What is the real issue regarding shortage of engines?
We have the issue on engines (supply) for JLR. Suppliers in Europe cut back their capacity rapidly to adjust to the demand of original equipment makers). A year ago, we had no idea when we would come out of the crisis, especially in Europe. The cutback was an amazing pace. But now that demand has picked up, they are in short supply. The downturn was faster but the upswing is even faster. We are working our partner, Ford, on how we can de-bottleneck. I have 15,000-20,000 customers who want a product but are not getting it. I have angry letters coming to me regarding this.
Is it true that the engine contract with Ford is till 2013?
It is not just one contract; it's multiple contracts and they have different times and it extends beyond 2013. We are currently giving Ford the volume (estimate) for 2013. Whenever the contract comes up for renewal, we will renew it.
Volumes of JLR have risen tremendously lately. Would you look to revisit your decision of closing one of the plants in the UK?
We have three plants in the UK, which could be combined into one plant, into 350,000 units. This will give us great flexibility and reduce cost. We continue to explain to the unions and the local politicians that it is a very sensible move, while not resorting to any job losses. It's not a plant closure but a merger of two plants 20 km apart.
What difference has Tata Motors brought to the manufacturing process at JLR?
If you look at the balance sheet and the cost structure, with a very simple calculation you will find that Tata Motors is working about half of where General Motors is. The percentage of fixed cost to total cost is significantly lower than at any of the major international auto companies. It is a company with a very different cost structure.
Which are the areas you have focused on for cost reduction?
Cost reduction has to continue, it is a permanent initiative. The typical way of doing it is to squeeze the suppliers but that is not a good strategy. The right way is to talk to your suppliers and find how do they reduce cost and in turn give us the best cost. We have learnt a lot of lessons on the Nano, which could be passed on.
Have you factored in the possibility of making Tata branded products out of the new merged plant?
Tata branded cars we will not manufacture out of the UK.
Does the company see a possibility of an IPO for JLR?
We have ambitious plans for JLR and Tata Motors and they need capital. We will work on all the options to get that capital on board. But no decision has been taken so far.
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