India's cash move almost wipes out Tata Motors profits

Feb 15, 2017, 00:29
India's cash move almost wipes out Tata Motors profits

"During the quarter, commercial vehicle segments of the company witnessed demand shrinkage due to the demonetisation". Losses rose to Rs 1,046 crore from a loss of Rs 137 crore the company had posted in Q3 of 2015-16 fiscal.

The Jaguar Land Rover unit is vulnerable because it doesn't have factories in the US and sells much of its United Kingdom output overseas. The China operation generated a higher profit of 35 million pounds in the October-December 2016 quarter compared to 22 million pounds in the corresponding period of the previous year. Exports grew by 34.6% Y-o-Y.

"The segment witnessed major pressure with a fall of nine percent year-on-year" in sales, it noted. "That is because the JLR margin seem to be settling in to the single digit space unlike (in) the past where a 14% was a given".

Shares of Tata fell as much 7.3%, before recouping some of the losses to close 3.7% lower at 486.8 rupees on Mumbai's BSE stock exchange.

The company says the operating performance reflects lower wholesale volumes and less favourable product mix partially offset by favourable market mix (including the runout of the Discovery model), unfavourable variable marketing expense including the extended 2016 model year runout expenses in the USA; higher new model launch costs and biennial pay negotiation settlement.

Q3FY17: Tata Motors' net profit declines by 96% at Rs 112 crore

Passenger vehicle sales rose 25.4% on the back of a continued strong customer response to the Tiago hatchback, the company said.

"What is it that we need to be a high performance organisation - being lean, it's about being agile and it's about having clearly addressed and delegated accountability", Mr. Butschek said.

auto makers in India were also hit in the third quarter by Prime Minister Narendra Modi's "demonetization" move in November, when he declared notes of 500 rupees and 1,000 rupees illegal tender, taking about 86 percent of total currency out of circulation.

"JLR had lower wholesale volumes", C. Ramakrishnan, chief financial officer of Tata Motors, said at a briefing in Mumbai.

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