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Tata Motors to Pay JLR's Research and Development Bill

By Motortrend India Staff   |   07 January,2010

Tata Motors will pay £400 million (Rs 3,200 Crore) annually for R&D and product development in its British brands Jaguar and Land Rover. This is over and above JLR's working capital requirements and Capex.

“Our annual R&D costs are around £400 million including product development spend. Bulk of the investments for our 2010 model year products, which are currently being launched, was already made by Ford before the change of ownership,” said Phil Popham, managing director of Land Rover.

The product spend does not, however, include the £340 million funding that Jaguar Land Rover had received from the European Investment Bank. “That is a separate, stand alone funding for significant investment in environment technology which is separate from our annual spend on R&D,” said JLR spokesman Paul Chadderton.

“Jaguar Land Rover is an independent business unit within Tata Motors unlike before when we were a Ford Motor Company brand with no independent existence,” he said. As a result the British subsidiary is now looking for working capital loans to fend for itself instead of depending on parent Tata Motors for support.

Although JLR has tied up working capital loans from banks such as SBI, GE Capital, Standard Chartered and Bank of Baroda, there is still significant support that comes from Tata Motors. At the press conference in the Auto Expo, Tata group chairman Ratan Tata reiterated that support saying, “Nobody makes an acquisition based on short term opportunities to add value long term. The integration of the two companies will give them an opportunity to make their destinies. We want to rekindle Jaguar's roots with sports cars and speedy cars. JLR will be profitable and together we will be a viable automobile company.”

JLR has already started work on its next generation of models like the LRX concept and the compact model RR. Also being developed is a sports car though there's still “much work to do on that” said Jaguar MD Mike O’Driscoll. Mr Tata is closely involved with the design and development of the next generation of products at JLR. Like the Nano he takes a personal interest in the nitty gritty.

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