Curation of Business: Tata Motors hit by biggest loss since 2009

Image source: Moneycontrol

Swapnajit and Vivanesh, ACJ. 

One of the leading industries of the country, Tata Motors has suffered a loss of Rs. 1902.4, in the first quarter of the year. This is their biggest loss since 2009. In the previous year, they had a profit of Rs. 3199 in the same quarter. (According to NDTV)

The company reportedly incurred the loss because of its UK arm, the Ralf Speth led Jaguar Land Rovers (JLR) . JLR was hurt by China’s import duty cut effective July 1, which led to “lower wholesales” ahead of the reduction, as well as market issues like diesel concerns in the U.K. and Europe. JLR’s revenue for Q1 was £ 5.2 billion, down 6.7 percent year-over-year. The slump season was attributed to lower wholesale and increased incentives in China ahead of the July 1 reduction. This resulted in an unfavorable revaluation of the currency and higher depreciation and amortization from continuing operations resulted in a pre-tax loss for the quarter of £ 264m (negative EBIT margin). Earnings before interest, taxes, depreciation and amortization (EBITDA) was £ 325 million (6.2 percent margin).

However, the domestic business has turned around with Tata Motors reporting a pre-tax profit of Rs. 1,464 crore as compared to pre tax loss of Rs. 463 crore in the same period last year. Profit after tax for the quarter was Rs. 1,188 crore. Revenue increased 83% to Rs. 16,803 crore as it grew from a low base in the same period last year, top company officials said.

“I am delighted with the progress made by domestic business,” Natarajan Chandrasekaran, chairman of Tata Motors, said in a statement. “We continue to gain market share while strongly improving profitability in both Commercial Vehicles and Passenger Vehicles,” he added. (According to Economic Times)

JLR continues to invest in new vehicles and technologies that will support future growth with a £ 1.1 billion investment for the quarter. These capital expenditures and seasonal working capital outflows of £ 1 billion resulted in negative operating cash flow of £ 1.7 billion. The automaker plans to invest around 4.5 billion pounds in the current fiscal year. The Company expects to achieve a 4-7 percent return by the end of fiscal year 2018-18, as announced for fiscal year 19-21.

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