Commercial vehicle and luxury car maker Tata Motors on May 18 posted a consolidated loss at Rs 7,605.4 crore in the quarter ended March 2021 despite a sharp growth in revenue though on a low base. Asset write-downs and restructuring costs with respect to new JLR's strategy Reimagine - Rs 14,994.30 crore impacted the bottomline.
The company had reported a consolidated loss of Rs 9,894.25 crore in the year-ago quarter and profit at Rs 2,906.45 crore in the December 2020 quarter.
The company's consolidated revenue from operations grew by 41.8 percent year-on-year to Rs 88,627.9 crore in Q4FY21, and the sequential increase in topline was 17.1 percent, meeting analysts' estimates.
Profit was estimated at Rs 2,721 crore on revenue of Rs 88,109 crore for the quarter, according to the average of estimates of analysts polled by CNBC-TV18.
"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 semi-conductor shortages worldwide," said Tata Motors which expects Q1FY22 to be relatively weak due to this as well as rising commodity inflation and expects to improve gradually from the second quarter.
The COVID infections started increasing sharply from April onwards and hit a peak of over 4 lakh cases per day in May.
The standalone business including joint operations reported profit at Rs 1,645.69 crore in Q4FY21 against loss of Rs 4,871.05 crore in the year-ago quarter, and clocked a massive 106 percent year-on-year growth in revenue at Rs 20,045.9 crore during the quarter, driven by strong passenger vehicle demand and recovery in commercial vehicle demand.
"The commercial vehicle business consistently posted sequential quarter-on-quarter growth on back of improved consumer sentiments, buoyancy in e-business, firming freight rates and higher infrastructure demand including road construction and mining. We have successfully improved our operational and financial performance by reducing costs, and generating free cash flows," said Guenter Butschek, CEO and MD.
In Q4FY21 wholesales (including exports) increased 90.2 percent YoY to 1,95,859 units, and for the full year, wholesales rose 2 percent to 4,84,591 units compared to previous year, said the company.
The company further said Jaguar Land Rover business continued to recover following the onset of the COVID-19 pandemic, with retail sales in the fourth quarter rising 12.4 percent YoY to 1,23,483 vehicles supported by a strong recovery in China, where sales grew 127 percent over Q4 last year, when the impact of COVID-19 peaked in that market.
The award-winning new Land Rover Defender contributed significantly to retail sales, with 16,963 units sold in Q4, the company added.
"Pre-tax profit before exceptional charges increased significantly to 534 million pound in Q4 and 662 million pound for the full year, reversing losses in the same periods a year ago. The EBIT margin improved to 7.5 percent in Q4 and 2.6 percent for the full year, up 10.7 and 2.5 points respectively year-on-year," said the company, adding the improving performance mainly reflected recovering volumes, favourable mix, cost performance (including lower marketing spend) and foreign exchange.
In February 2021, the company announced its new global strategy to Reimagine the future of modern luxury by design and deliver double-digit EBIT margins by Fiscal 2025-26. "This will entail 1.5 billion pound (Rs 14,994.30 crore) of exceptional charges in the fourth quarter, including 952 million pound (Rs 9,606.11 crore) of non-cash write downs of prior investments and 534 million pound (Rs 5,388.19 crore) of restructuring charges expected to be paid in FY22," said the company.
After these exceptional charges, the company said it reported a pre-tax loss of 952 million pound for the quarter and pre-tax loss of 861 pound million for the full year.
"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 Q1, but the company is still targeting an EBIT margin of at least 4.0 percent and break-even free cash flow after 2.5 pound billion of investment and 0.5 billion pound of restructuring costs that has already been accrued," said Tata Motors in case of JLR.
The company further said consolidated EBITDA margin improved by 870 bps YoY to 14.4 percent in Q4FY21, while the JLR's EBITDA margin increased by 910 bps to 15.3 percent and standalone margin rose by 1,370 bps to 7.8 percent compared to year-ago quarter.
In the COVID year 2020-21, Tata Motors' consolidated loss widened to Rs 13,451.39 crore from Rs 12,070.85 crore in previous year, while revenue declined 4.3 percent to Rs 2,49,794.75 crore compared to previous year.