Forbes India 15th Anniversary Special

Tata Motors posts Rs 430 crore loss in Q2 FY16

An exceptional charge of Rs 2,493 crore recognised by the company due to the Jaguar Land Rover vehicles damaged in the Tianjin port explosion in China forced the car maker into the red in the September 2015 quarter

Published: Nov 6, 2015 05:58:46 PM IST
Updated: Nov 6, 2015 06:14:09 PM IST
Tata Motors posts Rs 430 crore loss in Q2 FY16
Image: Courtesy Overdrive

Tata Motors Ltd, the automobile arm of the salt-to-software Tata Group, posted a consolidated loss of Rs 430 crore for the quarter ended September 30, 2015, against a net profit of Rs 3,291 crore in the same period last year. The company’s turnover in the same period rose marginally to Rs 61,318 crore, up one percent year-on-year.

The loss that Tata Motors reported in the July-September period was largely a result of an exceptional charge of Rs 2,493 crore that the company had to recognise on its profit and loss account for the period. This was on account of the Jaguar Land Rover (the British luxury carmaker that is a subsidiary of Tata Motors) cars that were damaged due to an explosion at China’s Tianjin port in August this year.  
Excluding the exceptional provision, Tata Motors reported a profit from ordinary activities after finance charges of Rs 1,538.29 crore, a 72.74 percent drop from the year earlier.

Tata Motors’s standalone India business reported earnings before interest, tax, depreciation and amortisation (Ebitda) of Rs 709 crore during the quarter with an Ebitda margin of 6.8 percent, which was an improvement of 840 basis points over the year earlier. According to the Tata Motors results presentation, this improvement in operating performance was a result of strong growth in the sales of medium and heavy commercial vehicles, which was up by 35 percent year-on-year and ongoing cost reductions measures.

At the bottomline level, however, Tata Motors’s India business posted a net loss of Rs 287 crore, though losses narrowed substantially from the Rs 1,846 crore reported in the September 2014 quarter.

On the back of new offerings like Zest, the sedan, and Bolt, the hatchback, which are part of Tata Motors’s new ‘Horizonext’ strategy, Tata Motors’s sales grew 14.8 percent year-on-year in the car segment. In the overall passenger vehicle segment, Tata Motors’s sales grew by 5.2 percent, lower than the 6.9 percent growth in volumes exhibited by the entire passenger vehicles segment in the country.

Overall, the consolidated carmaking entity sold 35,558 units in India and abroad during the September quarter, a growth of 6 percent over last year.   

Tata Motors’s Jaguar Land Rover (JLR) business posted revenues of 4.83 billion pounds during the July-September period, marginally higher than the 4.80 billion pounds turnover reported a year earlier. However, JLR’s Ebitda fell by 37 percent year-on-year to 589 million pounds during the quarter and margins declined to 12.2 percent from 19.4 percent a year earlier.

The drop in operating profits and margin was a result of a “less favourable sales mix, higher manufacturing and launch costs and unfavourable foreign exchange revaluation,” according to the Tata Motors’s presentation.

“As previously indicated, Ebitda margins for fiscal 2015-16 (for JLR) are expected to be lower than the high levels in 2014-15 reflecting model mix and launch costs associated with new products, launch and reporting effects of the China joint venture and more mixed economic conditions, particularly in China,” the company’s investor presentation said.

Tata Motors’s share price fell by 1.87 percent on the BSE on Friday to close at Rs 396.25 per share. The bourse’s benchmark index, Sensex, lost 0.15 percent to end at 26,265.24 points on the same day.