Tata Motors results

A few years ago, Indians were surprised and proud to learn that over 95% of Suzuki's global profits were coming from Maruti Suzuki. Maruti Suzuki was the crown jewel of Suzuki.

Tomorrow, we might see a similar situation, but from opposite perspective. Tata Motors bought Jaguar Land Rover (JLR) paying about 2 Billion Pounds. For the year ending March 2011, JLR is expected to have made 1.1 Billion Pounds in profit. In fact, some analysts privately think that even 1.1 Billion Pounds is a conservative number, and the actual performance could be closer to 1.2 Billion Pounds! Their reasoning is that JLR already had over 750 million Pounds in profits at the end of the 3rd quarter, and the 4th quarter has seen all time record sales in pretty much every single market where JLR operates. Just going with their first 3 quarter run-rate would take them near 1.05B Pounds - and with the significantly better performance in the last quarter, they should have made a lot more money than that.

Just imagine - in FY11, Tata Motors has recovered over half of their investments in JLR. In FY10, JLR was in a desperate situation, and needed help from UK government to survive! Tata Motors has put in place a long term cost cutting and cross synergy plan - running from 2009 to 2014. Within 2 years of this plan, the results are so spectacular. One can only imagine what the performance would be over next couple of years!

Tomorrow, we will likely see news that JLR is generating over 95% of profits of Tata Motors. When analysts look at Tata Motors, there is very little reason to look at the Indian operations today!

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