You can be one of the most popular car manufacturing companies in the country, you can be one of the pioneers in the Electric Vehicle segment in the country, and still, you can be bleeding almost 49 Crores in a day. Sounds unimaginable, right? It has become a true story for our beloved Indian automaker -Tata Motors.
According to recent reports, Tata Motors’ consolidated loss widened to ?4,441.57 crores in the September quarter compared to ?314.45-crore loss reported a year before. At the same time the company, saw consolidated revenue from operations increase 14.6 percent to ?61,378 crores (?53,530 crores).
The company suffers because of Supply Chain issues
The crown jewel of Tata Motors, Jaguar Land Rover was worse hit by the ongoing silicon scarcity. According to reports, the number of vehicles moved from wholesalers to dealers in the quarter were 64,032 vehicles, which is a decrease of 12.8 percent year-on-year, and retail sales (including the China Joint Venture) were 92,710 vehicles, which saw a decline of 18.4 percent, reflecting the semiconductor shortage and lower retailer inventories.
For these decline in margins, supply chain issues and commodity inflation are being pointed out. Because of this, Tata Motors reported an EBIT loss of 1.6 percent and a pre-tax loss of ?800 crores for Q2 FY22. The only silver lining for the business has been the success of passenger vehicles in recent times. The PV business continued its turnaround journey. It has strengthened its double-digit market share with decade-high quarterly sales.
The Electric Vehicle business grew by three-folds and recorded the highest monthly and quarterly sales of 1,078 units and 2,704 units, respectively.
Gradual improvement is on the horizon
Even though with recent losses, Tata Motors is positive about the business scenario continuing to show gradual improvement. At the same time, challenges on the supply side, including semiconductor issues and sharp commodity inflation, need to be dealt with effectively.
“Sequential improvement in overall performance is expected to continue and we target to be EBIT and free cash flow positive in H2 FY22. We continue with our efforts to unlock the supply bottlenecks by working proactively with our vendor partners,” the company said in a statement.
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