However, the ongoing stress in the China market for the company’s cash cow, Jaguar Land Rover (JLR), meant it came in almost half of what it was in the quarter ended March 31, 2018. The net profit was, however, much above the Bloomberg consensus estimates of Rs 570 crore.

The profit, Tata Motors management said, was on the back of a substantial correction in inventory of JLR in the company’s Chinese business and stringent cost control measures under its programme ‘Charge’. The changes in inventories of finished goods, work-in-progress and products for sale rose to over `10,670 crore during the quarter, up from `1,888-odd crore in Q4FY18.

JLR, which contributes around 78% of the company’s overall revenues, has been going through problems during the year with falling sales owing to a decline in demand of diesel vehicles, slowing business in a key market like China and uncertainties over Brexit.

In the previous quarter ended December 31, 2018, too, Tata Motors had posted a surprise and its biggest consolidated net loss at `26,961 crore on the back of a non-cash asset impairment of `27,838 crore for JLR. In Q4FY18 as well, the company had recorded a one-time impairment of `1,641 crore related to provision for impairment of certain intangibles under development and capital work-in-progress.

Tata Motors chief financial officer PB Balaji said the company is banking on a turnaround in JLR’s China business as the market is showing some signs of recovery, and expects the growth to be back for the luxury car in the quarter ended September 2019.

“It is undeniable that the global operating environment is not easy in terms of Brexit and the trade wars with China. A year ago, we sold 150,000 vehicles in China. This year we sold only 100,000. China is the most profitable business within JLR portfolio. For us China needs to turnaround and that is why we are doing everything possible,” he told newspersons at a post-earnings conference.

However, he said, in the meanwhile, the US and UK markets are doing very well for the company. “UK despite Brexit challenges, we grew 8.7% and gained market share and same is the case with US, where the profitability is in line with overall JLR profitability,” he said.

The unit posted a loss of over £119 million during the quarter with revenues falling by 5.6% y-o-y at £7,134 million. JLR retail sales during quarter were down by 8% year-on-year at 1,72,700 units.

The consolidated net sales during the quarter declined nearly 4% y-o-y to `86,422 crore, though coming above analyst estimates of `85,165 crore.

While the Tata Motors domestic business continues to deliver profitable growth, challenges at JLR remain.

Consequently, the consolidated Ebitda (earnings before interest, tax, depreciation and amortisation) declined a sharp 25% y-o-y to `8,449 crore during the quarter, while Ebitda margins fell 280 basis points to 9.7%.

Meanwhile, the company said its cost control project called ‘Charge’ in JLR is on track to achieve the £2.5-billion target; cash benefits have started to flow in with £1.3 billion delivered in FY19.

At the standalone level, Tata Motors reported a net profit of over `106 crore versus a loss of nearly `500 crore in the quarter ended March 31, 2018. Standalone net sales stood at `18,561 crore, which was a decline of 3.1% on a y-o-y basis.

The free cash flow (automotive) in FY19 was a negative of `9,166 crore, reflecting lower operating profits at JLR. Closing net automotive debt was `28,394 crore, reflecting the cumulative negative free cash flow, primarily at JLR.