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Automobiles

Tata Motors trims loss as Jaguar Land Rover rebounds in China

Automaker expects India festivals to boost sales

Workers assemble a Tata Tigor car inside the Tata Motors car plant in Sanand, on the outskirts of Ahmedabad, India.   © Reuters

MUMBAI (NewsRise) -- Tata Motors, India's biggest automaker by revenue, reported a narrower-than-expected second-quarter loss as a pickup in demand at luxury unit Jaguar Land Rover's China operations helped offset a slowdown at home.

The Mumbai-based automaker, which derives the bulk of its revenue from the luxury brands, said JLR continues to expect an improvement in cost savings and broadening of its electric vehicles fleet. The British carmaker, which Tata acquired in 2008, had been facing a slowdown in demand in its major markets, especially China. JLR last year launched a massive revival plan by cutting costs and investments, and in July said the worst is behind for the company in China.

The marquee brand has also been contending with weaker sales in western markets amid a shift in trend to cleaner energy from fossil fuels. The company expects to launch electric variants of all JLR models by next year.

In the quarter ended in September, the consolidated net loss stood at 2.17 billion rupees ($31 million), compared with a loss of 10.5 billion rupees a year earlier, the company said in a statement. Analysts were expecting a loss of 15.5 billion rupees, according to Refinitiv data.

Total revenue from operations fell 9% to 654.32 billion rupees, Tata Motors said Friday.

Jaguar Land Rover reported a pre-tax profit of 156 million pounds ($200 million) aided by an improvement in China, its largest market. JLR's overall retail sales fell 0.7% in the quarter.

The company expects JLR'S financial results to continue to improve and reiterated its target of 3% to 4% operating margin for the full year.

Tata Motors has been riding on the success of the unit that accounts for more than half of the company's revenue and nearly 90% of its operating profit. The company spent 841 million pounds in the quarter, and improved its free cash flow.

Still, it warned that the market "remains challenging" due to a multitude of factors.

"We are focused on leveraging our strong brands and exciting product portfolio to improve our revenue growth, while rigorously executing our cost and cash improvement plans," Tata Motors said.

Meanwhile, Tata Motors' India business, which makes a range of passenger and commercial vehicles, saw a 44% slump in revenue. In the quarter ended in September, Tata Motors' standalone business swung to a loss of 12.82 billion rupees.

Automotive demand in Asia's third-biggest economy has been shrinking for more than a year amid a credit crunch that has crimped consumer spending. The slowdown prompted many companies including Tata Motors and Maruti Suzuki India to slash production in recent months.

Tata Motors is expecting India's festival season, which started last month, to help revive demand.

"With the onset of festive season, we are seeing initial green shoots this month with better retails in passenger vehicles," said Guenter Butschek, CEO of Tata Motors.

The company's board also approved raising up to 100 billion rupees through debt and equity.

Shares of Tata Motors fell 4.9% in Mumbai trading before it released the earnings, while the benchmark S&P BSE Sensex closed up 0.1%.

--Dhanya Ann Thoppil

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