TATA Motors: Pushing Ahead
Last fiscal was indeed a challenging year for Tata Motors, considering it posted a net loss of Rs 28,826.2 crore during FY2018-19. The Indian auto major had posted a consolidated net profit of Rs 8,988.9 in FY2017-18. However, there was an increase in the total revenue from operation to Rs 3 lakh crore during FY19 compared to Rs 2.9 lakh crore in the previous fiscal.
During FY19, Tata Motors closed manufacturing operations in Thailand and the relevant restructuring costs were factored into the financial results. Tata Motors had also made provisions for impairment in Jaguar Land Rover worth Rs 27,837.9 crore during the December quarter of the FY19. The company assessed the recoverable amount of the Jaguar Land Rover business in light of changing market conditions, especially in China, technology disruptions and rising cost of debt.
The company had explained the net loss numbers via a statement at the time of posting their full year numbers in May earlier in the year. “This has resulted in an impairment charge of £3,105 million (Rs 27,837.9 crore) being recognised as exceptional charge for the quarter ended December 2018. The company continues to assess and endeavours to take appropriate mitigating actions on the potential impacts of changes, if any in tax and treaty arrangements globally, including Brexit”, it had said in its statement.
Contrary to the annual performance, Tata Motors finally returned to profitability during the March quarter as it posted consolidated net profit of Rs 1,117.5 crore during the March quarter of FY19 after reporting losses to the tune of Rs 26,992.5 crore during the December quarter. The company reported revenue of Rs 86,422 crore during Q4 FY19, declining from the Rs 89,9929 crore reported during the year-ago period.
Guenter Butschek, CEO and MD, Tata Motors, said: “The industry has been grappling with a long and sharp slow-down. Growth continues to be impacted by subdued demand, higher capacity from the new axle load norms, liquidity stress, low freight availability, weak consumer sentiment and general economic slowdown. The sharp market decline over the last few months has impacted our Q2 performance as well which is disappointing.”
“With the onset of festive season, we are seeing initial green shoots this month with better retails in passenger vehicles. We hope that the slew of measures announced by the government so far, as well as their commitments to front end significant infrastructure investments, introduce a scrap-page policy and ensure adequate liquidity to MSMEs will improve the situation in the coming months,” he said.
The 58-year old Butschek further added, “We are better prepared to tide over the current market challenges with proactive stock reductions, focus on retail acceleration and a deep commitment to the Turnaround journey. We remain agile to tap the potential demand rebound and are focused on achieving a smooth transition to BSVI for TML and our partners, while providing world class BSVI solutions to our customers.”
By FY 2023-24, the company aims to become the most aspirational Indian auto brand, consistently winning by delivering superior financial re-turns, driving sustainable mobility solutions, exceeding customer expectations, and creating a highly engaged work force. “We remain committed to meet our aspirations and your expectation of further improved performance in FY 2019-20,” he told shareholders in the FY-19 annual report.
