Tata Motors has reported its biggest net loss of ₹26,993 crore for the December quarter, impacted by exceptional item of asset impairment in JLR of Rs 27,838 crore. This is Tata Motors’ third consecutive quarterly loss as its luxury car unit, Jaguar Land Rover (JLR) continues to struggle from Chinese slowdown and Brexit woes.
The loss was reported on 5% growth in revenues to Rs 77,000 crore.
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The company attributed the impairment of ₹27,838 crore on JLR to slowing sales in China, technological disruptions and rising cost of debts. UK’s largest car maker JLR, contributes to 72% of Tata Motors revenues.
Commenting on the results, N Chandrasekaran, Chairman Tata Motors said, “Domestic business continues the strong momentum and has delivered market share gains as well as profitable growth. The Turnaround 2.0 strategy is delivering well with a continuing portfolio of product launches, which are the requisite building blocks for sustainable growth. In JLR, the market conditions continue to be challenging particularly in China. The company has taken decisive steps to step up competitiveness, reduce the costs and improve the cash flows while continuing to invest in exciting products and leading edge technologies. With these interventions, we are building Tata Motors group to deliver strong results in the medium term.”
Company’s EBITDA margins narrowed by 230 basis points (bps) to 8.5% and its EBIT margins contracted by 370 bps to 0.1%.
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On a stand alone basis, Tata Motors reported a net profit of Rs 618 crore on 1.5% growth in revenues to Rs 16,208 crore.
Guenter Butschek, CEO and MD, Tata Motors, said “Fiscal year 2019 so far has been a challenging period for the industry. Despite the muted growth, Tata Motors has delivered strong results, registered an impressive profitable growth this year on the back of exciting products, renewed brand positioning and aggressive cost reduction.”
JLR reported revenues of £6.2 billion and a pre-tax loss before exceptional items of £273 million with 2.6% negative EBIT margin for the quarter.
“The automotive industry is facing significant market, technological, and regulatory headwinds. At the same time, investment in new models, electrification and other technologies remains high. Given the muted demand scenario and the associated impact on the financials, Jaguar Land Rover has concluded that the carrying value of capitalized investments should be adjusted down, resulting in a non-cash £3.1 billion pre-tax exceptional charge and an overall pre-tax loss of £3.4 billion for the quarter,” said Tata Motors in a statement.
Paras Bothra, President Equities at Ashika Stock Broking told The Hindu, “Tata Motors has been a big under performer in the current fiscal and with China slowdown and Briexit, JLR sales will continue to suffer and impact its parents profitability.”
Tata Motors shares on BSE closed up 2.64% at Rs 182.90 in a flat Mumbai market on Thursday. The results were announced after the closure of market hours.