Tata Motors Q4 Results: Slump In Sales Causes Nearly Rs 10,000-Crore Loss

Tata Motors Ltd. reported a quarterly loss as the Covid-19 pandemic led to a slump in vehicle sales.

Net loss stood at Rs 9,894.2 crore in the quarter ended March compared with a profit of Rs 1,117 crore profit a year ago, the automaker said in an exchange filing Monday. A consensus of analysts tracked by Bloomberg had pegged the loss at Rs 1,466 crore. The loss is exaggerated as the company made a Rs 2,549-crore provision for impairment in its passenger vehicles business, onerous contracts and subsidiaries.

• Revenue fell 28% year-on-year to Rs 62,493 crore—higher than the Rs 61,353-crore estimate.
• Operating profit declined 70.4% to Rs 2,373.4 crore.
• Margin narrowed to 3.8% from 9.3% last year.

The owner of Jaguar Land Rover saw sales take a significant hit due to the Covid-19 pandemic. Sales in China, its fastest-growing market, plummeted due to the strict lockdown for curbing the virus spread. In India, Tata Motors faced a mix of challenges led by upfront insurance costs, a broader consumption slowdown and transition to the new BS-VI emission norms.

“Disruption in supply chain induced by the pandemic and the nationwide lockdown in mid-March 2020 added to the problems,” Guenter Butschek, chief executive officer and managing director of Tata Motors, was quoted as saying in a media statement. Even with the “relentless” focus on retail and cost-reduction initiatives, Tata Motors failed to mitigate the impact on financials, he said.

Production and sales of automakers are yet to normalise, with countries gradually easing lockdown rules. Tata Motors expects an even bigger hit in the first quarter of fiscal 2021 with the full impact of the lockdowns coming into play.

The company expects sales to start recovering from June onwards and is preparing its supply chain accordingly. It will also focus more on “rigorously” conserving cash by cutting down spends. Tata Motors has reduced its capital expenditure plan to Rs 1,500 crore for FY21 compared with Rs 5,300 crore last year.

Also Read: Jaguar Land Rover Owner Sees Beginnings of Recovery in China

“While the outlook remains uncertain the Company expects a gradual recovery of sales and improving cash flows for the remainder of the year and expects to end the FY21 with positive free cash flows,” it said.

Shares of Tata Motors closed 4.6% lower, ahead of the earnings announcement, while the benchmark S&P BSE Sensex fell 1.63%.