MOSL: ANNUAL REPORT THREADBARE (ART) | TATA MOTORS FY17-Changing stance on hedging policy
​​ANNUAL REPORT THREADBARE (ART) | TATA MOTORS FY17: Changing stance on hedging policy
Tata Motors’ FY17 annual report highlights weak operating performance. EBITDA declined 12.5% to INR335b and PAT declined 35% to INR76b. Net worth dipped to INR585b (FY16: INR794b) due to losses on (a) cash flow hedges, (b) re-measurement of pension liabilities, and (c) translation of foreign operations charged through OCI. Derivative losses continue to impact earnings, with GBP1,229m (~INR100b of realized losses) reported above EBITDA and INR135b of unrealized losses adjusted through OCI. Disclosure of year-end hedge position suggests a varying hedging policy adopted by JLR. Operating cash flow (adjusted) dipped to INR220b (FY16: INR315b) and was also supported by significant increase in payables and other liabilities.
Operational performance deteriorates
Revenue declined 1.1% to INR2,744b due to weak GBP and degrowth in MHCV segment. EBIDTA margin declined to 11% (FY16: 13%) on higher marketing spend and manufacturing & operating cost at JLR. EBITDA declined 13% to INR335b. Forex losses at INR39.1b and high depreciation at INR179b (FY16: INR167.1b) also impacted earnings.
Tata Motors is an automobile company, engaged in the manufacture and sale of commercial and passenger vehicles primarily in India. Co. provides cars, utility vehicles, trucks, buses, and defense vehicles, as well as develops electric and hybrid vehicles for personal and public transportation. In addition, Co. is engaged in the provision of engineering and automotive applications, as well as machine tools and factory automation applications; construction equipment manufacturing; automotive vehicle components manufacturing, among others. Co. markets its vehicles in Europe, Africa, the Middle East, South East Asia, South Asia, and South America.
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