Tata Motors has recorded losses at the consolidated level in five of the last six quarters. But two things stand out in the three months ended September 2019.

One, the losses have narrowed substantially to just ₹217 crore, compared with ₹1,049 crore a year ago. And, two, Jaguar Land Rover ( JLR) has returned to profitability.

The downturn in domestic auto sales did no good to the standalone business, which posted a loss of ₹1,282 crore. But what helped is the sharp improvement in performance at Jaguar Land Rover (JLR) thanks to a recovery in China and other cost control efforts. Jaguar Land Rover posted a profit (before tax and exceptional items) of £156 million (approximately ₹1,420 crore) during the quarter.

What helped JLR

JLR’s topline grew 8 per cent year-on-year to £6,086 million (₹55,400 crore), thanks to launches/facelifts and better offtake in China. JLR’s China retail volumes jumped 24.3 per cent even as the industry sales dropped 6 per cent. Steps taken by the company in the last few months, such as resetting inventory levels, redrawing its engagement with retailers and simplifying its incentive programmes to provide greater benefits have paid off. JLR was also helped by benign material costs, lower depreciation and fixed marketing expenses as well as favourable foreign exchange rates.

EBITDA margins for JLR improved by 480 basis points over the September 2018 quarter to 13.8 per cent, while EBIT margins improved by 560 basis points to 4.8 per cent.

The ongoing ‘Project Charge’, directed at achieving cost savings of £2.5 billion by 2019-20 had helped improve profitability.

It aims to reduce engineering expenses, rationalise inventory and bring down employee and manufacturing, material and selling expenses. Since 2018-19, JLR has so far achieved £2.2 billion savings under this project. The company expects to continue this beyond 2020 as well.

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