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Tata Motors Net Revenue Declines 80%, Loss Before Tax Rs 2,190 cr – Q1 FY 2021

Tata Motors today revealed their financial results for the period from 1st April 2020 to 30th June 2020

Tata Motors posted consolidated net loss of Rs 8,437.99 crore for Q1 FY21, higher than what analysts had estimated. Loss in comparison to the corresponding quarter is Rs 3,698.34 crore. Total revenue from ops fell 47.94 percent YoY to Rs 31,983.06 crore.

Covid-19 Impact

Operations were restarted in May 2020 after going into lockdown at March end. In Q1 FY21, wholesales (including exports) decreased 81.5 percent to 25,294 units. Domestic volumes across segments fell significantly. M&HCV sales decline is 92.1 percent, ILCV decline is 92.1 percent, SCV and Pick Ups decline is 85.4 percent. and CV Passenger decline is 97.2 percent. Domestic PV volumes sales decline is 60.6 percent. Overall domestic retails are lower than wholesales by 2.5K units.

Revenue for the quarter decreased 80 percent to Rs 2.7K Cr and pre-tax loss before exceptional items was Rs 2,141Cr (against pre-tax loss of Rs 40Cr in Q1FY20) owing to volume decline and negative operating leverage. Free cash flow was Rs (4.3) KCr. Investment spends were reduced to Rs 492 Cr for the quarter. At the end of Q1 FY21, liquidity stands at Rs 6.9 KCr.

Tata Motors Results Q1 FY2021
Tata Motors Results Q1 FY2021

Production and retailer shutdowns for a considerable period of the quarter ensued from Covid-19 pandemic related lockdown. This has contracted volumes. TML says ‘Q1 was marked by successful transition to BSVI and a sharp increase in PV market shares to 9.5 percent’. Negative operating leverage hampered performance. Cash out flows are better than earlier expectations owing to ‘improvement initiatives ceiling in Rs 1,020 crore savings in the quarter’.

Going Forward

Global lockdown restrictions impacted Jaguar Land Rover, its luxury car unit. Going forward, the outlook remains uncertain for the year owing to pandemic related lockdowns and limitations. Tata Motors expects gradual recovery of demand and supply in the coming months.

Efforts will be streamlined to significantly deleverage the business with aims to generate positive free cash flows over last 3 quarters of the year. Overall economic recovery is expected in H2FY21. Tata Motors has called out a cash improvement program of Rs 6000 cr, including a cost improvement program of Rs 1500Cr.

Capex for FY21 is expected to be around Rs 1500Cr. TML expects improved cash flows for the remainder of the year. Rs 1020 cr savings out of Rs 6000 cr of cost and cash savings targeted for the year has already been reported.

Guenter Butschek, CEO and MD, Tata Motors, said, “The COVID-19 pandemic has deeply impacted the auto industry in Q1FY21. Post a calibrated restart at all plants in mid-May, we gradually scaled up our capacity while prudently safeguarding the health and wellbeing of our employees as well as the larger ecosystem. Even as we continue to address the challenges, we see some disruption due to the intermittent shutdowns and supply chain bottlenecks.

We have witnessed some green shoots emerging in PV owing to some pent up demand pre COVID, and are hopeful for a full recovery of the CV industry by end of the fiscal year, with a gradual pickup of demand, aligned to the economic recovery. We remain focused on making Tata Motors more agile to improve our market, operational and financial performance by reducing costs, generating free cash flows and providing the best in class customer experience.”

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