BackTata Motors reports ₹7,585 crore consolidated loss in March quarter
The figure is, however, narrower than the ₹9,863.75 crore loss a year ago as Tata Motors and JLR reported robust sales during the period
PremiumTata Motors Ltd posted a consolidated loss of ₹7,585.34 crore in the March quarter, mainly because its UK unit Jaguar Land Rover wrote off investments worth ₹15,000 crore during the period.
The figure is, however, narrower than the ₹9,863.75 crore loss a year ago as Tata Motors and JLR reported robust sales during the period.
In February, JLR announced its decision to write off its investments that were earmarked for developing internal combustion vehicles, which became unviable after the automaker’s move to pivot towards electric vehicle technology.
A Bloomberg survey of analysts predicted Tata Motors to report a profit of ₹2,774.10 crore in the three months ended 31 March.
The Mumbai-based automaker reported a strong recovery in its operating performance in the fiscal fourth quarter, backed by higher sales of JLR vehicles in key markets like China and the US.
Tata Motors, however, does not expect the growth momentum to continue in this fiscal first and second quarters as vehicle production is likely to be hit by a global shortage of semi-conductors, a critical component in modern vehicles.
An explosive surge in covid-19 infections in India will also adversely hit the company’s performance in its home market, with sales of its commercial and passenger vehicles expected to stay subdued in the coming months.
P. Balaji, chief financial officer of Tata Motors, said the increase in covid vaccinations in China, the US and UK has led to robust demand for JLR vehicles in these important markets, leading to an overall expansion in the company’s order book.
“We are facing supply-chain issues in quarter one, and it will be fair to say that in the near term, there will be an impact in the supply of vehicles. At the moment, demand is not a concern," Balaji said. He said the shortage of semi-conductors is not expected to improve significantly in the September quarter but is likely to start easing in the fiscal third quarter.
Tata Motors did not specify the loss in vehicle production and wholesales due to component shortages. The sharp rise in covid infections in India will also delay the recovery of Tata Motors’ commercial vehicle business, which is more profitable than its passenger vehicles business. The company witnessed a recovery in medium and heavy commercial vehicle sales in the second half of last fiscal amid increased activity in the construction and manufacturing sectors. This helped boost the margins of the India business.
“In commercial vehicles, we expect stress from the financing perspective since collections have come down due to the lockdown. Growth, market demand and freight rates have also been impacted due to the second wave. The underlying dynamic of the CV sector has improved, though with the new investment in infra projects, easing of financing norms and scrappage policy announcement. We need to look beyond the short term issue in the sector, and recovery can be really fast if the last year is anything to go by," Balaji said.
On a consolidated basis, Tata Motors’ revenue for the March quarter jumped 41.8% to ₹88,627.9 crore, thanks to the recovery in vehicle sales.
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