Tata Motors profit plummets by 96% over note ban, lower JLR earnings

Mail Today Bureau   Mumbai     Last Updated: February 15, 2017  | 13:22 IST
Tata Motors profit plummets by 96% over Note ban, lower JLR earnings
MD and CEO of Tata Motors Guenter Butschek at the press conference in Mumbai

Tata Motors saw its net profit plunge 96 per cent during the October-December quarter as earnings at its British luxury carmaker Jaguar Land Rover (JLR) fell sharply and losses piled up in its domestic business.

Consolidated net profit for the three months to Dec. 31 fell to Rs 112 crore from Rs 2,953 crore a year earlier, the company said on Tuesday. Total income from operations fell 4.3 per cent to Rs 68,541 crore.

Combined retail sales of its sleek Jaguar sedans and Land Rover sports utility vehicles (SUVs) rose 8 percent to 149,288 vehicles in the three months through December from a year earlier on the back of a 38 per cent rise in sales in China.

While Jaguar retail sales rose about 90 per cent to 45,364 vehicles, Land Rover sales fell 9 percent to 103,924 vehicles. JLR's net profit declined to 167 million pounds ($208 million) from 440 million a year ago, although revenue went up 13.1 per cent. Tata Motors' domestic business reported a net loss of Rs 1,046 crore as it revamped its passenger vehicles business to boost sales and gain market share.

Earlier in February, Tata Motors unveiled a new brand called TAMO, aimed at testing new technologies and enabling the company to become more responsive to changing market trends.

"What is it that we need to be a high performance organisation -being lean, it's about being agile and it's about having clearly addressed and delegated accountability," Guenter Butschek, MD and CEO of Tata Motors, told a news conference on Tuesday.

The company is also implementing a management transformation from the beginning of April aimed at bringing in speed, simplicity and agility to deal with market volatility, he said.

Tata Motors said during the third quarter 2016-17, its commercial vehicles segment witnessed demand shrinkage due to the demonetization which had wiped out 86 per cent of the currency in circulation.

Medium and heavy commercial vehicle segment witnessed major pressure with a fall of 9 per cent and LCV segment was overall flat. Passenger vehicles segment grew by 25.4 per cent with car segment rising by 31.1 per cent on the back of continued strong response to the Tiago, it added.

Tata Motors stock ended at Rs 468.30 apiece, down 7.34 per cent, on BSE.

The company expects to see a much better fourth quarter, Chief Financial Officer C Ramakrishnan said at press conference.

Other issues facing JLR include Britain's Brexit vote and US President Donald Trump's promised protectionist policies, according to a Jan. 20 report by Mumbai-based IDFC Securities. The United States accounts for about 25 percent of JLR's sales.

Ramakrishnan attributed the poor show by JLR to a slew of events such as hedging losses on forex and commodities positions, new wage settlement provisions, higher advertising spends and some product mismatch.

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