Tata Motors, which has seen its sales dwindle for more than a year now amid slowdown in demand, on Tuesday issued a mild profit warning stating that the company will have either no profit or inadequate profit for FY14. The company will announce its Q4 and full-year earnings on May 29.
In a filing to the BSE, Tata Motors said: “The company had recorded a profit before and after tax for the nine months ended December 31, 2013, of R391.13 crore and R1,151.13 crore respectively. Owing to the prolonged slowdown and weak consumer sentiments, the financial performance of the company has worsened and it is likely that it will have no profits/inadequate profits for the financial year 2013-14.”
Tata Motors said the slowdown, weak consumer sentiments, subdued infrastructure activity, tight financing environment with high interest rate, weak operating economics for transporters due to lower fleet utilisation and stagnant freight rates combined with fuel price increases continued to impact the performance of the automobile industry and the company.
"The company has been aggressively pursuing and implementing its strategies, including launch of new products and cost reduction initiatives. The results of these are likely to be felt in the coming years,” it said.
Tata Motors' domestic passenger vehicles volumes declined 36.7% to 198,812 units in FY14 compared with the year ago period. Sales of domestic commercial vehicles fell 28.5% to 317,887 units during the period compared with a year ago.
The company said it did not have major product launches except for upgrades and variants in FY13 and FY14 in the passenger vehicle segment.
"Increase in competition in the domestic market, particularly in the passenger car business, wherein new product launches were aggressively positioned also affected the company’s performance,” it said.
Tata Motors will launch two new products – Bolt and Zest –in the hatchback and the entry level sedan space shortly.