The company took a hit of Rs 15,000 crore to re-cast JLR business.


To recast JLR’s operation, the company took a Rs 15,000 crore hit.

Tata Motors announced a good operational output in the fourth quarter of 2021 (Q4), led by its UK subsidiary Jaguar Land Rover (JLR) and its India operations, narrowing its consolidated loss, which was primarily due to exceptional products.

The global car manufacturer owned by the Tata group posted a net loss of Rs 7,605 crore, compared to a net loss of Rs 9,894 crore in the previous quarter. Except for exceptional products, the company’s income, Ebitda (earnings before interest, taxes, depreciation, and amortisation), and profit before tax (PBT) all exceeded Street expectations.

The loss was primarily due to Rs 14,994 crore in asset write-downs and restructuring costs related to JLR’s Re-imagine strategy. After deducting Rs 2,000 crore in write-backs in the India market, the net exceptional expenses were Rs 13,347 crore.

The Ebitda of the company’s passenger vehicle (PV) division was the best in a decade.

Despite starting from a low point, the company’s consolidated revenue from operations increased by 41.8 percent year over year to Rs 88,628 crore in Q4FY21. The rise was 17.1% sequentially.

According to a Bloomberg survey, sales, Ebitda, and PBT were estimated to be Rs 87,518 crore, Rs 11,210 crore, and Rs 4,538 crore, respectively. Tata Motors, on the other hand, posted Ebitda of Rs 12,745 crore and PBT of Rs 5,074 crore in Q4FY21.

“Despite the pandemic, it was a quarter that saw a good resilient all-round performance,” PB Balaji, Tata Motors’ chief financial officer, told reporters in a post-earnings call. He claims that demand for JLR is improving as more people are vaccinated and normalcy returns to most of the company’s main markets, including the United States, the United Kingdom, and Europe. Before extraordinary costs, JLR posted pre-tax income of £534 million in the fourth quarter and £662 million for the full year.

JLR took an extraordinary charge of £1.5 billion in the quarter, which included £952 million in non-cash write-downs. The company had stated in February that these extraordinary charges would be taken in Q4.

In FY21, it spent £2,343 million and expects to spend the same sum in FY22. According to Balaji, the project ‘Charge+’ delivered £2.5 billion in FY21 and £6 billion during its lifespan.

“While we believe that lower capex and government stimulus will help JLR, we believe that growing the PV market and concentrating on cost management will help the company’s standalone margin. Furthermore, strict capex and R&D management will reduce its automotive debt to a greater extent over the next 2-3 years,” Mitul Shah, head of research at Reliance Securities, said.

Reliance Securities maintains a favourable view on the stock, citing the ongoing revival of JLR’s global business and restructuring of its domestic business, as well as the stock’s attractive valuation. The standalone company, which had taken a Rs 2,000 crore impairment and onerous contract provision for the PV sector, reversed its fortunes this quarter due to a substantial improvement in the PV business’ results. The Ebitda margin for the PV market was 4.9 percent in Q4.