Tata Motors’ quarterly loss almost doubled in April-June as India's largest automaker was hit by lower sales. Loss at the Tata Group flagship widened to £368 million in the first quarter of fiscal 2020 from £186.3 million in the same period of the previous fiscal. Sales were down nearly 8% to £ 6.15 billion. Analysts expected Tata Motors to post a loss of £193.8 million in the April to June quarter.
Loss at Jaguar Land Rover (JLR), which accounts for about 80% of Tata Motors’ revenue, increased to 395 million pounds in the latest quarter from 264 million pounds a year earlier. JLR’s sales declined 3% to 5 billion pounds. Rating agency Fitch had downgraded Tata Motors, citing risks to its “profitability and cash generation over the next two-three years”. The company generated a negative cash flow of £1.2 billion while its debt stood at £4.7 billion as on June 30. Negative cash flow means a situation where cash outflows are higher than cash inflows.
The auto sector has been plagued by a slowdown due to weak consumer sentiments and other macro factors, prompting companies to slash production on rising inventories. Automobile sales serve as a proxy to the consumption story and Tata Motors is the first vehicle maker to come out with quarterly earnings, making it an indicator of the sector’s performance.
Tata Motors believes that the worst is behind the company and hopes that its performance will improve from here on. The focus is on product offerings, customer activations and enhanced service experience, it said. The company is here to play the long-term growth story despite the challenges it is going through, said Tata Motors CFO P B Balaji. Tata Motors is betting on electric vehicles to ramp up its presence.
Excluding JLR, Tata Motors on a standalone basis reported a loss of £4 million in the first quarter of fiscal 2020. Sales declined nearly 20% to £1.34 billion. Balaji said the management is confident that the company will attain operating margins of 3% to 4% in two to four years.