Tata Motors has reported a consolidated net loss of ₹1,863 crore for the first quarter ended June 30, 2018 as compared to net profit of ₹3,199 crore in the same period last year owing to losses at its cash cow Jaguar Land Rover (JLR).
This is the worst quarterly loss since December 2009. The company reported 14.7% growth in top line at ₹67,081 crore.
JLR reported net loss of £210 million despite gaining retail market share by 6%. However, the domestic business has turned around with Tata Motors reporting a pre-tax profit of ₹1,464 crore as compared to pre tax loss of ₹463 crore in the same period last year. Profit after tax for the quarter was ₹1,188 crore. Revenue increased 83% to ₹16,803 crore as it grew from a low base in the same period last year, top company officials said.
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‘Turnaround 2.0’
“I am delighted with the progress made by the domestic business on their ‘Turnaround 2.0’ strategy. We continue to gain market share while strongly improving profitability in both Commercial Vehicles and Passenger Vehicles,” Natarajan Chandrasekaran, Chairman, Tata Motors, said in a statement.
With regard to JLR, the company faced multiple challenges including temporary issues like China duty impact as well as market issues like diesel concerns in the U.K. and Europe.
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“Despite these challenges, we remain committed to deliver the planned margins we outlined earlier this year and appreciate the urgency to address our challenges with speed. Towards this, we will step up all round execution. We will leverage our product portfolio to grow faster and drive down costs to improve operating leverage of the business. We will also calibrate our capital spends to minimise cash outflow,” he said.
Towards increased transparency, the company has announced separate segmental results for CV and PV businesses from this quarter.
Ralf Speth, chief executive, JLR, said: “We had a pre-tax loss in the first quarter, reflecting the impact of the announcement of the duty reduction in China as well as planned dealer stock reduction in the quarter.”
“We also continue to be impacted negatively by uncertainty over diesels in Europe along with Brexit and additional diesel taxes in U.K. Given these issues, we will remain focused on driving growth and simultaneously reducing costs and boosting operational efficiency and capability, taking the necessary steps to shape our future,” he said.
Tata Motors Group CFO P.B. Balaji said that despite the initial headwind JLR would have a planned margin improvement of 4-7%.
Cost cutting strategy
To cut cost, Tata Motors has decided to restructure its business in Thailand.
A decision has been made to cease manufacturing operations in this financial year. Last year, the company suffered a loss of ₹190 crore in Thailand and this much money would be saved, Mr. Balaji said.
“Going forward we will address the Thailand market with a revamped product portfolio, suitable to local market needs, delivered through a Completely Built Unit (CBU) distribution model.”