Tata Motors, the Indian car, bus and truck manufacturer that owns Jaguar and Land Rover in the UK, yesterday posted its first annual loss in eight years after sales at the luxury units plunged amid the global recession.

Tata Motors, the Indian car, bus and truck manufacturer that owns Jaguar and Land Rover in the UK, yesterday posted its first annual loss in eight years after sales at the luxury units plunged amid the global recession.

The consolidated net loss was 25 billion rupees (£323m) in the year ended March 31, compared with a net income of Rs22bn a year ago, the company said in Mumbai. Year-ago figures do not include Jaguar and Land Rover, which Tata bought from Ford Motor Company in June last year.

The Jaguar Land Rover unit had a pre-tax loss of Rs18bn as unemployment and the global financial meltdown damped sales in the United States and Europe.

BMW, the world's biggest maker of luxury vehicles, and Daimler, both posted losses in each of the past two quarters as the worst recession since the Second World War pushed the car industry into its deepest crisis in decades.

"Land Rover sales fell considerably," Tata Motors said. "The company has actively responded to the changed situation by taking a number of urgent and long-term measures. These include cutting costs drastically."

Tata, which controls 60% of India's truck and bus market, sold 120,000 Land Rovers in the 10 months ended March 31, compared with about 198,000 a year earlier, the company added.

Tata may consider more job cuts at Jaguar and Land Rover and may shut production if needed, vice chairman Ravi Kant said.

Chairman Ratan Tata is cutting investments at the parent company by nearly 40% in the year to March on slowing economic growth in India, the company's biggest market for its commercial vehicles.

Tata will begin sales of the Nano, the world's cheapest car, in July to revive earnings and challenge Japan's Suzuki Motor Corporation in Asia's fourth-largest motor vehicle market.

Since completing the Jaguar Land Rover deal, Tata Motors has struggled for financing as the global credit crisis and economic downturn cut the availability of funds.

A rights share offer last year did not attract great interest and the company deferred an overseas share issue and had to refinance a $3bn bridge loan it had taken to buy Jaguar and Land Rover from Ford.

Higher borrowing costs and an economic slowdown in India put the brakes on car sales for much of 2008-09, though they have improved since February.

Earlier this week, brokerage firm Merrill Lynch said Tata Motors is likely to remain on its growth path as the strength of its domestic operations would more than offset the weaknesses at Jaguar Land Rover, which itself could see a recovery in sales by next year.

Tata Motors will see "strong operational recovery of its domestic business, which we believe should be the prime driver of stock valuations", Merrill Lynch said in a research note, adding that "Jaguar Land Rover is likely to recover next year".

Despite the fact that volumes are likely to remain muted in developed markets such as the US and Europe, Merrill Lynch said that Tata is likely to register growth in net sales and earnings before interest, taxation, depreciation and amortisation.