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The company made a substantially higher tax provision of Rs 2,364 crore, more than double the expense it accounted for in the corresponding period last year. The Bloomberg profit consensus for the quarter stood at Rs 4,626 crore.
C Ramakrishnan, chief financial officer of Tata Motors, said, “As far as JLR is concerned there are two effects happening. One is a certain amount of higher tax provisioning in JLR and, more importantly, as JLR launches new products the depreciation and amortisation charged in JLR is also growing. It is a non-cash expenditure. Then we have a marginal effect of foreign exchange revaluation. As far as the India business is concerned we had to take some tax reversals credits because of the current performance. This is more of an accounting provision not cash”.
Net sales for the reporting quarter stood at Rs 60,564 crore a growth of 7 per cent compared to Rs 56,867 crore reported in the same quarter last year. However, sales too were lower than Bloomberg estimates of Rs 63,725 crore. Operating earnings improved to 17 per cent from 16.3 per cent at the consolidated level, and was better than estimates of 16.2 per cent. Stand-alone operations posted their biggest loss in six quarters at Rs 1,846 crore for the reporting quarter against a loss of Rs 804 crore in the same quarter last year, an increase of 130 per cent. The company clarified it had tax expense of Rs 738 crore during the quarter.
Still the company’s stand-alone operational performance remained a worry as vehicle sales fell by 21 per cent to 80,724 units from 101,902 units led by a slide in commercial vehicle sales. Net sales stood at Rs 8,750 crore, down 1.3 per cent from Rs 8,868 crore posted in the same quarter last year. The EBITDA margin was a negative 1.7 per cent Jaguar Land Rover too posted a drop in net profit at Pound 450 million, a decrease of 11 per cent from Pound 507 million. Vehicle sales declined to 103,975 units, 6 per cent lower that 110,781 units. Net sales grew to Pound 4.8 billion during the quarter, an increase of 4 per cent from Pound 4.6 billion.
A richer product mix supported by the success of Range Rover Sport, Range Rover and Jaguar F-Type helped improve the EBITDA margin to 19.4 per cent from 17.5 per cent. To keep the momentum going, the company said it would start manufacturing at the China joint venture plant before the end of the financial year.
As regards to the labour strike threat looming over the five Jaguar Land Rover plants in the UK, the company’s finance head said negotiations were on with the union to end the deadlock. Striking workers have threatened industrial action if their wage demands are not agreed upon.
The stock closed 0.5 per cent lower at Rs 524 on the BSE on Friday. The results came in after market hours.
