Tata Motors is committed to meeting Ebit (earnings before interest and tax) margin of 4-7% between FY19 and FY21 despite the headwinds the company is facing at the time.
Tata Motors is committed to meeting Ebit (earnings before interest and tax) margin of 4-7% between FY19 and FY21 despite the headwinds the company is facing at the time. Speaking at the 73rd annual general meeting, Tata Motors chairman Natarajan Chandrasekaran said, “The entire team is aware of the issues and appreciates the urgent need to find solutions. We will work closely with the JLR team to achieve the target.”
Jaguar Land Rover (JLR), which contributes 78% of the total revenue of Tata Motors, met with a ‘Perfect Storm’ as its revenue slid by 6% and volumes by 7.7% due to diesel taxes in the UK and Europe, Brexit uncertainty and China import duty cut. Chandrasekaran stated that the business lost operating leverage due to a combination of slowing demand and higher incentives in capex and people.
The company on its part will be investing Rs 1.2 lakh crore in Jaguar Land Rover in the coming three years to be a part of disruptive change. “Currently we have more requirement of capex, but we are embarking on cost cutting programme which would help us gain operating leverage,” he added.
In the quarterly results update, Tata Motors on Tuesday posted a consolidated loss of Rs 1,863 crore, its biggest loss since December 2008, affected by the weak performance of JLR. The consolidated revenues, net of excise, were at Rs 2,94,243 crore, up by 9% compared with the previous year, mainly due to the growth in the India business. However, the company could not pay dividends to its shareholders as as it did not declare profits due to significant write-offs.
While the company is confident in meeting its Ebit target of 4-7%, any possibility of divesting from JLR will be considered only after five years.