Published: Wed, February 15, 2017
Money | By Oscar Reynolds

Tata Motors profits plummet 96% after cash ban

Tata Motors profits plummet 96% after cash ban

The drop in the profit and revenue was driven by a fall in demand for the firm's commercial vehicles owing to the Indian government's abrupt move in November to pull high-value banknotes from circulation, the Mumbai-based company said.

Net profit on a consolidated basis in the December ended quarter fell to Rs 112 crore from Rs 2,953 crore in the corresponding quarter in the previous financial year.

Tata Motors Finance, the company's financing subsidiary, registered a net revenue from operations of Rs 688 crore and reported a loss after tax of Rs 3 crore during the quarter.

Tata Motor's Jaguar Land Rover (JLR) business posted a strong performance.

The company is also implementing a management transformation from the beginning of April aimed at bringing in speed, simplicity and agility to deal with market volatility, he said. "Medium and heavy commercial vehicle segment witnessed major pressure with a fall of 9% (Y-o-Y) and light commercial vehicle segment was overall flat". "That is because the JLR margin seem to be settling in to the single digit space unlike (in) the past where a 14% was a given". "Passenger vehicles segment grew by 25.4% on-year with auto segment growth of 31.1% on-year on the back of continued strong response to the Tiago", Tata Motors said, adding that exports grew by 34.6% on-year.

Tata Motors provisionally ended down 7.34% at Rs 468.3 on BSE, while Tata Motors DVR fell further to Rs 289, down 8.8%.

Prime Minister Narendra Modi's so-called demonetization drive removed around 86 percent of India's cash at a stroke, triggering massive queues outside banks and a daunting cash shortage that has hit businesses across the country.

Other issues facing JLR include Britain's Brexit vote and U.S. President Donald Trump's promised protectionist policies, according to a January 20 report by Mumbai-based IDFC Securities.

"Given this, JLR is in a more precarious position than its peers", IDFC Securities analyst Deepak Jain said in the report. The United States accounts for about 25% of JLR's sales.

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