Revenue at JLR, the British arm, rose to £6.4 billion, up 2.8 per cent compared to the same period of 2018-19.
P B Balaji, chief financial officer for the Tata Motors
group, cautioned that demand in China — one of its most significant markets in terms of volume and profit — could be hit with the Coronavirus
outbreak, derailing the margin targets for the ongoing financial year.
“A few things on the horizon worry us, the big one being this,” Balaji said on Thursday. Saying they expected a three per cent Ebit (earnings before interest and tax) margin for JLR, he cautioned that this could be hit by the virus outbreak, which needed to be “watched closely...It’s a developing situation and people are in the midst of a Chinese New Year break till February 8”. JLR’s retail sales in China rose rose 34.6 per cent, contributing 19.4 per cent in total sales. JLR’s overall sales during the quarter contracted 2.3 per cent to 141,200 units.
The UK subsidiary has exceeded the Project Charge target it had envisaged. JLR says it will be able to save £2.9 billion in China recovery as against the target of £2.5 billion by March 2020. A higher contribution of more expensive models in the overall mix and the cost savings project helped the consolidated entity report an Ebit margin of 2.3 per cent. It plans to save an additional £1.9 bn through a focus on material cost reduction.
On the effect of Brexit from the European Union, from Friday formally, Balaji said the earlier concern with regard to the first phase of Brexit had remained unfounded. "We now need to see how the negotiations (between the EU and Britain) from now till the end of December pan out." Fears regarding a 'hard Brexit' that the company had expressed in previous quarters were not there any more, he stated.
Meanwhile, poor sales of medium and heavy commercial vehicles weighed on India operations. The Indian arm posted a net loss of Rs 1,039.5 crore, as against a profit of Rs 617.6 crore in the year-ago quarter. Standalone total revenue contracted to Rs 10,843 crore as compared with Rs 16,208 crore in the earlier period.
While some things have started moving in the right direction, the company awaits a pick-up in the long-haul cargo segment. Also, the buoyancy seen in passenger vehicle sales during the festive season is not there. “Internally, we are ready with everything and are waiting for an overall pick-up in demand which should help the overall business,” said Balaji.
The share price ended nearly 1 per cent lower on the BSE exchange at Rs 186.2 on Thursday.