Tata Motors slipped into a loss in second-quarter, as the Indian owner of Jaguar Land Rover took a one-time charge after an explosion at China's Tianjin port in August damaged some of its luxury vehicles.
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Tata Motors posted a net loss of 4.30 billion rupees ($65.34 million) in the quarter ended Sepember 30 versus a net profit of 32.9 billion rupees a year earlier, the company said in a statement. It took a one-time charge of 24.93 billion rupees for the Jaguar and Land Rover vehicles damaged at the Tianjin Port.
Revenue rose nearly 2% to 619.74 billion rupees, spurred by new models and strong demand for its trucks.
The British luxury car brand last month warned that it would likely be hit by a one-time charge during the second quarter, as the automaker had around 5,800 vehicles at the port during the explosion.
The process for finalizing an insurance claim may take some months to conclude, so insurance and other potential recoveries will only be recognized in future, the company said in its statement.
Weaker China sales, foreign exchange losses and higher depreciation and amortization costs in the Jaguar Land Rover business weighed during the quarter, Tata Motors said.
Over the past few quarters, Jaguar Land Rover, which competes with brands such as Audi, Mercedes-Benz and BMW, has grappled with high inventories amid slumping sales in China, prompting the automaker to cut prices, sales and production targets for the marquee brand.
The company is hopeful of a turnaround in China, triggered by the nation's measures to resuscitate flagging growth, officials said.
We are really optimistic that China is going take economic reforms, and based on that the car market is going to grow," Ralf Speth, CEO of Jaguar Land Rover, said at a press conference in Mumbai. The company will continue to ramp up capacity in China as well as in Western markets, he said.
In order to fuel growth, Tata Motors has been stepping up investments on expanding capacity, with plans to set up new factories in Brazil and the U.K. It also aims to expand its joint venture with Chery Automobile in China, where the company last year opened a new Jaguar Land Rover plant. ■