Tata Motors on Tuesday reported a surprise loss for the fourth quarter ended March 31, 2021 following a large writeoff at its arm Jaguar Land Rover (JLR). The company posted a consolidated loss of Rs 7,585.34 crore against a loss of Rs 9,863.75 crore in the year ago period.
Analysts had expected the company to report profits of Rs 2500-3000 crore.
The net loss came after an exceptional charge of Rs 14,994.30 crore was recognised under JLR's Reimagine strategy. The company had to write down £951.83 million (Rs 9,606.11 crore) of assets from its books as JLR had to shelve some models.
Tata Motors had to bear restructuring costs of £533.88 million (Rs 5,388.19 crore). This included costs of £526.36 million (Rs 5,312.29 crore) accruals to settle legal obligations on work performed to date and provisions for redundancies and other third-party obligations along with a defined benefit past service cost of £7.52 million (Rs 75.90 crore).
The loss comes at a time the industry is facing a demand slump after the outbreak of the second Covid wave apart from rising input costs and chip shortages.
According to Tata Motors, the second wave is expected to have a temporary adverse impact on the demand and supply situation. The first half of this fiscal is likely to remain weak and a sequential improvement is expected from the second quarter, it said.
“Cases are still high in many markets while supply chain issues, in particular for semi-conductors, have become more difficult to mitigate and are now impacting production plans for the first quarter. The company is working closely with affected suppliers to resolve the issues,’’ Tata Motors said.
The company reported total revenues of Rs 88,627.90 crore in the fourth quarter of the last fiscal compared with Rs 62,492.96 crore in the year-ago period.
Revenues for 2020-21 were Rs 2.49 lakh crore against Rs 2.11 lakh crore a year ago. Consolidated net loss stood at Rs 13,395.10 crore compared with a loss of Rs 11,975.23 crore in the previous year.
Subsidiary JLR saw net revenues coming at £6.5 billion which represented a growth of 20.5 per cent over the previous year period even as it posted pre-tax profits of £534 million in the fourth quarter and £662 million for the full year before the exceptional charges.
JLR sales in the fourth quarter rose 12.4 per cent to 123,483 vehicles, backed by a strong recovery in China where sales grew 127 per cent over the previous year when the the impact of Covid-19 peaked in that market.
Sales for the year fell 13.6 per cent to 439,588 vehicles, though sales in China rose 23.4 per. The new Land Rover Defender contributed significantly to retail sales.
Standalone revenues at Tata Motors (which represents its domestic and joint operations) jumped 106 per cent to Rs 20,046 crore. The quarter saw its passenger vehicle volumes rise 162 per cent.
“The auto industry was deeply impacted by Covid-19 in 2020-21 but witnessed a steady growth in vehicle demand as the nationwide lockdown eased and pent-up demand came to fore supported by a steady recovery of the economy,” Guenter Butschek, CEO and MD, Tata Motors.
“At Tata Motors, we scaled up capacity by prudently addressing several supply chain bottlenecks,’’ the Tata Motors chief said.
Fund raising put off
The board of Tata Motors on Tuesday deferred its decision on fund-raising. The company did not disclose the reasons or a new date for a meeting. “The board has deferred its decision on fund raising to a subsequent board meeting, which will be intimated to the stock exchanges in due course, ’’ it said to the stock exchanges .
The fund-raising proposal was tacked on to the board’s agenda only last week. All the options were on the table that included preferential issue, private placement, rights issue, convertible securities of any description, debt securities or a combination of these options.
