Cyrus Mistry, chairman of Tata Motors, warned shareholders business would remain challenging in 2016-17.
“We are getting used to an unpredictable and dynamic market environment. The financial year will not be any different,” Mistry said at the company’s 71st annual general meeting on Tuesday.
Mistry hailed the passage of the Goods and Services Tax Bill as an important step towards a stable economic environment but also warned that events like Brexit has created an uncertain business environment which will likely hit Jaguar Land Rover (JLR) operations.
“In India, growth is expected to remain strong as low inflation and government stimuli will benefit the overall economic situation,” he added.
“China’s economic growth is set to edge down further. This will result in tougher market conditions for all global manufacturers, including Jaguar Land Rover,” Mistry said.
Tata Motors reported a 21 per cent decline in consolidated net profit in 2015-16 to Rs 11,024 crore from Rs 13,900 crore in 2014-15. This was mainly due to declining profits at Jaguar Land Rover because of falling Chinese demand.
Jaguar launched the XF, XE, F Pace and Land Rover the Discovery Sport and Range Rover Evoque in 2015-16. Despite this, the company reported a 36 per cent drop in net profit to £1.3 billion (Rs 13,000 crore) in 2015-16 from £2.03 billion (Rs 20,000 crore) in 2014-15.
Tata Motors pumped in £3.75 billion (Rs 37,125 crore) towards capital expenditure and product development in Jaguar Land Rover last financial year, up from £3.2 billion (Rs 31,700 crore) the year before.
Parent Tata Motors, however, posted a standalone net profit of Rs 234 crore in 2015-16 against a loss of Rs 4,739 crore in 2014-15. This was due to strong demand for trucks, the company’s cost-cutting measures, and new car launches. Tata Motors kicked off 2016-17 with the launch of the Tiago, a new hatchback priced at Rs 3.5 lakh. The car has drawn good response and the company has started a second shift for at its plant in Gujarat.
“Tiago has received strong bookings. New products like the Hexa, Kite 5 and Nexon have also received positive response at the Auto Expo,” Mistry added.