Tata Motors: Impact Of Losing A Foreign Market

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Tata Motors Limited
Tata motors is an Indian multinational automobile manufacturing company headquartered in Mumbai, India, and a member of the Tata Group. Its products include passenger cars, trucks, vans, coaches, buses, construction equipment and military vehicles. Tata Motors' principal subsidiaries purchased the English premium car maker Jaguar Land Rover and the South Korean commercial vehicle manufacturer Tata Daewoo. Tata Motors entered the passenger vehicle market in 1991 with the launch of the Tata Sierra, becoming the first Indian manufacturer to achieve the capability of developing a competitive original automobile. Tata Motors acquired the South Korean truck manufacturer Daewoo Commercial Vehicles Company in 2004 and purchased Jaguar
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The exchange rate of one currency versus the other is influenced by numerous fundamental and technical factors. These include relative supply and demand of the two currencies, economic performance, outlook for inflation, interest rate differentials, capital flows, technical support and resistance levels, and so on. As these factors are generally in a state of everlasting flux, currency values fluctuate from one moment to the next. But although a currency’s level is largely supposed to be determined by the underlying economy, the tables are often turned, as huge movements in a currency can affect the economy’s fortunes.

Identify the impact of losing a foreign market on the profits of the company. According to the Hindustan Times, Tata motors’ consolidated net profit in the quarter fell to Rs.2,260.40 crore from Rs.5,254.23 crore a year ago, missing analyst estimates. Net sales rose 10% to Rs.66,101.27 crore from Rs.60,093.79 crore in the same period. Total costs rose 18% to Rs.63,993.99 crore.
Higher sales volumes both at the stand-alone business and the Jaguar Land Rover Ltd unit were more than offset by the adverse foreign exchange impact of Rs.2,296 crore and adverse commodity derivatives impact of Rs.167 crore.
Most of the forex loss stemmed from its UK luxury unit Jaguar Land Rover, where net profit fell to £304 million from £492 million in the year-ago quarter, despite a 9.17% increase in revenue to £5.461

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