Tata Motors Q2 net loss at Rs 188 cr; domestic ops slows JLR surge

New Delhi: Homegrown auto major Tata Motors on Friday reported a consolidated net loss of Rs 187.7 crore for the quarter ended September 30, hit by subdued demand for its vehicles in the domestic market.

The company, which had posted a loss of Rs 1,009.49 crore in the same period of 2018-19, also said its board has approved raising of around Rs 10,000 crore through preferential allotment to parent Tata Sons and external commercial borrowing.

Tata Motors said its total consolidated revenue during the period under review stood at Rs 65,431.95 crore as against Rs 71,981.08 crore in the year-ago period. It was partly affected by a Rs 3,400 crore system stock reduction in the domestic operations along with dealers.

British arm Jaguar Land Rover (JLR) reported a pre-tax profit of 156 million pounds, 246 million pounds better year-on-year, it added.

The British brand's wholesales during the second quarter were up 2.9 per cent at 1,34,489 units.

"JLR has returned to profitability and revenue growth. This is testament to the fundamental strength of our business, our award-winning products, new technologies and operating efficiencies," JLR Chief Executive Ralf Speth said.

JLR's 'Project Charge' transformation programme contributed 162 million pound of cost improvement and 285 million pound reduction in investment spending in the quarter, Tata Motors said.

"As such, it is encouraging to see the impact of our Project Charge transformation programme and improvement initiatives in the China market start to come through in our results. Our people have responded very positively to the challenging circumstances over the past year," Speth added.

Looking forward, the company would continue its product offensive, broadening its range of electrified vehicles, he added.

On standalone basis, Tata Motors said its net loss for the quarter was at Rs 1,281.97 crore as against a profit of Rs 109.14 crore in the year-ago period.

Domestic wholesales of vehicles were down 44.1 per cent to 1,06,349 units in the second quarter as compared to the year-ago period, the company said.

"The industry has been grappling with a long and sharp slowdown. 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," Tata Motors CEO Guenter Butschek said.

The sharp market decline over the last few months has impacted the company's second quarter performance as well which is disappointing, he added.

"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 scrappage policy and ensure adequate liquidity to MSMEs will improve the situation in the coming months," Butschek said.

Tata Motor's board, which met on Friday, approved raising funds of nearly Rs 10,000 crore through issuance of securities to parent Tata Sons and external commercial borrowings.

The board approved raising a total of Rs 6,494.35 crore from Tata Sons through issuance of securities via preferential allotment.

The company would raise Rs 3,024.35 crore through preferential  allotment of 20,16,23,407 ordinary shares to Tata Sons at a price of Rs 150 per share. It would raise another Rs 3,470 crore through issuance of 23,13,33,871 convertible warrants of Rs 150 per warrant.

Tata Motors further said its board has also in-principle approved and authorised the raising of additional funds up to Rs 3,500 crore through external commercial borrowings.                      

Tata Motors Group CFO P B Balaji said in a concall that the funds raised through equity issue to parent Tata Sons will be utilised to reduce overall debt and "bolster the balance sheet" of the company.                                 He further said sum to be raised via ECB "when the market conditions are appropriate" will be used to refinance existing loans of Tata Motors.

The net automotive debt of Tata Motors group is around Rs 50,000 crore out of which around Rs 20,000 crore is accounted for by Tata Motors Ltd, Balaji said.

Tata Motors shares on Friday ended 4.87 per cent down at Rs 126.95 apiece on the BSE.