Tata Mo­tors Net Skids 96% in Q3 as JLR Dis­ap­points

Net down to .₹ 112 cr as lower whole­sale vol­umes of UK lux­ury car unit hurt; rev­enue falls 4% to .₹ 68,541 cr

The Economic Times - - Companies: Pursuit Of Profit - Our Bureau

Mum­bai: Tata Mo­tors, In­dia’s big­gest ve­hi­cle maker by rev­enue, on Tuesday posted a 96% drop in thirdquar­ter con­sol­i­dated net profit, hurt by lower whole­sale vol­umes at Jaguar Land Rover and higher ex­penses.

The com­pany posted a net profit of .₹ 112 crore for the Oc­to­ber-De­cem­ber pe­riod com­pared with .₹ 2,953 crore a year ear­lier. Rev­enue fell 4% to .₹ 68,541 crore.

Net profit for JLR fell 62% to £167 mil­lion (.`1,400 crore). The UK-based lux­ury car unit has propped up Tata Mo­tors’ con­sol­i­dated re­sults in re­cent years, off­set­ting weak num­bers in the home mar­ket of In­dia, and its lat­est per­for­mance is a wor­ri­some de­vel­op­ment for the par­ent.

Tata Mo­tors’ stand­alone net loss widened to .₹ 1,046 crore from .₹ 137 crore a year ear­lier. The re­sults were an­nounced min­utes be­fore mar­ket clo­sure. The stock in­stantly fell more than 7%, be­fore par­ing some of the losses and clos­ing still 3.7% lower at .₹ 486.8 on the BSE, where the bench­mark Sen­sex barely changed.

Con­sol­i­dated earn­ings mar­gin be­fore in­ter­est, tax, de­pre­ci­a­tion and amor­ti­sa­tion nar­rowed to 8.9% from 13.8% a year ear­lier. At JLR, the mar­gin fell to 9.3% from14.4%, while on a stand­alone level, the de­cline was to 1.5% from 6%.

Chief fi­nan­cial of­fi­cer C Ra­makr­ish­nan called it “a dis­ap­point­ing quar­ter”. “It was a quar­ter with cer­tain head­winds in the JLR busi­ness,” he said in a post-re­sults meet. Some vari­able mar­ket­ing spend­ing in­creased and some prod­ucts such

as the Land Rover Dis­cov­ery ran out of pro­duc­tion, he added.

The rise in the costs led to a 31% in­crease in the com­pany’s other, or non-core, ex­penses to .₹ 18,834 crore. Ra­makr­ish­nan, how­ever, said “the fourth quar­ter (Jan­uary-March) will def­i­nitely see an im­prove­ment in mar­gins (for JLR), and hope­fully on the back of the new launches, we should up the lev­els of mar­gins.”

Whole­sale vol­umes of JLR (ex­clud­ing its China ven­ture) in the past quar­ter fell 5% to 130,910 units.

Weak sales at Tata Mo­tors’ big­gest money spin­ner come in the midst of ap­pre­hen­sions stem­ming from a po­ten­tial tax to be levied in the US by the Don­ald Trump gov­ern­ment on im­ported cars and the UK’s exit from the Euro­pean Union. JLR man­u­fac­tures most of its prod­ucts in the UK and sells those in 160 coun­tries.

“Any of these trade bar­ri­ers or du­ties will af­fect the JLR busi­ness but it will be pre­ma­ture to cri­tique the im­pact right now,” said Ra­makr­ish­nan. “We are watch­ing this space and closely mon­i­tor­ing the sit­u­a­tion. We may have some counter mea­sures but it is early to speak of them right now.” Tata Mo­tors do­mes­tic com­mer­cial ve­hi­cle sales dropped 4.1%. In that, sales of medium and large com­mer­cial ve­hi­cles de­clined 9%.

Ravi Pishar­ody, ex­ec­u­tive di­rec­tor for com­mer­cial ve­hi­cles, said de­mon­eti­sa­tion had a ma­jor im­pact, with com­mer­cial ve­hi­cle sales fall­ing over 35% in Novem­ber, month-on-month as well as in com­par­i­son with the same month the year be­fore. The gov­ern­ment had an­nounced the note-re­call on Novem­ber 8. How­ever, the ef­fect has re­duced now and that the sit­u­a­tion will im­prove fur­ther, he added.

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