decision Chief Financial Officer, Tata Motors, C Ramakrishnan said that there is a high probability that going forward the investment towards the research and development may follow an upward trend as new programmes and new projects start off. He further added that around 10 to 11 percent should be reinvested towards the product and technology development now and the amount of investment should increase going forward. He also informed that at present the two brands generate around £10 bn annually.

Four products are currently being developed under the Jaguar brand which include a small sports car, station wagon, entry level sedan and a crossover. This is not it ,the engineers are also working towards developing an electric sedan called C-X75. The electric sedan is likely to return 900 km to a charge, with a top speed of 320 km/hr.

Sports utility vehicle brand land rover is also developing models which are expected to hit the roads by 2011 and in 2012-13. The brand is planning towards introducing an alternative of the hybrid cars as well as improving the current line-up.

Land Rover is also thinking on the lines to develop armored vehicles exclusively designed for armed forces across the globe. Automotive companies have to incur added expenses on R&D to adhere to the stricter norms for the Western countries effective 2012.

JLR at present is spending three times more than Tata Motors in India, which is at Rs 2,500-3,000 crore annually towards R&D. Despite of the severe financial crunch two years ago, the Mumbai-based company did not hesitate on spending extravagantly into the two brands.

In retrospect, the Indian companies have increased its spending on the R&D with the introduction of various products and improvement in engine technology.

Both premium brands are generating enough funds. The positive cash generation allowed Tata Motors to repay debt and bring down the debt-to-equity ratio to 0.8 as of December 2010.

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