With sales being majorly impacted by COVID-19, Tata Motors is targeting capex spending of around Rs 1,500 crore in FY21, substantially lower than Rs 5,300 crore in FY20.

Tata Motors reports net loss of Rs 9863 crore in Jan-March quarter
Money Automobile Tuesday, June 16, 2020 - 10:12

Tata Motors on Monday reported a consolidated net loss of Rs 9,863.75 crore for the January-March period of financial year 2019-20.

During the same period of the previous fiscal, the company had reported a net profit of Rs 1,108.66 crore.

In a regulatory filing, the company said that the novel coronavirus pandemic severely impacted its financials.

"In India, demand which was already adversely impacted by the general economic slowdown, liquidity stress and stock corrections due to BS-VI transition, was further affected by the lockdown. Steep volume decline, particularly MHCV, and resulting negative operating leverage impacted profitability and cash flows," it said.

On Jaguar Land Rover, the filing said that after its return to profit in the second and third quarters, which reflected improvements achieved through its transformation programme, fourth quarter results were significantly impacted by the pandemic.

Tata Motors' revenue from operations fell by 27.7 per cent on a year-on-year basis to Rs 62,492.96 crore during the period under review.

On the outlook for the April-June quarter, it said that the first quarter of FY 2020-21 is expected to be significantly weaker in both JLR and Tata Motors with the full impact of lockdowns being reflected in the results.

"A gradual improvement in performance is anticipated in the coming quarters as we deliver our exciting product range while driving a robust cost and cash savings agenda. Actions are underway to significantly deleverage the Tata Motors Group with JLR to become sustainably cash positive from FY22 while becoming future ready," it said.

The company said that it has put in place rigorous cost and investment controls to conserve cash as much as possible.

With limited sales in the quarter so far, the company expects sales to start recovering from June onwards and is gearing up its supply chain accordingly. Tata Motors will focus on conserving cash by rigorously managing cost and investment spends to protect liquidity.

It has put in place a cost savings program of Rs 1500 crore and a cash improvement program of Rs 6,000 crore. As part of this, company has deferred or cancelled lower margin and non-critical investment and is targeting capex spending of circa Rs 1.5K crore in FY21, substantially lower than Rs 5.3K crore in FY20 and FY19.

With peak lockdowns in the first quarter of FY21, Tata Motors expects significantly lower sales in the quarter and negative free cash flow of about Rs 5000 crore in Q1FY21, around Rs 3500 crore of which is related to one-time working capital outflows.

While the outlook remains uncertain the company expects a gradual recovery of sales and improving cash flows for the remainder of the year and expects to end the FY21 with positive free cash flows.

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