Tata Motors plunged back into the red in the first quarter of 2019-20 with India's number one vehicle maker on Thursday blaming the losses on lower sales by its luxury Jaguar Land Rover brand.
Tata said it lost 36.99 billion rupees ($536 million) in the three months up to June 30, up from a loss of 19.02 billion rupees a year earlier.
The heavily indebted company has now suffered losses in four of the last five quarters. It managed a profit of 11.17 billion rupees ($160 million) for the previous quarter.
Rating agency Fitch also downgraded Tata Motors, citing risks to its ‘profitability and cash generation over the next two-three years’. This sparked a 4.5 per cent fall in Tata Motors shares on the Bombay Stock Exchange on Thursday.
Fitch highlighted uncertainty about Britain's withdrawal from the European Union. Most Jaguar and Land Rover production is in Britain.
Tata Motors chief executive Guenter Butschek said ‘the continued slowdown across the auto industry due to weak consumer sentiments’ had hit sales of Jaguars and Land Rover.
Tata Motors said its revenue fell by 7.7 percent, but record sales in Britain helped offset the poor market.
‘With China stabilizing and an exciting product lineup, JLR expects to return to growth soon,’ Butschek added. The company is now investing in electric cars in a bid to rejuvenate its image.
Tata said it sold 1.36 million vehicles in the latest quarter, down 22.7 percent against the same quarter last year.
The quarterly result came as the peak body representing the vehicle component industry said up to a million jobs could be lost amid the downturn in the auto sector.
‘Considering the auto component industry grows on the back of the vehicle industry, a current 15 to 20 percent cut in vehicle production has led to a crisis like situation in the auto component sector,’ the director-general of the Automotive Component Manufacturers Association of India, Vinnie Mehta, said in a statement Thursday.
‘If the trend continues, an estimated ten-lakh (one million) people could be laid-off.’
Earlier this month, India reported its eighth successive monthly fall in car sales as a weak economy hits demand. Several carmakers, including Mahindra & Mahindra, have slashed production.
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