Tata Motors expects limited volume hit in domestic biz due to coronavirus

PTI New Delhi | Updated on March 06, 2020 Published on March 06, 2020

Tata Motors on Friday said it expects limited volume loss in its domestic business during the January-March 2020 period due to disruption of supply chain from China owing to the coronavirus outbreak.

The auto major also expects Jaguar Land Rover’s (JLR) full-year EBIT (earnings before interest and tax) margin to be down by about 1 per cent due to reduction in China sales.

“For Tata Motors’ domestic business, fourth quarter performance was already planned to be significantly impacted due to the switchover from BS-IV to BS-VI and the shortage of parts is likely to have some additional impact on specific BS-VI models which is expected to be secured in the coming months,” the company said in a statement.

While sharing an update on the impact of coronavirus, the company, however, remained optimistic to end the fourth quarter with positive free cash flow.

“With some flexibility in mix (models, trim levels), the current visibility protects production volumes up to mid-March. The further planning horizon contains some uncertainties which are expected to be mitigated to a large extent; situation could lead to limited volume losses in the fourth quarter,” Tata Motors said.

It also added that the situation is, however, expected to be recovered as market demand is likely to improve gradually upon transition to BS-VI.

Commenting on the financial impact on the JLR business due to coronavirus episode, the company said, “Recognising the present situation is highly uncertain and could change, the reduction in China sales resulting from the coronavirus presently is estimated to reduce JLR’s full year EBIT margin by about 1 per cent.”

However, free cash flow in the fourth quarter is still expected to be modestly positive and JLR had 5.8 billion of total liquidity at December 2019 ( 3.9b of cash and a 1.9b undrawn revolving credit facility), it added.

Published on March 06, 2020

A letter from the Editor

Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Support Quality Journalism
This article is closed for comments.
Please Email the Editor
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.