Tata Motors’ Q1 loss more than doubles to ₹8,438 cr.

CV, PV sales plunge; JLR no exception

Tata Motors said consolidated first-quarter net loss increased to ₹8,438 crore from ₹3,698 crore in the year-earlier period as the COVID-19-related lockdown severely impacted sales.

Revenue declined almost 48% to ₹31,482 crore.

Revenue of Tata Motors’ domestic business declined 80% to ₹2,687 crore. Commercial vehicle sales plunged 97% and passenger vehicles, 55%.

Jaguar Land Rover (JLR) unit reported a revenue decline of 44%, retail sales decline of 42% and loss before tax of £413 million. Stating that the revenue for the quarter was severely impacted by the lockdown, P.B. Balaji, Group CFO, Tata Motors, said continued lockdowns would impact the company operationally, including on supply chain matters. “All our units were impacted. However, we saved cost both at Tata Motors and JLR. There is huge improvement coming [on cost reduction] from JLR,” he said on a conference call. Project Charge at JLR delivered £1.2b of cost, profit, and cash flow improvements in the quarter.

Negative operating leverage impacted the performance significantly at Tata Motors. However, cash outflows were better than earlier expectations driven by the improvement initiatives which yielded ₹1,020 crore of cash savings in the quarter, Mr. Balaji said.

The company said the outlook remained uncertain for the year with infections continuing to rise and intermittent lockdowns in many countries.

“However, we expect a gradual recovery of demand and supply in the coming months. In this context, we are committed to significantly deleveraging the business in the coming years and aim to generate positive free cash flows over last 3 quarters of the year by focusing on better front end activations of our exciting product range, and executing our cost and cash savings with rigour," the company said in a filing with stock exchanges.

Arjun Yash Mahajan, head institutional business, Reliance Securities said, “While we believe lower capex and the government’s stimulus would support JLR, focus on cost control would improve margins going forward. Though we expect its debt to increase over next two to three years, tight control on capex and R&D would keep its expansion of debt under control.”

On Friday, the board of directors approved (subject to the requisite regulatory and other approvals) a Scheme of Arrangement between Tata Motors Ltd. and TML Business Analytics Services Limited (Transferee Company) transfer of the passenger vehicles undertaking of the company as a going concern, on a slump sale basis to the transferee company for a lump sum consideration of ₹9,417 crore through issuance of equity shares.

And reduction of its share capital without extinguishing or reducing its liability on any of its shares by writing down a portion of its securities premium account to the extent of ₹11,173.59 crore, with a corresponding adjustment to the accumulated losses of the company.

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