The Brexit turmoil took a heavy toll on Tata Motors earnings for April-June, with the company today reporting a 57 per cent plunge in net income at Rs 2,236 crore.
While a battered pound eroded Rs 2,296 crore from its profit, adverse commodity derivatives blew a hole of Rs 167 crore.
As the pound took a beating — sinking to a 31-year-low following the Brexit vote on June 24 — the company’s cash cow JLR took a 14 per cent forex hit at Rs 2,296 crore, offsetting the higher income arising from better volumes, Tata Group CFO C Ramakrishnan told reporters here this evening.
As a result, net income of Jaguar Land Rover (JLR) fell 38.21 per cent to 304 million pound in the first quarter ended June, from 492 million pound, while its revenue rose to 5,461 million pound from 5,002 million pound a year ago.
He said the overall numbers were driven down by lower market incentives in the quarter. The numbers would have been still lower but for the one-time income of Rs 478 crore, or 50 million pounds, from claims arising out of the Tianjin (China) fire last financial year.
“Operating performance of JLR reflects the overall higher wholesales, offset by adverse forex impact of 207 million pound, including revaluation of 84 million pound, mainly euro payables resulting from depreciation in the pound following the Brexit vote,” Ramakrishnan said.
“Higher volumes in both standalone as well as Jaguar Land Rover business were more than offset by the adverse forex impact of Rs 2,296 crore and adverse commodity derivatives impact of Rs 167 crore. On top of that, JLR operating profit was also hit by lower local market incentives and higher depreciation and amortisation expenses.”
For the quarter, consolidated revenue rose to Rs 67,056 crore from Rs 61,510 crore, driven by improvement in the businesses of both the parent as well as JLR on the back of strong sales in Britain, Europe, North America, China, whose volume share declined to 14.1 per cent in the reporting quarter from 20.5 per cent a year ago.
Despite this, the China JV chipped in a profit of 45 million pound, Ramakrishnan said.
Despite the massive drop in numbers, the market lapped up the Tata Motors scrip, which rallied 4.24 per cent to Rs 514.70 on BSE, whereas the benchmark Sensex recorded a marginal drop.