Mumbai/New Delhi: Foreign exchange losses after Britain's decision to leave the European Union and higher expenses offset strong sales growth at India's Tata Motors, more than halving its net profit in the April-June quarter.
Tata Motors' profit was hit by forex losses of Rs 2,296 crore ($342.43 million) mainly due to pound depreciation post-Brexit vote and adverse commodity derivatives impact of Rs 167 crore in the quarter, it said in a statement on Friday.
Chief Financial Officer C Ramakrishnan said while the company cannot predict whether the foreign exchange impact will continue, it will be cautious and closely monitor and assess market conditions in Britain and the EU.
"We need to be careful ... that is why we have a fairly robust hedge book so we are not subject to so much volatility," Ramakrishnan said, adding that major events that suddenly trigger significant currency movements tend to be a surprise.
The majority of the forex loss was at its British luxury unit Jaguar Land Rover where profit after tax fell to 304 million pounds from 492 million pounds in the year ago quarter, despite a 9 percent increase in revenue thanks to strong sales of its Jaguar XE compact saloon and Discovery Sport SUV.
"The operating performance in the quarter reflects the overall higher wholesales, offset by adverse foreign exchange impact of 207 million pounds including revaluation of 84 million pounds, mainly euro payables resulting from depreciation in the pound following the Brexit vote," Tata said in a statement.
As a result, operating margins at JLR fell to 12.3 percent during the quarter from 16.4 percent in the year ago quarter.
Margins were also impacted by lower local market incentives earned in China this quarter compared with a year ago and a change in the product portfolio to include more high-volume-low-margin vehicles like the Jaguar XE.
Tata Motors, India's top automaker by revenue, said consolidated net profit for the quarter fell to Rs 2,236 crore compared with Rs 5,231 crore in the year-ago quarter. Analysts on average expected a profit of Rs 2,420 crore, according to Thomson Reuters data.
Total income from operations rose 9 percent to Rs 67,056 crore.
Profit was helped by a one-time gain of Rs 478 crore in an insurance payment for damage caused to JLR cars in an explosion at Tianjin port in China last year.
Shares in Tata Motors, valued at $23.7 billion, ended the day 2 percent higher after rising as much as 4 percent in a weak Mumbai market.
($1 = 67.0500 rupees)
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
