Tata Motors' Q4 net loss narrows to Rs 7,585 crore on improved sales

On the outlook, Tata Motors said while demand remains strong, the supply situation over the next few months is likely to be adversely impacted by disruptions from COVID-19 lockdowns in India and semiconductor shortages worldwide. JLR said the increasing Covid vaccination rates are encouraging for the ultimate recovery of the global economy and automotive industry from the effects of the pandemic.

Home-grown auto major Tata Motors on Tuesday reported a narrowing of consolidated net loss at Rs 7,585 crore for the fourth quarter ended March 31, 2021, aided by improved sales.

The company had posted a consolidated net loss of Rs 9,864 crore in the January-March period of 2019-20, Tata Motors said in a BSE filing.

The auto major's total income in the fourth quarter stood at Rs 89,319 crore. It was at Rs 63,057 crore in the year-ago quarter.

The company's British arm, Jaguar Land Rover reported a pre-tax loss of 952 million pounds for the quarter owing to the 1.5 billion pounds of exceptional charges, including 952 million pounds of non-cash write-downs of prior investments and 534 million pounds of restructuring charges expected to be paid in FY'22.

This was on account of JLR's new global strategy to 'Reimagine' the future of modern luxury by design and deliver double-digit EBIT margins by fiscal 2025/26.

However, JLR clocked a 20.5 per cent increase in revenue at 6.5 billion pounds during the quarter led by China and the new Defender model. Retail sales in the fourth quarter were 1,23,483 units, up 12.4 per cent year-on-year.

For FY'21, JLR revenue was at 19.7 billion pounds while retail sales were at 439,588 units, down 13.6 percent.

Commenting on JLR's performance, company Chief Executive Officer Thierry Bollore said, "I have been encouraged by the company's resilience and strong recovery during a uniquely challenging year. Despite the pandemic, this year has also seen significant positive change culminating in February with the launch of our Reimagine strategy focused on reimagining our iconic British brands for a future of modern luxury by design."

On a standalone basis, Tata Motors reported net profit from continuing operations at Rs 1,645.69 crore. It had reported loss from continuing operations at Rs 4,871.05 crore in the year-ago period.

Tata Motors' standalone total income was at Rs 20,305.90 crore as against Rs 10,001.79 crore in the corresponding period a year ago. During the quarter, the company's wholesales, including exports, grew by 90.2 per cent to 1,95,859 units.

"The auto industry was deeply impacted by COVID-19 in FY'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," Tata Motors CEO and Managing Director Guenter Butschek said.

At Tata Motors, he added, "We scaled up capacity by prudently addressing several supply-chain bottlenecks while maintaining the health, safety and wellbeing of our employees as well as the supporting ecosystem at the forefront."

For the entire 2020-21 fiscal, Tata Motors reported a consolidated net loss of Rs 13,395 crore. It had posted a net loss of Rs 11,975 crore in 2019-20. Its total income stood at Rs 2,52,438 crore for the last financial year as against Rs 2,64,041 crore in FY'20.

Tata Motors said during the year ended March 31, 2021, exceptional charge of Rs 14,994.30 crore was recognised under the Jaguar Land Rover's 'Reimagine' strategy, which included asset write-downs of 951.83 mllllon pounds (Rs 9,606.11 crore) in relation to models cancelled and restructuring costs of 533.88 million pounds (Rs 5,388.19 crore).

The restructuring costs included 526.36 million pounds (Rs 5,312.29 crore) accruals "to settle legal obligations on work performed to date and provisions for redundancies and other third party obligations and defined benefit past service cost of 7.52 million pounds (Rs 75.90 crore)".

On the outlook, Tata Motors said while demand remains strong, the supply situation over the next few months is likely to be adversely impacted by disruptions from COVID-19 lockdowns in India and semiconductor shortages worldwide.

"We expect Q1 FY22 to be relatively weak due to this as well as rising commodity inflation and expect to improve gradually from the second quarter. 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," it added.

JLR said the increasing Covid vaccination rates are encouraging for the ultimate recovery of the global economy and automotive industry from the effects of the pandemic.

"However, cases are still high in many markets while supply chain issues, in particular for semiconductors, have become more difficult to mitigate and are now impacting production plans for Q1. The company is working closely with affected suppliers to resolve the issues and minimise the effect on customers," it said adding, it expects continued sales recovery in FY'22.

In the domestic market, Tata Motors said the business scenario is fluid with the second wave of the pandemic hitting India resulting in multiple lockdowns.

"The first priority in this situation is the safety and well-being of our employees. This is also expected to have a temporary adverse impact on the demand and supply situation.

Consequently, the first half of the year is expected to be relatively weak," Tata Motors said.

Sequential improvement in overall performance is expected from the second quarter of FY22, it said.

Addressing a virtual conference, Tata Motors Group CFO PB Balaji said the company plans to invest in the range of 2.5-3 billion pounds on the JLR business per year over the next five years.

The capex for the domestic business would be in the range of Rs 3,000-3,500 crore, he added.

Balaji, however, noted the process would be dynamic depending upon the market conditions, he noted.

The company had invested around Rs 1,800 crore in the domestic business last fiscal.

On the company's plans regarding its PV business, Balaji said that from 8.2 per cent market share in the last quarter, the auto major would like to move towards double digit share in the future.

Going ahead, the auto major would like to cement its place as the third largest player in the segment, he said.

New product launches, including upcoming SUV Hornbill, would help the company achieve its market share targets, Balaji noted.

He noted that the PV business is expected to suffer temporarily due to COVID-19 and supply issues, but in the medium to long term it is expected to bounce back with demand for personal mobility expected to continue.

On completion of hiving off its passenger vehicle business into a separate subsidiary, Balaji said the process should be completed by October this year.

Tata Motors had received shareholders' approval for the initiative in March and currently the matter is with NCLT.

On the domestic commercial vehicle business, Balaji said there were challenges in the short term and the company is taking steps like curtailing production so that the dealer partners remained viable.

He informed that so far 47 employees of the company have perished due to the COVID-19 complications.