Further deterioration of market conditions in China, Brexit issue and uncertainties regarding diesel vehicles in Europe are other worries facing the auto major
Tata Motors reported a consolidated loss of Rs 26,960.80 crore for the third quarter ending December 31, 2018, its biggest ever, as it took a £3.1 billion one-time, non-cash asset impairment charge for its British unit Jaguar land Lover (JLR).
Further deterioration of market conditions in China, Brexit issue and uncertainties regarding diesel vehicles in Europe are other worries facing the auto major.
N Chandrasekaran, chairman, Tata Sons, said in JLR, the market condition continues to be challenging, particularly in China.
As per a regulatory filing, retail sales for JLR during the quarter in consideration were 1,44,602 units, down 6.4% year on year, primarily a result of continued challenging market conditions in China, offset partially by encouraging growth in North America and the UK. The company's sales in Europe were up slightly despite an 8% drop in the overall market.
"In the three-month period, sales increased for the new Jaguar E-PACE and Jaguar I-PACE as well as the refreshed Range Rover and Range Rover Sport, while the slowdown in China largely accounted for lower sales of other models," the company said in the filing.
JLR reported revenues of £6.2 billion and a pre-tax loss before exceptional items of £273 million for the quarter. Ebit (earnings before interest and taxes margin was at 2.6%.
According to P B Balaji, CFO, Tata Motors, the third quarter was also impacted by one-off factors including costs related to planned reduction in inventories, warranty reserve adjustments and currency and commodity revaluation. Given the muted demand scenario and the associated impact on the financials, JLR concluded that the carrying value of capitalised investments should be adjusted down, resulting in a non-cash £3.1 billion pre-tax exceptional charge and an overall pre-tax loss of £3.4 billion for the quarter.
Ralf Speth, CEO, JLR, said in a statement, "This accounting adjustment is consistent with the other decisive actions that we must take as part of our 'charge' and accelerate transformation programmes to create an efficient and resilient business, enabling Jaguar Land Rover to counter the multiple economic, geopolitical, technological and regulatory headwinds presently impacting the automotive industry."
According to the analysts tracking the global market, the slowing of Chinese market combined with Beijing's trade war with the US has impacted the local market. As per China's Association of Automobile Manufacturers (CAAM), car sales in China fell 13% in December, the sixth straight month of declines, bringing annual sales to 28.1 million, down 2.8% from a year earlier. This was against a 3% annual growth forecast set at the start of 2018. It is the first time since the 1990s that China's auto market has contracted.
As part of its plans to achieve £2.5 billion of investment and profit improvements by March 2020, JLR had in January announced reducing its global workforce by 4,500 people. This is expected to result in a one-time exceptional redundancy cost of around £200 million, the company executives said.
On a standalone basis, the company posted profit after tax of Rs 617.62 crore as against Rs 211.59 crore in the year-ago quarter. Total standalone income rose to Rs 16,477.07 crore as against Rs 16,186.15 crore in the same period previous fiscal, the company officials
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