Tata Motors Q2 loss at ₹307.26 cr

Our Bureau Mumbai | Updated on October 27, 2020

Domestic PV volumes were up 110.4% during the quarter   -  Chris Ratcliffe

Revenue jumped 67% as against Q1 to ₹53,530 crore

Tata Motors on Tuesday posted a consolidated net loss of ₹307.26 crore in the second quarter of FY21, as against a loss of ₹8,443.98 crore in Q1.

The company’s total revenue from operations during the September quarter stood at ₹53,530 crore, a 67.36 per cent increase from the ₹31,983.06 crore posted in the first quarter.

Year-on-year, Tata Motors had posted a consolidated net loss of ₹187.70 crore in Q2 FY20. The total revenue from operations of the company during the period was ₹65,431.95 crore, marking an 18.18 per cent decline this year.

“The auto industry continued its calibrated progress in Q2 FY21 as the nationwide lockdown eased further. In PV, we accelerated the momentum built in Q1 and saw demand gradually emerge in select segments of CV. We remain hopeful for a full recovery in the CV industry by the end of this fiscal year aligned to the overall improvement in the economy. During the quarter, we delivered on our planned improvements in our operational and financial performance. We reiterate our commitment to make Tata Motors more agile by reducing costs, generating free cash flows, and providing the best in class customer experience,” said Guenter Butschek, CEO and MD, Tata Motors.

Sales numbers

Wholesale sales (including exports) during the quarter increased 3.4 per cent to 109,958 units. Domestic volumes were down by 43.2 per cent in M&HCVs, 32.5 per cent in ILCVs, 5.7 per cent in SCVs and pick-ups, and 74.4 per cent in PVs. Domestic PV volumes were up 110.4 per cent. Overall domestic retail sales were lower than wholesale sales by 14,700 units as pipeline inventory in CV improves, the company said.

“We are cautiously optimistic that the worst is probably over as far as commercial vehicles are concerned,” said PB Balaji, Group CFO, Tata Motors, during a conference call with reporters on Tuesday. “The CV business, compared to what it was a month and a half back, has definitely improved. Even more reassuringly, financial concerns are now starting to abate,” he added

“I think once moratorium has cleared, people are seeing that actually things are not as bad as they were and there are a lot of people wanting to repay loans on time...we are now seeing improvements in the loan recovery rate and that is ensuring financing coming through in CVs as well. I think if this trend were to continue, I would expect to see most issues of the issues of CVs resolved in the next three months or so,” he added.

On his overall outlook for the auto sector, Balaji said that the second half of this year will definitely see an improvement compared to the first half, and it should also improve every quarter in terms of performance.

“The company will focus on conserving cash by rigorously managing cost and investment spends to protect liquidity. The company has called out a cash improvement programme of ₹6,000 crore, including a cost improvement programme of ₹1,500 crore. Due to these actions, the company expects improving cash flows for the remainder of the year,” Tata Motors said in a statement.

JLR sees profit

Jaguar Land Rover returned to profit with significant positive cash flow in the quarter as sales and revenue recovered from the impact of Covid-19, but the figure remains below pre-Covid levels a year ago, it said. Retail sales of 113,569 units were up 53.3 per cent q-o-q. However, retail sales in most markets continued to be impacted by Covid-19, and so were down 11.9 per cent in y-o-y, it noted. “China sales were particularly encouraging, up 14.6 per cent on the prior quarter and 3.7 per cent year-on-year. Revenue was £4.4 billion (on wholesale sales of 73,451 excluding China JV), up 52.2 per cent from Q1, although down 28.5 per cent from pre-covid levels a year ago,” it said.

JLR generated a £65-million profit before tax (PBT) in the second quarter, up significantly from a loss of £413 million in the prior quarter, but lower than the £156 million a year ago. The improvement in the year reflects the recovery in sales, £0.3 billion of Project Charge+ cost efficiencies and favourable foreign exchange impact, the company said.

A gradual improvement in sales is expected to continue and will be supported by new and refreshed products, it said. “Although the outlook remains uncertain as a result of Covid-19 and questions over future UK-EU trading arrangements, JLR expects the recovery in sales, revenue, and profitability to continue in the second half of Fiscal 2020/21, supported by Project Charge+,” the company said.

On Tata Motors’ overall outlook, it said, “Despite concerns around the risk of a second wave of infection in many countries and other geopolitical risks, we expect a gradual recovery of demand and supply in the coming months. In this context, we are committed to achieving near zero net automotive debt in the coming years by focusing on better front-end activations of our exciting product range and executing our cost and cash savings with rigour.”

Published on October 27, 2020

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