MUMBAI -- Tata Motors will double investments in its Jaguar Land Rover brands to 1.5 billion pounds ($2.4 billion) a year, even as the Indian automaker warned that it will be a challenge to sustain high margins at its key profit generator.
With soaring revenues and expanding margins, Jaguar Land Rover (JLR) has driven the company's growth in recent quarters, as strong demand in emerging countries for the famous British brands offset sluggish performance in Tata's home market.
"Over the past 5 to 6 years, JLR has spent around 700 to 800 million pounds annually on capital expenditure and product development. Going forward, we will double that," C.R. Ramakrishnan, Tata's chief financial officer, said on Tuesday.
"JLR spending will be in the order of 1.5 billion pounds each year," Ramakrishnan told reporters, adding that the increase would apply in the current fiscal year ending in March.
JLR contributed 95 percent of the company's profit in the quarter to end-December, with a profit margin of 20 percent, three times the profitability seen at Tata's domestic business.
Sustaining such high margins in coming quarters would be "a challenge," for JLR, Ramakrishnan added, as sales growth likely moderates.