After slipping into receivership last year it looked like one of the best and most respected names in tuning was about to disappear. But thanks to some radical re-structuring the Wiltshire concern is back in business and doing what it knows best: breathing new vigour into old engines.

Rover's K-series engine has been with us for some 12 years, powering everything from the Metro to the Lotus Elise. Adaptable it may be, but when fitted with the horrendously complex VVC variable cam timing system, it isn't so easy to tune. Which makes Janspeed's tweaked MG ZR 160 all the more impressive, with a hike in power from the standard car's not insignificant 158bhp to a Clio Sport-humbling 178bhp. There's a useful boost in torque too, up 7lb ft to 135lb ft.

The increases come thanks to a combination of ancient and modern techniques. The old fogies amongst you will appreciate the tuned length, tubular 4-2-1 exhaust manifold and stainless steel sports exhaust, while techies will like the sound of the carbon fibre high-flow airbox and less restrictive 200-cells-per-square-inch catalytic converter.

It's a neat installation. The carbon airbox looks so well integrated it could be a factory-fit part, while externally the only clue is a subtly sporty tailpipe. The stance is also a little more aggressive, thanks to a newly developed suspension package, using shorter, stiffer Leda coil-over springs and Eibach dampers.

Janspeed has been entrusted with honing the set-up by MG dealership Edwards of Stratford, who are at present the country's only MG X-Power outlet. Whether both the engine and suspension upgrades are sold as official X-Power kits or through Janspeed is currently undecided.

In the meantime Janspeed is still finalising suspension settings, and I'm pleased to say that we've had some input. Spirited drives along some of our favourite and most varied local roads proved the damping to be just about spot-on although currently the springs are slightly too hard. Turns out the rear coils are stiffer than ideal because the standard ZR doesn't have a rear anti-roll bar, but Janspeed is now looking at fitting one, which will in turn allow them to soften things off a tad.

Even on its current settings this ZR's handling is much improved over the standard car. It is agile and adjustable in the twisty stuff; a lift of the throttle on turn-in provoking progressive, exploitable oversteer in place of the standard car's stubborn understeer. Through high-speed corners it remains neutral and confidence inspiring, where the factory car can turn a bit nasty. Unsurprisingly it's a lot more fun to drive quickly. At the moment the downside is a lumpen, tetchy low-speed ride.

Uncomfortably crashy at urban speeds, things settle down once you're pressing on, but as a result of our test Janspeed is going to try some more supple springs, and if they fit that rear-anti-roll bar they'll be able to introduce welcome extra pliancy without unduly compromising the high-speed control of the current stiff set-up.

The chassis might still be work in progress but the engine is fully signed-off, and really rather impressive. There's a hearty bwaarp on start-up, which sets the tone nicely, while the airbox generates a throaty induction roar that stays just short of intrusive. Weighing just over a ton, the little ZR has a muscular power-to-weight ratio as standard, but an extra 20bhp boosts this to 163bhp per ton; enough to eclipse the Mini Cooper S and breath down the neck of the Clio 172.

Peak power arrives some 500rpm earlier than standard, which means you don't need to work the engine quite so hard to make rapid progress. The power curve is fatter right across the rev range and the increase in urgency is tangible, especially when you're hauling through the mid-range. The 1.8-litre K-series also feels smoother, keener and more responsive, homing in on the 7100rpm limiter with enthusiasm.

Best of all, the engine package retails at a very reasonable ΂£1250 fitted, including Mr VATman's portion, and it's covered by a 12-month warranty. Not bad for a 20bhp gain. The price of the suspension kit is yet to be finalised, but Janspeed reckons ΂£750 is close to the mark, although this excludes fitting. Let's say a grand then.

Aside from the stock ZR 160's ageing interior, the major fly in the ointment is its ΂£14,560 price. Though reasonable at launch it now looks pricey when compared with the Cooper S and Clio Cup. Add the upgrade costs and you're into Leon Cupra R territory. However, pick up a used example and the tuning goodies make serious sense. Some things just never change.