Tata Motors profit takes a hit of Rs 27,838 crore at JLR

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The home-grown automaker recorded its biggest ever quarterly loss for the December quarter at Rs 26,960 crore after dealing itself a whopping Rs 27,838 crore non-cash write-off for Jaguar Land Rover (JLR).

The company has axed more than 6,000 jobs in recent months as part of a $3.2 billion cost-cutting plan, and a year ago put 1,000 of its United Kingdom workers on a three-day work week.

Following the news, Tata Motors issued a warning that its JLR unit, will also suffer an operating loss in the year to March, a downgrade on its earlier forecast for the business which predicted that it would manage to breakeven.

"Despite this, sales saw a dip in January due to lower demand for the F-PACE and the XF in China".

Jaguar Land Rover, which Tata Motors bought in 2008, contributes over 70 per cent to Tata Motors' total revenue and has been a major cash generator over the years.

Diesel vehicles account for just under 90% of Jaguar Land Rover's sales in Europe at a time when consumers are increasingly choosing more environmentally-friendly options.

On JLR, it said: "Performance impacted by challenging market conditions particularly in China and inventory corrections".

The significant loss includes a one-off £3.1 billion ($A5.7 billion) exceptional charge resulting from the British auto maker deciding to adjust the value of its capitalized investments.

"Jaguar Land Rover is facing headwinds on multiple fronts, including geopolitical uncertainty and technological disruption, apart from a sluggish demand scenario in a strong market like China", said analyst Debjit Maji at Stewart & Mackertich Wealth Management in Kolkata. "Despite the muted growth, Tata Motors has delivered strong results, registered an impressive profitable growth this year on the back of exciting products, renewed brand positioning and aggressive cost reduction". This is expected to result in a one-time exceptional redundancy cost of about 200 million pounds.

However, JLR is also planning a programme to accelerate the business, which is focused on longer-term investment as legacy carmakers across the world transition from fossil fuel-powered vehicles to battery technology.

Jaguar Land Rover is under pressure on several fronts.

JLR has announced that its electric drive units are to be produced at its Engine Manufacturing Centre at the Wolverhampton site.

This is a hard time for the industry, but we remain focused on ensuring sustainable and profitable growth, and making targeted investments, that will secure our business in the future.

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