Tata Motors reports wider-than-estimated loss as chip crisis packs a punch

Tata Motors registers a loss of 44.5 billion.The cost of raw materials for Tata Motors also sees an increase up to 373.1 billion in the latest quarter.
By : HT Auto Desk
| Updated on: 26 Jul 2021, 20:27 PM
File picture for representational purpose. (REUTERS)
File picture for representational purpose. (REUTERS)
File picture for representational purpose. (REUTERS)
File picture for representational purpose.

Tata Motors Ltd. has reported a loss of 44.5 billion in the last three months, end date of June 30. This is in comparison to the 84.4 billion shortfall that was registered last year, said the company according to a report by Bloomberg. Based on average estimation, analysts had predicted a loss of 21 billion. This huge loss is being attributed to the ongoing semiconductor shortage that has hit the automobile industry hard. Tata Motors shares also closed at 0.8% lower on Monday before the earnings were released.

The cost of raw materials for Tata Motors has seen a hike up to 373.1 billion in the latest quarter compared to 99.4 billion in the same period last year. However, its Jaguar Land Rover (JLR) brand has recorded a revenue of 4.97 billion pounds. The latter has conveyed that gradual improvement in the demand of its commercial vehicle segment is being observed.

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On the other hand, JLR's parent company, Tata Motors has informed in a statement that JLR is now expecting the semiconductor situation to worsen in the second quarter compared to the first hence resulting in a 50 percent decrease in the wholesale volume. “In the second quarter, JLR expects a negative EBIT margin with a free cash outflow of less than £1 billion. JLR expects the situation will start to improve in the second half of the financial year," quoted Bloomberg. The chip crisis had forced the luxury automaker to temporarily suspend production at its Castle Bromwich and Halewood plants.

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(Also read | Tata Motors to raise up to 500 cr via NCDs)

Jaguar Land Rover is working with suppliers and chip manufacturers to increase the availability and the control of chip supply for its vehicles. Chief financial officer Adrian Mardell informed that the company is also prioritising the production of higher-margin vehicles. It also plans to change features on vehicles, however, the chip shortage will not pose an issue in case of any important launches, shared Mardell.

(Inputs from Bloomberg)

First Published Date: 26 Jul 2021, 20:27 PM IST
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