Tata Motors bets on Nano, JLR in a "daunting" year

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Rising inflation and high input costs are going to put pressure on the earnings of Tata Motors even as high interest rates and slowing demand may prove to be a dampener to its business expansion plans.

However, Tata Motors is focusing on completing the acquisition of the British marques from US-based Ford Motor Co. and engineering its seamless integration into itself.

"Tata Motors will also have to absorb the cost of the JLR acquisition, and deal with its integration," said Ratan Tata, chairman, Tata Motors, in the company's annual report published in its website on Tuesday.

According to Tata, for funding the $2.3 JLR acquisition, the company is focusing on raising Rs.7200 crore ($1.8 billion) through rights issue and an additional $500-600 million through "international offering of equity and/or quasi equity."

JLR, Tata said, have "tremendous unfulfilled market potential" and would add "global scale, profits, and visibility to Tata Motors, enabling it to take its place in the global auto industry as a credible international automobile company."

"Tata Motors plans to re-kindle Jaguar's previous image connected with its sports car heritage," he said.

While delay in launches of new variants of passenger cars have led to decline in sales and market share of the company, lack of supply of powertrains and components led to a loss in market share in commercial vehicles segment.

However, introduction of new Indica variant and the introduction of a new mini van and mini people's carrier will help the company regain its market share, Tata said.

According to Tata, "Higher fuel prices will negatively impact both commercial vehicles and passenger car sales" even as "an unprecedented increase in material costs in steel, tires, among others" would force it to increase the prices of its vehicles.

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