Tata Motors Q1 net loss nearly doubles to Rs3,698 cr
25 July 2019
Tata Motors Ltd has reported a net loss of Rs3,698 crore for fiscal first quarter ended 30 June 2019, against a loss of Rs1,902crore for the similar quarter of the previous financial year.
Tata Motors, which owns iconic British car brands Jaguar Land Rover, said its revenue of the quarter was down 7.7 per cent at Rs60,830 crore, hit both by an ongoing slump in car demands at home, as well as plant shutdowns and delays due to Britain’s planned exit from the European Union.
The Indian auto sector has been plagued by slowing demand due to higher insurance costs and policy uncertainty that prompted many automakers to cut production as inventories surged.
Passenger vehicle sales in June fell over 17 per cent, resulting in an 18.4 per cent fall for the first quarter as a whole, data released by the industry body earlier this month showed.
Revenue for the quarter decreased 19.9 per cent to Rs13,352 crore, while pre-tax loss (before exceptional items) at Rs40 crore (against pre-tax profit of Rs1,464 crore in Q1FY 19) due to negative operating leverage and lower other income, including dividend. Loss after tax for the quarter stood at Rs97 crore.
Both commercial vehicles (CV) and passenger vehicles (PV) businesses will continue to strengthen their efforts for competitive, consistent and cash accretive growth through focus on retail growth, customized financing solutions, market activations, new product launches (incl. leveraging new architectures), rigorous cost reduction and inventory management to mitigate BSVI transition risk, the company stated.
"The continued slow down across the auto industry due to weak consumer sentiments, liquidity stress and the impact of axle load effect particularly in medium/heavy duty, impacted overall demand. Over the past few years we had struck a good balance between managing market dynamics and financial health. However, this time, despite our continuous Turnaround effort we could not prevent some impact on our Q1 performance.,” Guenter Butschek, CEO and MD, Tata Motors, said
“Looking ahead, both our businesses, CV and PV, will leverage Tata Motor’s revived agility and strive to boost consumer confidence by various market interventions – all round from best in class product offerings, retail activations and further improved service experience. With the budget announcement and upcoming festive season, we expect some tailwinds for the remaining FY20. Furthermore, our Turnaround actions are in full swing and will provide us a great level of confidence to master this unprecedented market challenge and we will get out of it even stronger,” he added.
The company’s focus will be on retail sales as it expects market conditions to improve ahead of the festive season that begins next month, he added.
Tata Motor’s revenue from Jaguar Land Rover Automotive Plc, the company’s biggest unit, fell 2.8 per cent to 5.07 billion pounds ($6.34 billion).
The company’s shares closed down 4.6 per cent in a broader NSE market that ended 0.17% lower.
Tata completed the $2.3-billion acquisition of Jaguar and Land Rover in 2008, but the iconic British brand has been hit by a trend to move away from diesel cars towards cleaner fuels, as well as political and trade uncertainty related to Brexit.
The Mumbai-based company plans to introduce electric variants for all of its JLR models by 2020.
On Thursday, Tata Motors chief financial officer PB Balaji said during a conference call that the luxury car was seeing a pick-up in sales in key market China and expected its sales to also improve in the UK as Brexit details got sorted.
The company was “extremely happy there will be decisive action in the coming days,” Balaji said of Brexit. The United Kingdom’s new Prime Minister Boris Johnson has promised to lead Britain out of the European Union on 31 October with “no ifs or buts.”