Tata Motors may already have a multi-year cost cutting agreement with workers in place, but it is still trying a new method to make Jaguar Land Rover (JLR) financially stable. After losing over $1 billion last year, it has now roped in consulting firms to solve Jaguar Land Rover's problems.

According to a CNBC-TV18 report, the firms that have been hired by Tata Motors are KPMG and German firm Roland Berger. The key mandate given to these firms is to come up with ideas and new proposals which will look at reducing costs, breakeven volumes, and also increasing the efficiency of JLR's overall operations.

In its latest filing with the UK government, JLR has said that during 2008, its unconsolidated results showed a loss of 673 million pounds, as compared to a 641.5 million pounds profit in the previous year. So Tata Motors is trying very hard to curtail cost.

In fact it already has an agreement in place which sees an annual cost reduction to the tune of 70 million pounds, but that is not proving enough, and now Tata Motors is getting more active than before in looking at JLR operations.

Company vice-chairman Ravi Kant said, ''Teams have been formed and they have been working very hard to work the entire thing out. There are some things which are visible which we are working on and that can be done. And there are some things which are not visible at the moment, we are working on. We do hope that we are able to get some very major gains as we go along.''

Tata Motors must indeed bank on these steps, because the financial losses are mainly due to the huge drop in volumes. For the first six months of this year Jaguar car sales were down 26 per cent, and Land Rover's were down it 38 per cent.

Q1 profits not unhealthy
In Mumbai, Tata Motors Ltd reported a first-quarter profit that bettered analysts' estimates. The company, mainly a truckmaker despite its various car forays, reported an unconsolidated net income gain 58 per cent to Rs514 crore in the quarter ended June, driven mainly by fall in raw material prices and the new accounting rules on foreign exchange differences.

India's largest vehicle manufacturer said it saw signs of recovery for the business both within and outside India. In addition, the government's renewed thrust on infrastructure and tax cuts would aid growth in coming quarters, it said in a statement.

During the quarter, net revenue fell 7.6% to Rs 6,405 crore. The earnings represent Tata Motors's standalone performance and don't include that of the JLR and Daewoo operations. Tata Motors will provide consolidated earnings, including of its UK-based luxury JLR unit, next month.

The company said it has repaid $150 million of the $1-billion JLR bridge loan. The company had raised the money last month by selling 1.5 per centstake in Tata Steel.

The company posted a notional forex loss of Rs6 crore as against Rs162 crore in the previous corresponding period. It said profit before tax in the year-ago quarter would have been higher by Rs176 crore under the revised accounting policy effective March, 2009.

Sales declined as falling earnings forced customers to defer purchases of cars and trucks. Within the passenger cars portfolio, it gained market share in the sedan segment but lost in SUVs. The star performer, however, was the Indica Vista. In commercial vehicles, while light commercial vehicles saw an improvement, demand is yet to pick up in heavy commercial vehicles.

Exports fell 43 per cent, particularly in its key market South Africa. Softening commodity and crude prices had a positive impact on earnings. Raw material consumption declined 24 per cent during the period under review, while operating margins improved by 400 basis points.