Tata Motors, India’s largest automotive company, posted a consolidated net loss of ₹992 crore during the March quarter of FY22 due to supply chain disruptions, commodity cost pressures, shutdown in parts of China and an exceptional charge taken for the pause in sales in Russia.
The Mumbai-based company, which owns Jaguar and Land Rover (JLR), has cautioned for the June quarter earnings which will also see commodity cost pressures and supply chain challenges. The company had posted a consolidated net loss of ₹7,585 crore in the same quarter of FY21.
While the markets of Russia and Ukraine, which account for 2.5 per cent of worldwide sales of JLR, are closed for the two brands, the company claims to have an order booking of 1,68,000 units on both the British brands, which is an increase from 1,55,000 units it claimed in Q3-FY22.
‘Monitoring situation’
PB Balaji, Chief Financial Officer, Tata Motors, said, “The supply chain has been impacted due to shut down in parts of China. We are managing the situation to the best of our abilities and it is one of the reasons why we need to watch out for Q1 in terms of availability of supplies coming from China on a consistent basis. We are monitoring the situation and taking actions accordingly.”
Cost of slump sale of passenger vehicle undertaking of ₹301 crore was also added to the exceptional items. Tata Motors took an exceptional charge ₹429 crore in the business operations in Russia during the reporting quarter.
“We have taken a charge on the operations we have in Russia and that’s the net asset value of the business we have written down. And until clarity emerges in terms of our ability to do business there, this is a conservative view we have taken on that,” Balaji added.
Tata Motors clocked a consolidated revenue of ₹77,857 crore, during the reporting quarter down 11.29 per cent compared to ₹87,772 crore posted in the same quarter in FY21. EBITDA for the quarter stood at 11.2 per cent at the consolidated level, down 320 basis points compared to Q4-FY21.
The company informed that it has received the first tranche of ₹7,500 primary investment by TPG Rise Climate in Tata Passenger Electric Mobility which is ₹3,750 crore. The company closed the March quarter with an EV penetration of 7.4 per cent.
Tata Motors added that EV business will drive up penetration and further accelerate sales. “The business is expected to deliver strong improvement in margins and profitability in FY23. The business will continue to step-up new product launches and enhance capacities to cater to increasing demand,” Tata Motors added.
To increase PV output
The auto maker is increasing capital expenditure to ₹5,500-6,000 crore for FY23 at the stand-alone level. It has lined up a capex of ₹3,500 crore for FY22. Balaji added that Tata Motors would look for debottlenecking of production processes to make way for increased output for the passenger vehicle category.
“The focus on debottlenecking continues and therefore our intention is to get as close to 50,000 (per month) as possible and all other options we will continue as it comes through,” Balaji added.