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Tata Motors Profits Plunge 57%
Tata Motors Ltd. reports consolidated revenue for its first fiscal quarter ended June 30 grew 9% to 671 billion rupees (10 billion) compared to the same period last year.
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Tata Motors Ltd. reports consolidated revenue for its first fiscal quarter ended June 30 grew 9% to 671 billion rupees (10 billion) compared to the same period last year. But net profit plummeted 57% to 22.4 billion rupees ($333 million).
The Indian carmaker blames the downturn on the weakened pound sterling, which has followed the U.K.’s vote to leave the European Union. The worsened exchange rate raises the cost of JLR’s foreign parts purchases and erodes profits expatriated to Tata. The unit generates 44% of its sales in Europe and buys 40% of its parts from sources within the EU.
JLR contributes about 90% of Tata Motors’ earnings. The unit reports retail sales for April-June rose in China (+19%), Europe (+16%) and North America (+17%). But net profit fell 38% to £304 million ($399 million) on unfavorable exchange rates.
Tata Motors says currency issues rate shrank its operating margin for the period to 12.3% from 14%. The company expects to ease currency effects on JLR in late 2018 when it opens a €1.4 billion ($1.6 billion) assembly plant Nitra, Slovakia. The factory will have an annual capacity to make 150,000 vehicles.
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