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Losses due to sluggish domestic performance may have burnt a hole in the financials of Tata Motors forcing it to decline dividend payout for the first time since 2002 but the Mumbai-based company is set to get its annual dividend of 150 million pounds (Rs 1,500cr) from Jaguar Land Rover.
The two British brands will pay dividend to their parent company before the end of current quarter, which is in-line with the payments done in previous years. Tata Motors has been receiving similar amount since 2013.
The dividend will further boost Tata Motors cash holding, which got a shot in the arm recently with the successful raising of Rs 7,498 crore through rights issue of shares.
“Considering the continued weak operating environment in the standalone business, and in view of the losses for the year, no dividend is permitted to be paid to the Members for FY2014-15, as per the Companies (Declaration and Payment of Dividend) Rules, 2014”, the company stated.
Tata Motors losses on a stand-alone basis widened 42% to Rs 1,164 crore during the last quarter as against Rs 817 crore posted in the same quarter in 2013-14. The losses were on account of higher depreciation charges on new products such as Zest and Bolt, company officials said.
The losses notwithstanding Tata Motors will go-ahead with its capital expenditure plan of Rs 3,000-4,000 crore for the year. The company will launch a hatchback and a compact sedan this year, followed by a compact sports utility vehicle next year.
Jaguar Land Rover net profit declined by 33% during the final quarter of last year due to increased foreign exchange losses, higher depreciation and a slowdown in demand in China, formerly its biggest market.
However, with changing dynamics, China's share in Q4 slipped to 19% from 24% placing it as the second largest market for JLR with the UK regaining lost ground and positioned as the biggest market for the two luxury brands.
