JLR’s Parent Tata Motors Expects Short Term Impact Of Chip Shortage As Its Reports Recovering Demand

India’s Tata Motors Ltd, the owner of JLR brand, is anticipating an easing of  global supply chain issues that started with the emergence of the Covid-19 pandemic with the rapid roll out of vaccines and forecast on Monday of its optimism to see an enhancement of performance of its business from the second half of its current financial year.

While the company is witnessing a gradual rise in demand for its commercial vehicles, Tata Motors said that demand for Jaguar Land Rover (JLR) and India passenger vehiclesremained strong during its latest completed quarter.  

However the company also issued a warning about the short term impact of the global semiconductor shortage, rise in costs of raw materials and uncertainty surrounding the Covid-19 pandemic with the emergence of the delta variant of the coronavirus causing resurgence of infections in many parts of the world.

Its previous estimate of the chip shortage in the second quarter being a bigger problem in its second fiscal year quarter compared to the first was reiterated by Tata Motors and predicted that it was likely that there would be a 50 per cent drop in wholesale volumes at JLR than the target that had been set by the company.  

Tata Motors also targets to reduce its debt in its automotive business to near zero by fiscal 2024, the company also said. About $425 million through unsecured offshore bonds had been raised by the car maker last month to refinance its existing debt and find its rising expenses.

The company also reported a 108 per cent rise in revenue for the first quarter to 655.35 billion rupees with the Covid-19 pandemic fuelling strong demand for personal vehicles even though it had severely hit sales across the luxury carmaker’s business a year earlier.

Tata Motors also reported a 68.1 per cent year on year jump in the overall retail sales revenues for its JLR brand which accounts for a major part of the total revenues of the company. 30,000 units of the car were sold through wholesales which was 27 per cent lower than the company had planned because of the production issues caused by the global semiconductor shortage, the company said

The company reported a consolidated net loss of 44.51 billion rupees ($598.04 million) for its fiscal year quarter ended June 30, compared to a a loss of 84.38 billion rupees in the same period a year earlier.

(Adapted from EconomicTimes.com)

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