Auto major Tata Motors today reported a 25.5% drop in its consolidated net profit at Rs 3,581 crore for the December quarter due to a massive loss in domestic business and a marginal dip in its bread and butter unit JLR's profit.
Auto major Tata Motors today reported a 25.5% drop in its consolidated net profit at Rs 3,581 crore for the December quarter due to a massive loss in domestic business and a marginal dip in its bread and butter unit JLR's profit.
The company has also said it is cautiously optimistic about cash flow at JLR next year due to a massive capex of up to 3.8 billion pounds involving its China venture and other expansion in Britain, where the company is setting up a new engine facility, and in Brazil.
On standalone basis, Tata Motors India reported a massive net loss of Rs 2,122.72 crore as against a profit of Rs 1,251.4 crore in the same period a year ago.
Group Chief Financial Officer C Ramakrishnan attributed the poor domestic show to a Rs 310 crore additional provisioning for its disputed Singur property in Bengal and an equal amount of one-time provisions during the quarter.
After many quarters of robust bottom line growth, its marquee British arm JLR too reported a marginal dip in net income at 593 million pounds from 619 million pounds.
The company attributed the dip in bottom line "to the effect of unfavourable revaluation of foreign currency debt and hedges, as well as higher depreciation and amortisation."
On concerns about cash flow in JLR, Ramakrishnan said the company is cautiously optimistic about cash flow due to the massive capex.
"We expect JLR profitability to be lower in the coming year as it increases investments at Britain and elsewhere, amounting to up to 3.8 billion pounds next fiscal."
The Tatas had bought struggling JLR form Ford Motor in 2008 for a little over $2.1 billion.
JLR's new factory in China is expected to boost output and that combined with the introduction of new models will drive growth, the company said.
It can be noted that Chinese sales have been tapering off of late and the company's largest market China has been slowing for some months. China contributed to 27.9% volume share during the reporting period, making it the largest market. On top of it, the company reported first drop in sales last month globally.
Jaguar Land Rover Chief Executive Ralf Speth said: "This quarter has seen robust financial performance, further underpinning our on-going investment in new product creation, capex and international expansion.
"With the official opening of new world-class facilities in China and Britain and the start of construction in Brazil, JLR is well-positioned to deliver more great vehicles to our customers globally."
The JLR revenue rose 8.64% to Rs 58,549.97 crore from Rs 53,892.52 crore in the corresponding quarter last year.
Consolidated net sales during the third quarter increased 9.6 percent to Rs 69,121.61 crore from Rs 63,512.51 crore, Ramakrishnan said.
Revenue from Tata and other brand vehicles and financing during the quarter were at Rs 11,158.87 crore as against Rs 9,741.37 crore in the same period last fiscal.
Ramakrishanan said the company expects to improve its car market share on the back of good response to the recent launch Zest and the Bolt.
The sedan Zest has already notched up over 16000 units sales, helping the company improves its market share to 5.7 percent in the quarter. While its commercial vehicles market share came down to 50.2% the reporting quarter.
When asked about capacity utilisaiton at the domestic unit, Ramakrishnan said that for commercial unit its about 50-55 per cent while for the car division its under 30%.
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