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

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

The step raises questions on whether it could affect Tata Motors' credit rating that has already been revised downward in the recent past.

Considering the ideal storm of woes engulfing JLR at the moment - from the damning of diesel to a slow down in China, from a loss of love for saloon cars to Brexit confusions - performance in the last quarter could have been a lot worse, with sales of £6.2bn down from £6.3bn and numbers down from 154k to 144k. To prepare for a scenario where there could be disruptions due to Brexit, JLR also plans to temporarily close plants in the United Kingdom from April this year.

The firm said "significant market, technological and regulatory headwinds" were affecting the sector, while investment in new models and changing technology was still high. The new Land Rover Defender will be revealed later this year.

FILE PHOTO - A Tata Tigor auto is pictured at the assembly line inside the Tata Motors vehicle plant in Sanand, on the outskirts of Ahmedabad, August 7, 2018.

The remaining half is understood to come from a lowering in the value of past investments in product development and engineering - recognition from Jaguar Land Rover that it is unlikely to reclaim previous investments with future sales.

JLR revenue at £ 6.2 billion was down 1.4 per cent while net profit stood at £3,129 million.

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Tata Sons Pte Ltd chairman N Chandrasekaran said market conditions continue to be challenging, particularly in China.

JLR's retail sales in China, which account for about one in every seven of its cars sold worldwide, fell by 40% year on year during the quarter, overshadowing growth in the USA and British markets.

The potential impact of a disorderly Brexit on cash generation would outweigh growth in the India business, resulting in a substantially weaker Tata Motors' consolidated financial profile. It has also streamlined its commercial policies to help compensate for retailers' losses, and is launching extensive on-site training programmes to improve the customer experience as well as operations.

The worldwide ratings agency has placed Tata Motors" long-term issuer default rating of "BB' on Rating Watch Negative (RWN) to reflect the increasing risks of a disorderly Brexit for its fully-owned subsidiary Jaguar Land Rover Automotive plc.

Shares in Tata Motors plunged as much as 30% in Mumbai on Friday after it reported a loss of $3.8 billion in the quarter ended December - the biggest in Indian corporate history, according to local media.

Last month, the company announced plans to slash around 10 per cent of its workforce.

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