Tata Motors consolidated net profit halves on slowdown in India, China

Tata Motors on Monday reporting halving of its consolidated net profit for the quarter ended March 31, 2019, halved to Rs 1,108 crore over the year ago period as it battled prolonged industry slowdown in India and headwinds in the China market. The company had reported a profit of Rs 2,175 crore in the year-ago period.

The development comes on the heels of consolidated loss of Rs 26,960.80 crore during the previous quarter, when it took a £3.1 billion one-time, non-cash asset impairment charge for its British unit Jaguar Land Lover (JLR).

Mayank Pareek, president, passenger vehicle business unit, Tata Motors, said though there has been slowdown for the past several months, certain sub-segments have grown. Pareek said in his professional experience he had witnessed 3-4 industry slowdowns, which could mainly be attributed to one or two factors. This time, there are several factors adding to the continued slowdown, which would last for another quarter or so, he said. Asked whether Tata Motors will cut down on its diesel cars post the BS-VI emission norms implementation, similar to the plans announced by market leader Maruti Suzuki, Pareek said they will continue to sell all kinds of vehicle irrespective of the fuel type and let customers decide their choice.

Talking about commercial vehicle (CV) business, Girish Wagh, president, commercial vehicle unit at Tata Motors, said, "Overall growth rate has come down." He said while the medium & heavy commercial vehicle (M&HCV) saw a de-growth, the tipper segment which is highly dependent on infrastructure projects continued to perform even till April before slowing down.

Tata Motors's total income during the quarter fell to Rs 87,285.64 crore as against Rs 91,643.44 crore in the year-ago period. For the entire 2018-19, the company posted a consolidated net loss of Rs 28,724.20 crore, compared to net profit of Rs 9,091.36 crore in 2017-18. Total income stood at Rs 3,04,903.71 crore for the last fiscal as against Rs 2,96,298.23 crore in 2017-18, the filing said.

The company's domestic business posted a standalone net profit of Rs 106.19 crore for the fourth quarter as against net loss of Rs 499.94 crore during the same period previous fiscal. Standalone total revenue from operations stood at Rs 18,561.41 crore as compared to Rs 19,173.46 in the fourth quarter a year ago.

For the fiscal ended March 31, the company's standalone profit stood at Rs 2,398.93 crore against a net loss of Rs 946.92 crore in the preceding financial year.

Total revenue from operations for the full 2018-19 was Rs 69,202.76 crore, as compared to Rs 58,689.81 crore in 2017-18.

JLR, on the other hand, reported its first profit in four quarters, overcoming a continued sales slump in China and raising optimism that Britain's largest automaker is finally on the mend.

Net profit was £119 million in the three months ended March, while profit before tax, excluding exceptional items, was £269 million. Annually, it posted a loss of £3.6 billion, largely attributed to a nearly 6% "weak" demand for its luxury car models in China. "Jaguar Land Rover has been one of the first companies in its sector to address the multiple headwinds simultaneously sweeping the automotive industry," said its CEO Ralf Speth.

"Jaguar Land Rover is focused on the future as we overcome the structural and cyclical issues that impacted our results in the past financial year. We will go forward as a transformed company that is leaner and fitter, building on the sustained investment of recent years in new products and the autonomous, connected, electric and shared technologies that will drive future demand," he said.

P B Balaji, chief financial officer, Tata Motors Group, said that China market, which has traditionally been the most profitable, still offers a very large opportunity. "We have taken a substantial cut in inventory and are banking big time on turnaround of China business," said Balaji.

According to the executives across the OEMs, retailers, component makers, one of the primary reasons for the slowdown in the industry has been tightening of liquidity by non-banking financial institutions following the emergence of Infrastructure Leasing & Financial Services Ltd (IL&FS) scam. The other prominent reasons include a rise in fuel prices, rural distress due to lack of rains in certain regions, new axle norms for trucks, severe floods in Kerala during August, new insurance laws leading to increase in costs, slowdown in certain industries leading to dip in consumer sentiment, among others.

JLR POSTS PROFIT

• JLR reported its first profit in four quarters, overcoming a continued sales slump in China and raising optimism that the automaker is finally on the mend
   
• Net profit was £119 million in the three months ended March, while profit before tax, excluding exceptional items, was £269 million

(with inputs from agencies)