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Tata Motors Q1 net loss widens to Rs 8438 cr

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The auto major reported a consolidated net loss of Rs 8438 crore in Q1 June 2020, higher than net loss of Rs 3,698.34 crore in Q1 June 2019.

Net sales in Q1 June 2020 stood at Rs 31,481.86 crore, falling 48% from Rs 60,830.16 posted in Q1 June 2019. The auto maker said that the nationwide lockdown resulted in the production and retailer shutdowns for major part of the quarter and heavily impacted the volumes. Negative operating leverage impacted the performance significantly.

The auto major reported a pre tax loss of Rs 6,183.73 in Q1 June 2020 as against pre tax loss of Rs 3,238.18 crore in Q1 June 2019. Total tax expense stood at Rs 2,200.49 crore in Q1 June 2020, rising sharply from Rs 196.07 crore in Q1 June 2019. The company restricted recognition of net deferred tax asset based on its assessment of recoverability, resulting in a deferred tax charge of Rs 2,074.38 crore.

On a standalone basis, the company post a net loss of Rs 2190.64 crore in Q1 June 2020, higher than net loss of Rs 97.10 crore in Q1 June 2019. Total revenue from operations declined 80% year on year to Rs 2,686.87 crore during the quarter.

In Q1 June 2020, wholesales (including exports) decreased 81.5% year on year to 25,294 units. COVID-19 lockdown deeply impacted the volumes in both CV and PV. The auto maker said it received encouraging response to EVs as it sold 289 EVs during the quarter.

Tata Motors said it expects gradual pickup in demand and supply situation on the back of overall economic recovery. The company said it will focus on conserving cash by rigorously managing cost and investment spends to protect liquidity.

The company said the outlook remains uncertain for the year with infections continuing to rise and intermittent lockdowns in many countries. However, we expect a gradual recovery of demand and supply in the coming months. In this context, we are committed to significantly deleveraging the business in the coming years and aim to generate positive free cash flows over last 3 quarters of the year by focusing on better front end activations of our exciting product range, and executing our cost and cash savings with rigour.

Tata Motors' subsidiary Jaguar Land Rover (JLR) retail sales dropped 42.4% year on year to 74,067 vehicles in Q1 June 2020. JLR's revenue stood at 2.9b in the quarter and the company made a pre-tax loss of 413m. JLR's free cash flow was negative 1.5b, primarily reflecting a one-time working capital outflow of 1.1b. The company's Chery Jaguar Land Rover Joint Venture in China achieved break-even profits in the quarter. The company successfully completed about 650m of new funding and ended the quarter with solid liquidity of 4.7b including 2.75b of cash and short-term investments and 1.9b undrawn revolving credit facility. JLR said about 98% of its retailers worldwide are now fully or partially open and all the company's plants have resumed manufacturing.

Commenting on company's performance, Guenter Butschek, CEO and MD, Tata Motors, said, The COVID-19 pandemic has deeply impacted the auto industry in Q1FY21. Post a calibrated restart at all plants in mid-May, we gradually scaled up our capacity while prudently safeguarding the health and wellbeing of our employees as well as the larger ecosystem. Even as we continue to address the challenges, we see some disruption due to the intermittent shutdowns and supply chain bottlenecks. We have witnessed some green shoots emerging in PV owing to some pent up demand pre COVID, and are hopeful for a full recovery of the CV industry by end of the fiscal year, with a gradual pickup of demand, aligned to the economic recovery. We remain focused on making Tata Motors more agile to improve our market, operational and financial performance by reducing costs, generating free cash flows and providing the best in class customer experience.

Shares of Tata Motors rose 0.96% to Rs 104.70. The result was announced after market hours yesterday, 31 July 2020.

Tata Motors, part of the $110 billion Tata group, is a global automobile manufacturer of cars, utility vehicles, pick-ups, trucks and buses.

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(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Sat, August 01 2020. 09:00 IST