Tata Motors Q4 net profit skids 49% to Rs 1,108 crore on JLR woes

Revenue from wholly owned subsidiary JLR fell 5 per cent to Rs 65,146 crore. The unit brings in most of Tata’s revenue
Tata Motors on Monday reported a 49 per cent decline in net profit for the March quarter ended March 31. But the earnings beat estimates as the cost-control measures initiated a few months ago to turn around operations of Jaguar Land Rover (JLR) Automotive started showing results.

In the three months to March, net profit of the company fell to Rs 1,108.66 crore against Rs 2,125.24 crore in the same quarter last year. Revenue for the quarter fell to Rs 85,676.33 crore from Rs 88,966.34 crore in the same quarter last year.

Revenue from wholly owned subsidiary JLR fell 5 per cent to Rs 65,146 crore. The unit brings in most of Tata’s revenue.

Three months ago, under “Project Charge”, Tata promised “decisive action” to cut costs at JLR and improve cash flow after weak sales at the British luxury car brand led Tata to post the biggest-ever quarterly loss in Indian corporate history.

P B Balaji, chief financial officer at Tata Motors, guided for challenging quarters ahead for the JLR as well as the India business as weak sentiments weigh on truck and passenger vehicles sales and disruptions ahead of BSVI emission norms take effect. 

“The Q1FY20 for JLR will reflect the seasonality and will be a weak quarter,” he said. A shutdown taken by the company in anticipation of the Brexit will also have an impact. But notwithstanding the challenges in China which is one of its most-profitable markets and other headwinds, he said Tata Motors is confident of accelerating its cash flow delivery and improve its profit before tax in the 2019-20 financial year and return a margin of 3-4 per cent and achieve the cost savings of £2.5 billion by the turn of the financial year. During the quarter, it had a saving of £1.3 billion.

Meanwhile, Balaji said the corrective actions taken in China should help in reviving sales by the next quarter. “While there is sequential improvement in JLR, domestic operations got impacted because of the slowdown. Therefore, there would not be any major changes in our estimates in terms of overall performance,” said Mitul Shah, vice president, research a Reliance Securities.

JLR’s retail sales in China declined by more than 50 per cent during the quarter, much steeper than the broader luxury car market in the region.

“Had it only been for wholesales, one would have attributed it to an inventory correction, but drop in retail indicates that the end user demand is poor for JLR products. Therefore, China continues to be a big worry,” said Shah.

The company's domestic business posted 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 financial year.

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 financial year 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 2019 financial year was Rs 69,202.76 crore, as compared to Rs 58,689.81 crore in 2017-18.

Tata Motors shares on Monday ended 7.53 per cent up at Rs 190 apiece on the BSE.

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