The auto-makers' sales volume declined, led by the China unit of JLR, and the Britain-based subsidiary of Tata Motors, where it fell 29 per cent. China is one of the biggest and the most profitable markets
for JLR, accounting for 19 per cent of volume in the quarter. The sales volume at the Indian unit, which makes commercial vehicles and passenger cars, fell 23 per cent over the year-ago period.
The company’s consolidated operating profit margin was 4.5 per cent, down 159 basis points (bps) in a year and the lowest in a decade, excluding the December 2018 quarter.
The management, however, expects the performance to gradually improve in the rest of the year with focus on stepping up retail growth, improved dealer profitability, and launch of new products while driving rigorous cost reduction while transiting to BS VI.
With China stabilizing and new product lineup ahead, JLR expects to return to growth soon and its financial results to improve over the balance of the year, the company said in its statement.
“In spite of having a low-volume quarter, Tata Motors has managed to pare its FCF outflow compared to same quarter last year. We maintain our view that Tata Motor’s focused approach on products, value chain and FCF generation will pave the way for a sustainable turnaround, although the macro challenges would take time to subside,” analysts at Antique Stock Broking said in a result review note.
Meanwhile, Fitch Rating downgraded the stock with a 'negative outlook', to which Tata Motors responded by saying that it has no formal engagement with the rating agency. "The rating downgrade has been unsolicited and hence the company has no comments to offer," it said.