Tata Motors logs loss of ₹4,450 cr in Q1
Tata Motors Ltd plunged to a wider-than-expected consolidated loss in the June quarter as a global shortage of semiconductor chips hit production at its Jaguar Land Rover (JLR) unit.
The Mumbai-based automaker posted a loss of ₹4,450 crore for the three months to 30 June. The figure far exceeded the ₹2,774.10 crore loss estimated in a Bloomberg survey of analysts.
Tata Motors had a year-earlier loss of ₹8,443.98 crore when its operations globally were impacted following lockdowns imposed in several countries to combat the pandemic.
The June-quarter loss, however, narrowed from the ₹7,585.34 crore loss in the March quarter.
NEW DELHI:
Last month, the British carmaker guided for a cash outflow of about £1 billion with a negative Ebit (earnings before interest) margin in the September quarter as it would not be able to make vehicles in line with market demand.
Tata Motors’ consolidated revenue more than doubled to ₹66,406.5 crore, with sales of JLR improving in markets such as China and the US.
On a sequential basis, revenue fell from ₹88,627.9 crore in the March quarter as JLR was unable to meet its wholesale target, and the Indian business was affected by the second Covid wave.
P. Balaji, Tata Motors’ chief financial officer, said the JLR management is doing rigorous follow-up with suppliers, redesigning vehicles to use fewer chipsets and planning a longterm arrangement with suppliers to resolve the ongoing crisis caused by the scarcity of semiconductor chips.
“We expect wholesales of 65,000 units in this quarter for JLR, which is 50% less than the internal target. As a result, we are expecting a negative Ebit margin and cash outflow of £1 billion,” said Balaji.
He said there is no short-term reprieve from this current disruption, but the company expects gradual improvement from this quarter onwards.
“While we believe lower capex and government’s stimulus would support JLR, improving PV (passenger vehicles) business and focus on cost control would improve Tata Motors’ standalone margin,” said Mitul Shah, head of research, Reliance Securities. “Moreover, tight control on capex and R&D (research and development) would lower its automotive debt to a greater extent over the next 2-3 years,” said Shah.
Tata Motors made a strong recovery in operating performance in the third and fourth quarters of FY21, backed by higher sales of JLR vehicles in key markets such as China and the US.