Jaguar Land Rover drives Tata Motors to biggest quarterly loss

JLR booked a £3.4bn loss after a £3.1bn accounting charge

Tata Motors reported the biggest quarterly loss among Indian corporates after it was hit by asset impairment in its United Kingdom subsidiary, Jaguar Land Rover (JLR) Automotive in the December quarter.

The loss was reported on 5% growth in revenues to Rs 77,000 crore.

The stock is now trading (09:22 am) at 15.83 percent lower at Rs 153.95 on the BSE.

While JLR's fortunes nosedived, the standalone entity posted a net profit of Rs 618 crore on the back of improving performance.

Jaguar chief executive Ralf Speth said: "Jaguar Land Rover reported strong third-quarter sales in the United Kingdom and North America, but our overall performance continued to be impacted by challenging market conditions in China". Jaguar chief executive Ralf Speth said: "Jaguar Land Rover reported strong third-quarter sales in the United Kingdom and North America, but our overall performance continued to be impacted by challenging market conditions in China".

Management-take: "Tata Motors domestic business continues to see strong momentum and has delivered market share gains as well as profitable growth".

"Impairments can only help you clean your balance sheet, but they don't address the problem of cash flow". This, in turn, singed earnings at the firm. Its heavy production presence in the United Kingdom exposes it to a disorderly Brexit, the likelihood of which has risen over the past few weeks, Fitch Ratings said this week. It incurred a loss of 3,129 million pounds. Total exports during the month stood at 3,270 units, a dip of 37 per cent as compared with the same period of last month due to the current liquidity crisis in Nepal, formation of new government in Bangladesh and political uncertainty in Sri Lanka, the company said.

"In JLR, the market conditions continue to be challenging, particularly in China".

JLR chief executive Ralf Speth said: "This accounting adjustment is consistent with the other decisive actions that we must take. enabling Jaguar Land Rover to counter the multiple economic, geopolitical, technological and regulatory headwinds presently impacting the automotive industry".

Jaguar Land Rover said that drop in profit was down to a slump in sales in the struggling Chinese market, which offset a slight rise in sales in Europe and the US. This is why the company had to revisit its China strategy, which included inventory correction and reworking of dealer profitability.

The troubles may mount if the United Kingdom and EU Brexit deal is worse than expected.

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