Tata Motors' profit plunging, no dividends this year

Tata Motors has reported a 56.2% decline in net profit in the first quarter of 2015. While analysts had estimated over Rs. 4,060 crores, the company reported a net profit of merely Rs. 1,717 crores consolidated net profit. Foreign exchange fluctuations itself resulted in a loss of Rs. 2,355 crores.

It is a known fact that JLR accounts for nearly 80% of Tata's profits. China contributes to nearly one-fifth of JLR's total revenue. The slowdown in China's luxury car market seems to have a major impacted on the balance sheet numbers. While a year-ago the quarterly increase was 36%, the recent earnings of the group fell by 20% to 23,526 vehicles in the market. Competitors like Mercedes-Benz and Audi in China seem to have resorted to reduction in prices, however, JLR hasn't adopted the same. Industry exports claim that the company benefited during the luxury car market boom in China, with is premium pricing strategy, however, it seems to be hurting now.

Tata Motors' Indian operations recorded a loss of Rs. 1,164 crores, compared to Rs. 817 crores last year, due to high depreciation and amortization costs.

The group said that it will not pay any dividend this year. This is the first time since 2002, that the company has held back dividends.

JLR is now betting on the Jaguar XE and new XF sedans to drive volumes. On the other hand, Tata Motors continues to bank on its commercial vehicles and new passenger vehicles to drive volumes.

Sources: Reuters, Economic Times, Livemint