Tata Motors Q1 net loss narrows to ₹4,451 cr

Covid woes and dip in JLR sales have kept Tata Motors in the red   –  REUTERS

The Tata Motors Group has narrowed its consolidated losses to ₹4,450.92 crore in the first quarter ended June 30, compared to the loss of ₹8,438 crore reported in the corresponding previous quarter. The losses are down 41 per cent compared to the ₹7,605.40-crore loss reported in the fourth quarter ended March 31, 2021.

The company reported a 107 per cent uptick in revenue from operations at ₹65,535.38 crore in the first quarter (₹31,481 crore).

JLR sales skid

The losses in the first quarter are primarily due to a decline in sales at Jaguar Land Rover, which has been hit by the global shortage of semiconductors. JLR’s wholesales dipped by 30,000 vehicles during the quarter. “We expect a wholesale of 65,000 units in the second quarter for JLR, which is 50 per cent less than the internal target. As a result, we expect a negative EBIT margin and cash outflow of £1 billion,” said PB Balaji, Group CFO.

Tata Motors said that while demand remains strong for JLR, and passenger and commercial vehicles in India, the semiconductor issue, commodity inflation and pandemic uncertainty will continue to have an impact in the short term. The performance will improve progressively starting the second half of the fiscal year as the supply chain improves and pandemic comes under control.

“The business has demonstrated strong resilience in the face of adversity and its fundamentals are strong. We will remain agile to address these challenges and drive consistent, competitive and cash accretive growth over the medium to long term whilst deleveraging the business to near-zero automotive debt by FY24,” said a company statement.

To circumvent the silicon shortage, higher-margin models are being prioritised. There is a long-term design-based effort to reduce dependence on semiconductors and an ongoing effort to increase visibility and control over future semiconductor supplies, including long-term contracts, the company said. Tata Motors’ standalone numbers reflect the recovery. The India business reported a loss of ₹1,320.74 crore in Q1 compared to a net loss of ₹2,190 crore in the year-ago period. The passenger vehicle segment is especially showing strong growth momentum with volumes up at 64,600 units — a 343 per cent jump YoY. The electric vehicle business (EV reported the highest-ever quarterly sales at 1,715 units.

CV demand subdued

The Commercial Vehicle (CV) demand continues to remain muted albeit reporting a 363 per cent improvement in volumes over Q1 of 2019-20, which was severely affected by the first lockdown. But sales are 55 per cent lower sequentially, too.

The domestic market has so far not been too affected by the semiconductor shortage, but the situation is being monitored. Balaji believes that recovery will be seen in the domestic front from the second quarter while JLR will start showing signs of improvement in the second half of FY22.

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