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Tata Motors sees JLR back in profit this year as China sales recover

Tata Motors said tighter control of expenses and a turnaround at JLR helped dull the impact of an economic slowdown at home

Reuters  |  Mumbai/Bengaluru 

Land Rover
Britain-based JLR has been at the centre of media speculation in recent months, with reports Tata might look to sell a stake | Photo: Shutterstock

Ltd expects its luxury arm to return to profit this financial year helped by cost cuts and a recovery in Chinese demand, it said on Monday, after the group's fourth-quarter profit fell less than expected.

Finance chief P B Balaji told reporters he expected Chinese sales of its sleek Jaguar saloons and Land Rover sport-utility vehicles (SUVs) to return to growth "a quarter from now."

Brexit-related disruption and a slowdown in sales in China, once Jaguar Land Rover's (JLR) fastest-growing market, have hammered Tata's finances. Three months ago, it posted the biggest quarterly loss in Indian corporate history.

"Metrics (in China) have started stabilising, return on sales have picked up dramatically and at the same time our inventories at the dealers have come down significantly," Balaji said. "We should start seeing China come back to growth a quarter from now," he added.

Tata, India's biggest automaker by revenue, said tighter control of expenses and a turnaround at helped dull the impact of an economic slowdown at home as it posted its first quarterly profit for the fiscal year that ended on March 31.

Tata earned Rs 11.17 billion ($160.26 million) in net profit in January-March. That was ahead of the Rs 3.38 billion average of 10 analyst estimates compiled by Refinitiv IBES, though lower than Rs 21.25 billion a year earlier.

Revenue from its wholly owned subsidiary Automotive Plc fell 5 per cent to Rs 651.46 billion. The unit brings in most of Tata's revenue.

Britain-based has been at the centre of media speculation in recent months, with reports Tata might look to sell a stake and also that the unit was set to announce a major investment in Britain. announced 4,500 job cuts in January.

Balaji said Tata had no plans to sell JLR.

Last month, Tata's domestic rival Maruti Suzuki India Ltd booked a 5 per cent drop in quarterly net profit and forecast weak growth for the year ending March 2020 due in part to a consumer-led slowdown and tighter liquidity.

"In India we expect to see next 3-6 months of tepid demand ... the near term performance is likely to be definitely impacted due to continued slowdown in the market. This will improve as the year progresses," Balaji said.

shares closed up 7.5 per cent at 190.15 rupees ahead of the The Nifty Auto index ended up 4.2 per cent amid a broader market rally.

First Published: Mon, May 20 2019. 22:48 IST
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