Tata Motors net profit tanks as JLR volumes disappoint

Consolidated net profit of Tata Motors, India’s biggest automobile company, dipped by a whopping 56 per cent in the final quarter of last financial year as China, Jaguar Land Rover’s biggest market, slowed down considerably.

The Mumbai-based company posted Rs 1,717-crore net profit for the quarter ended March, against Rs 3,918 crore in the corresponding quarter last year. Bloomberg had estimated Tata Motors to report a net profit of Rs 4,092 crore for the quarter.

The management warned there could be further pressure on margins in the current and upcoming quarters, which accounts for 45 per cent of the total yearly revenue, even as China, where margins of all luxury car makers has been under pressure, remains a concern.

Ebitda (earnings before interest, taxes, depreciation, and amortisation) margins are expected to be slightly weaker in 2015-16 against 2014-15, a company official said.

“Higher depreciation and amortisation costs and adverse mark-to-market of the unrealised hedges and revaluation of foreign currency debts hit margins,” the company clarified. Tata Motors skipped paying dividend for the year, a first in 13 years. JLR has outstanding debt of £2.5 billion (Rs 25,000 crore), out of which at least two-thirds is US dollar denominated. The two brands suffered a forex loss of £220 million (Rs 2,200 crore) during the quarter.

JLR was offset by unfavourable operational forex net of realised hedges, due to a weaker dollar and renminbi for the first half of FY15 and a weaker euro throughout the year, the company stated.

Consolidated net sales for the reporting quarter stood at Rs 67,297, a growth of 3 per cent, against Rs 65,616 crore reported in the same quarter last year hit by a flat growth in revenue from JLR. Ebitda margins declined to 13.7 per cent in the quarter from 16.5 per cent reported in the same quarter last year.

Tata Motors