Mumbai , Oct 25 : Automaker Tata Motors on Friday reported a consolidated loss of Rs 216 crore for the second quarter of current fiscal against a loss of Rs 1,049 crore in the same period of previous fiscal amid slowing demand for passenger and commercial vehicles in the home market.
Significantly, finance costs increased by Rs 609 crore to Rs 1,835 crore during Q2 FY20 versus prior year due to higher borrowings as compared to Q2 FY19.
The profit before tax of its luxury unit Jaguar Land Rover (JLR) stood at 156 million pounds. "Jaguar Land Rover has improved its performance this quarter and delivered a well-rounded performance. In particular, the improvement in China on the back of better operational metrics is reassuring," the company said in a statement.
"However, the auto industry in India witnessed a sharp decline in both commercial and passenger vehicles, resulting in a disappointing break to the rhythmic delivery of the company's turnaround journey of the last two years," it said.
"The profitability was impacted by an adverse mix from the steep decline in medium and heavy commercial vehicle volumes and loss of operating leverage as we proactively focused on retails and reduced system stocks to secure dealer viability," said the statement.
"Though the near-term market situation is fluid, we are optimistic on the medium-term outlook of this market and will continue to drive our turnaround strategy and transition seamlessly to BS-VI," it added.
CEO and Managing Director Guenter Butschek said that the industry is 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," he said.
"The sharp market decline over the last few months has impacted our Q2 performance as well which is disappointing. With the onset of the festive season, we are seeing initial green shoots this month with better retail in passenger vehicles," said Butschek.
"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 micro, small and medium enterprises will improve the situation in the coming months."
In another announcement, Tata Motors said its board of directors has approved a preferential allotment of ordinary shares and warrants to the promoter, Tata Sons, for an aggregate consideration of Rs 6,500 crore.
"This strong support from Tata Sons will benefit all shareholders by allowing the business to focus on the long-term strategy, reduce debt levels and provide rating support to the Tata Motors Group.