Tata Motors profit declines as JLR margins shrink on discounts; outlook clouded
Tata Motors Ltd reported a decline in annual net profit on Tuesday, as its British luxury car unit Jaguar Land Rover (JLR) faced margin pressures and the Indian automaker refrained from giving future guidance for the subsidiary citing global trade uncertainties fuelled by Trump tariffs.
The country's largest passenger vehicle maker recorded a muted 1.3% growth in revenue to ₹ 4.39 trillion in FY25, as sales fell globally.Earnings before interest, taxes, depreciation, and amortization, or Ebitda, margin fell 100 basis points to 13.1% due to a decline in margins of JLR owing to higher discounts.
As a result, net profit for the full year fell 11% to ₹ 28,100 crore, from ₹ 31,800 crore in FY24.
Tata Motors' Q4 revenue edged up 0.4% to ₹ 1.19 trillion, but profit more than halved to ₹ 8,600 crore. This sharp profit drop is partly due to a prior-year accounting boost: in January-March of 2024, Tata Motors recognized an ₹ 8,300 crore deferred tax asset, inflating that quarter's profit. The current quarter reflects a return to normal accounting.
'In this challenging environment, Tata Motors was able to deliver highest-ever revenue and profit before tax (business earnings in India). The automotive business has also become net debt free,' P.B. Balaji, group chief financial officer at Tata Motors said in a post-results media briefing.
Tata Motors' shares settled 1.8% lower at ₹ 707.90 apiece on BSE on Tuesday.
Jaguar Land Rover's FY25 revenue was steady at £28.9 billion, accounting for about 69% of Tata Motors' overall revenue. The British firm's Ebitda margin also declined by 160 basis points to 14.3% during the year.
"A major concern for the company would be international challenges but a positive is the fact that JLR continues to be profitable. Domestically, the company has to watch out for rising competition eating into its market share," Saji John, senior research analyst at Geojit Financial Services, said.
Tata Motors acquired the British luxury car brand for $2.3 billion in 2008.
There are still some details which need to be clarified before we are able to give the exact picture on impact on Jaguar Land Rover
The British brand has had to deal with a tough environment as tensions flared up between the United States and other countries as the Trump administration imposed 25% import tariffs.
The company will partly benefit from the US-UK trade agreement, which brings down tariffs to 10% from the current 25%. However, the rate still remains higher than 2.5% tariffs auto imports attracted before.
Slowdown in sales of Tata Motors was visible in the decline in volumes globally. The firm's investor presentation showed that global sales declined 3% to 366,000 units in the January-March period.
The company believes that the global premium luxury segment and Indian domestic markets will be able to withstand the uncertainties.
'Demand in the United Kingdom is expected to pick up further. The outlook for Europe is also looking better,' Balaji said during the call.
However, the company shied away from giving the exact outlook on the impact of global headwinds on Jaguar Land Rover as the situation is still evolving. However, the management maintained that there will be no changes to investment plans for the year ahead
'There are still some details which need to be clarified before we are able to give the exact picture on impact on Jaguar Land Rover,' Balaji told reporters.
Jaguar Land Rover, which gets about one fourth of its sales from the North American region, paused shipments to the region in April. The exports since then have resumed but the impact on its revenue and profit remains unclear.
On the domestic front, the passenger vehicle division of Tata Motors recorded a 7.5% decline in revenue to ₹ 48,445 crore in FY25 amid a 3% fall in total sales to 556,263 cars. Similarly, the commercial vehicle segment also recorded a 4.7% fall in revenue to ₹ 75,053 crore.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Time of India
13 minutes ago
- Time of India
Auto companies face shortages due to China's rare earth restrictions
Automakers and their suppliers are facing shortages due to restrictions on Chinese exports of rare earths, minerals and magnets, an issue that has forced some to shut down production of certain models. Rare earth magnets are used in motors that run electric vehicles and other car parts such as windows and audio speakers. These companies have paused production or warned shortages were affecting their supply chains: PRODUCTION SUSPENDED Ford shut down production of its Explorer SUV at its Chicago plant for a week in May because of the rare earths shortage. Suzuki Motor suspended production of its flagship Swift subcompact from May 26, citing a shortage of components. It expects a partial restart on June 13, with full resumption after June 16. Two people familiar with the matter said the suspension was due to China's restrictions. Suzuki declined to comment on the reason. Several European auto supplier plants and production lines have been shut down because of a rare earth shortage, Europe's auto supplier association CLEPA said on June 4. SUPPLY CHAIN CONCERNS Indian automaker Bajaj Auto warned that any further delays in securing the supply of rare earth magnets from China could "seriously impact" EV production by July. Auto parts maker Bosch said bottlenecks in the supply of rare earths were affecting its suppliers, who had to furnish a lot of detailed information to get export licences. BMW said a part of its supplier network was affected by the shortage, but that its own plants were running as normal. Maruti Suzuki India's top-selling carmaker, said there was no immediate impact, and that it was in talks with the government on the matter. German auto supplier ZF said it sees the effect of a rare earths shortage on some of its suppliers, although it does not procure the raw materials itself.
Hindustan Times
13 minutes ago
- Hindustan Times
Mehul Choksi's bank accounts, shares attached by Sebi over ₹2.1 crore dues
Markets regulator Sebi has ordered the attachment of bank accounts and shares and mutual fund holdings of absconding diamantaire Mehul Choksi to recover dues totalling ₹2.1 crore in a case of violation of insider trading rules in the shares of Gitanjali Gems. The latest move followed a demand notice issued to Choksi on May 15, warning attachment of assets as well as bank accounts if he failed to make the payment within 15 days. The demand notice came after Choksi failed to pay the fine imposed by the Securities and Exchange Board of India (SEBI) in January 2022 in a case of violation of insider trading rules in the shares of Gitanjali Gems Ltd. Choksi, who was the chairman and managing director as well as part of promoter group of Gitanjali Gems, is the maternal uncle of Nirav Modi. Both are facing charges of defrauding state-owned Punjab National Bank (PNB) of more than ₹14,000 crore. Both Choksi and Modi fled India after the PNB scam came to light in early 2018. In April, Choksi was arrested in Belgium following an extradition request by Indian probe agencies. He was located in Belgium last year when he went there for getting medical treatment. He had been staying in Antigua since 2018 after leaving India. Modi was arrested by the Scotland Yard Police in March 2019 and is currently in jail in that country. In an attachment notice dated June 4, Sebi said the pending dues of ₹2.1 crore include the initial fine of ₹1.5 crore and interest of ₹60 lakh. To recover the dues, Sebi asked all the banks, depositories -- CDSL and NSDL -- and mutual funds not to allow any debit from the accounts of Choksi. However, credits have been permitted. Further, Sebi has directed the banks to attach all accounts, including lockers, held by the defaulter. Initiating the recovery proceedings, Sebi said there is sufficient reason to believe that Choksi may dispose of the amounts in the bank accounts, mutual fund folios and securities in the demat accounts held with the depositories and "realisation of the amount due under the certificate would, in consequence, be delayed or obstructed". In its order passed in January 2022, the regulator imposed a penalty of ₹1.5 crore on Choksi and restrained him from the securities market for one year. Sebi had found that Choksi communicated unpublished price sensitive information to one Rakesh Girdharlal Gajera, who sold his entire shareholding of 5.75 per cent in Gitanjali Gems in December 2017 with the intention of avoiding loss ahead of any event which may lead to disclosure of fraudulent issuance of LoUs (letter of undertaking) to Gitanjali Group and magnitude in public domain. It was noted that fraudulent LoUs were issued on behalf of entities belonging to the Gitanjali Group, including GGL. "Noticee no. 1 (Choksi) was found to have communicated UPSI (unpublished price sensitive information) to Noticee no. 2 (Gajera) without any underlying legal obligation or any legitimate purpose," Sebi had said in its final order. Through such activities, the two persons had violated the provisions of the PIT (Prohibition of Insider Trading) rules. In May 2023, Sebi sent a notice to Choksi directing him to pay ₹5.35 crore in a case pertaining to fraudulent trading in the shares of Gitanjali Gems.
Business Standard
14 minutes ago
- Business Standard
How China gained control over the global rare earth minerals supply chain
The alarm has been intensifying in the past few weeks as global automakers, including major German manufacturers, raised concerns over China's export restrictions on rare earth alloys, magnets, and mixtures, warning that the curbs could trigger production delays and operational shutdowns. The latest backlash follows similar complaints from US firms and an Indian electric vehicle producer last week, highlighting the mounting global fallout from Beijing's April decision to suspend outbound shipments of several critical minerals. China has intensified its strategic dominance over the global supply of rare earth elements by adding critical minerals to its export control list, further straining already fragile global supply chains amid rising geopolitical tensions. The move, seen as a direct response to heightened tariffs imposed by the United States, underscores China's decades-long state-led push to monopolise both the mining and, more critically, the processing of rare earth materials—metals that are essential to a range of advanced technologies from electric vehicles to fighter jets. The 1990s strategy that gave China a monopoly Despite being relatively abundant in the Earth's crust, rare earths are rarely found in concentrated deposits and require complex, often environmentally hazardous, refining processes. China's edge lies not only in its 30–36 per cent share of global reserves but in its near-total control of the processing chain, estimated at over 85 per cent of global capacity. Beginning in the 1990s, Beijing classified rare earths as strategic resources, shielding the sector from foreign control and channelling significant state support into extraction and refining. Initiatives like 'Made in China 2025' ensured rare earths remained embedded in the country's high-tech ambitions. Western retreat allowed China to dominate supply chains As the US and other Western nations shut down domestic operations over cost and environmental concerns, China ramped up investment. It perfected the solvent extraction method, a process initially developed in the US but later abandoned due to regulatory and environmental challenges. By the early 2000s, China produced up to 97 per cent of the world's rare earths and began restricting exports, simultaneously driving up global prices and encouraging foreign manufacturers to relocate operations to China to secure uninterrupted supply. Export curbs on 7 key elements spark global concern In April, China extended export restrictions on terbium, yttrium, dysprosium, gadolinium, lutetium, samarium, and scandium—seven of the 17 recognised rare earth elements. Each plays a unique role in modern technologies and defence systems. Why terbium, yttrium and dysprosium matter globally Terbium: Vital for smartphone displays and aircraft magnets. China exports 85 per cent to Japan, just 5 per cent to the US. Yttrium: Used in medical lasers and superconductors. US relies 93 per cent on China. Dysprosium: Key for EV magnets and wind turbines. Majority goes to Japan and South Korea. Gadolinium: Common in MRI scans and reactor cores. Lutetium: Used in oil refining, mainly imported by the US. Samarium: Strategic for military-grade magnets and nuclear use. Scandium: Critical for aerospace; no US production in 50+ years. Japan, US, EU scramble to reduce China dependency China's move is expected to hit countries that are already struggling to build independent rare earth supply chains. According to Chinese customs data, Japan remains the largest buyer of these restricted materials, followed by South Korea and the US. Global supply chain diversification faces uphill battle In response, nations are accelerating efforts to reduce reliance on Chinese supply. Australia's Lynas Rare Earths is expanding its Malaysian plant. The EU is funding scandium production, and the US has revived mining at the Mountain Pass facility in California—though the ore is still sent abroad for processing. Yet such initiatives face formidable challenges. China's low production costs, lenient environmental standards, and strong vertical integration give it a lasting competitive edge.
