The Economic Times - - Companies: Pursuit Of Profit -

timesin­ter­ ET In­tel­li­gence Group: Shares of Tata Mo­tors, In­dia’s largest truck maker and owner of the Jaguar-Lan­dRover(JLR)brands, may ex­tend losses suf­fered in the af­ter math of dis­ap­point­ing De­cem­ber re­sults, as re­verses from com­mod­ity hedges limit prospect­sof margin­ex­pan­sionat the coun­try’s most glob­alised au­to­mo­tive com­pany.

A 510 ba­sis-point drop in the operating profit (EBITDA) mar­gin of JLR stumped in­vestors and an­a­lysts, who had not pen­ciled in con­trac­tion in the busi­ness that had hith­erto helped off­set Tata Mo­tors’ lack­lus­ter do­mes­tic per-

for­mance. Lower whole­sale vol­umes, less favourable prod­uct mix, higher vari­able mar­ket­ing ex­penses and wages, and more new-model launches de­pressed the com­pany’s earn­ings. Higher mar­ket­ing costs and the phase­out of Dis­cov­ery hit mar­gins by 1.7% and 2%, re­spec­tively.

Al­though many of these fac­tors may not be si­mul­ta­ne­ously at play over the sub­se­quent quar­ters, Tata Mo­tors’ abil­ity to drive mar­gin­shigh­er­will­be­lim­it­edby the con­trac­tual hedges taken to off­set cur­rency and com­mod­ity-

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