Homegrown auto major Tata Motors on Thursday reported a consolidated net profit of Rs 1,738.30 crore for the third quarter ended December 31, 2019, helped by aggressive cost-cutting measures and stronger performance from Jaguar Land Rover (JLR). The company had posted worst ever quarterly loss of Rs 26,992.54 crore in the corresponding quarter last year due to one-time non-cash charge for asset impairment of its UK subsidiary Jaguar Land Rover at Rs 27,838 crore.
Consolidated revenue for October-December period declined by 6.81 per cent to Rs 71,676.07 crore as compared to Rs 76,915.94 crore in the same quarter last year, Tata Motors said in a filing to the Bombay Stock Exchange after market hours.
The operating profit or EBITDA (earnings before interest, tax, depreciation and amortisation) margin stood at 9.9 per cent during December quarter.
Finance costs increased by Rs 175 crore to Rs 1,744 crore during Q3FY20 versus prior year due to higher gross borrowings.
The company said the consolidated results were benefitted from JLR recovery in China and 'Project Charge' cost-saving plan. However, decline in the M&HCV (medium and heavy commercial vehicle) and the stock reduction in India have adversely affected numbers.
"The company's project charge transformation programme reduced operating costs by 154 million pounds, investment by 200 million pounds, and inventories by 405 million pounds in the quarter," Tata Motors said in the filing.
On the standalone basis, the company posted net loss of Rs 1,039.51 crore against a profit of Rs 617 crore in the year ago period, dented by decline in domestic sales. The standalone revenue plunged 33 per cent year-on-year to Rs 10,800 crore.
In Q3FY20, wholesales (including exports) fell 24.6 per cent to 1,29,185 units. In the domestic market, M&HCV trucks de- grew by 47.7 per cent, followed by ILCV by 15.7 per cent, SCV & Pick Ups by 6.1 per cent and CV Passenger by 25.6 per cent. Domestic passenger vehicle volumes were down 26 per cent.
During the quarter under review, Tata Motors' UK-based subsidiary, JLR, reported profit at Rs 372 million pounds against revenue of 6.4 billion pounds. The total retail sales declined 2.3 per cent, despite 24.3 per cent rise in sales in China and 1.1 per cent increase in North America sales.
Commenting on earnings numbers, Guenter Butschek, CEO and MD Tata Motors said, "The downturn in the automotive industry continued in 03 as the economy slowed down. Despite gaining sequential market shares in M&HCV, ILCV and SCV this quarter, our financial performance was impacted due to the downturn coupled with the inventory corrections we took to get ready for BS VI."
"We remain optimistic of the medium to long term opportunity offered by the Indian automotive market and aim to win in this market with our fully refreshed, exciting and competitive portfolio coupled with focused efforts to improve our sales and customer experience and continued drive for cost efficiencies," Butschek said.
Speaking on JLR's performance, CEO Ralf Speth said, "In the third quarter Jaguar Land Rover sustained year-on-year revenue and profit growth as we continued to transform our business. Conditions in the automotive industry remain challenging but we are encouraged by the recovery in our China business and the success of the new Range Rover Evoque."
Ahead of Q3 earnings, shares of Tata Motors closed Thursday's trade at Rs 186.20 apiece, down 0.98 per cent, on the Bombay Stock Exchange.
By Chitranjan Kumar