Both Jaguar Land Rover and the domestic business have contributed to Tata Motors’ consolidated loss of about ₹430 crore in the quarter ended September 2015.

Retail volume growth for JLR during the quarter has at best been flat, thanks to a 32 per cent drop in volumes in China.

The general economic slowdown in China and slow-ramp up in local production in its joint venture there have affected volumes.

China now brings only 18 per cent of the total JLR volumes, compared to 27 per cent a year ago. Other overseas markets (barring the US, the UK and Europe) have also seen a drop in sales volumes.

Secondly, the company has been affected at the operating level due to higher launch costs for its new vehicles and unfavourable forex movements (Euro vs Pound).

JLR’s EBITDA margins have consequently come down to 12.2 per cent from 19.4 per cent a year ago. At the net profit level, higher finance costs, unfavourable revaluation of foreign currency debt and mark to market of unrealised hedges have also worked against JLR in this period.

On the domestic front, the company continues to post losses, despite the sharp turnaround in car and commercial vehicle sales.

But the solace is that it turned EBITDA positive in the March 2015 quarter and continues to show improvement sequentially on the operating front.

Hence, it may only be a matter of time before domestic operations turn profitable.

At JLR though, a revival in Chinese demand is vital.

However, with the UK, Europe and US volumes showing strong double digit growth, recent and upcoming launches such as the new XF, Evoque, XE, XJ and F-PACE, may help improve profitability in the quarters to come.

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