GOOD FOR TATA MOTORS

The Queen of England will officially open the new GBP 500 million engine plant of JLR at Wolverhampton tomorrow.
·         The plant, which will be staffed by 1400 workers is set to produce an engine every 36 seconds at full capacity.
·         The engines will be aluminium 4-cylinder petrol and diesels of JLR’s own design and the new Jaguar XS saloon will be the first to get one of the new engines.
·         Neither Jaguar nor Land Rover has used an engine, designed and built in-house since the late 90s, as the engines were sourced from Ford, an arrangement which may continue till 2018.
·         With inhouse production of engines, JLR will keep the engine manufacturing margin for itself (currently Ford makes it).
· This is a big milestone for JLR, which will likely lead to re-rating of the stock on expectation of gradual margin expansion going forward (as JLR will be privy to manufacturing margin on inhouse engines)


2015 will be a big year for Tata Motors for the following reasons:

1. China JV production, which opened last week, will go full steam.
2. In house engine production will go full throttle.
3. Launch of Jaguar XE.
4. Expected full scale recovery in the domestic MHCV business in India.