Tata Motors came out with a disappointing performance in the quarter ended March 2018, with the consolidated net profit halving to ₹2175 crore in comparison with the March 2017 quarter.

Although consolidated revenues (adjusted for GST impact) grew by 18 per cent to ₹91,279 crore, the company was not able to carry the forward this performance to the bottom line.

The sharp drop in profit is partly due to an exception expense to the extent of ₹1,640 crore. During the quarter, the company reviewed its assets /investments across and wrote off those that were no longer useful due to factors such as change of priorities, restructuring and so on.

Besides, at the operating level, the company witnessed margin pressures due to elevated marketing expenses at JLR and also due to a decision to treat a higher proportion of its product development costs as revenue expense, beginning this quarter.

Consolidated EBITDA margin, thus, came in at 12.8 per cent vis-à-vis 13.1 per cent in the same quarter last year. But for the exception expense, the domestic business put up a good show in the quarter.

Tepid show by JLR

Domestic sales volumes grew by 35-37 per cent, thanks to a revival in industrial growth and improving consumption.

The standalone business recorded a profit before tax and exceptional item of ₹488 crore against a loss of ₹499 crore in the March 2017 quarter.

But this was not the case with JLR. While sales volumes in China grew by 11 per cent, volumes in the US remained tepid due to market cyclicality.

Uncertainty over exit and government policy for diesel vehicles saw the UK and Europe record a 12-21 per cent decline in volumes over the March 2017 quarter.

Hence, JLR revenues grew only by a tepid 4 per cent. JLR’s profits dropped by about 50 per cent over the March 2017 quarter to £264 million now.

With the domestic auto industry in an upturn and JLR too, strengthening its portfolio with recent/ planned launches such as the E-Pace, Velar, I-Pace and other refreshments of the Range Rover and Range Rover Sport, the coming months are expected to be better for the company.

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