New Delhi: Tata Motors Ltd’s fiscal third-quarter profit plummeted 96% as lower sales at its British luxury car unit Jaguar Land Rover Automotive Plc. (JLR) and a wider loss in its domestic business took its toll on India’s largest automaker by revenue.

Net profit fell to Rs111.57 crore in the three months ended 31 December from Rs2,952.67 crore in the year-ago period, the Mumbai-based company said on Tuesday. A Bloomberg poll of 20 analysts had estimated a profit of Rs2,264.5 crore.

Consolidated sales fell 2.2% to Rs67,864.95 crore from Rs69,398.07 crore in the year-ago period.

Tata Motors said the invalidation of high-value banknotes by Prime Minister Narendra Modi on 8 November hurt its domestic commercial vehicles business, a cash cow, with sales of trucks and buses declining 9%. Sales of light commercial vehicles were flat.

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The biggest hit came from JLR, where net profit declined to £167 million ($208 million) from £440 million a year ago on a 13.1% increase in revenue to £6.5 billion.

“These are terrible numbers," said Mahantesh Sabarad, head (retail research), SBI Cap Securities Ltd.

“That is because the JLR margin seem to be settling in to the single-digit space unlike (in) the past where a 14% was a given. More so, the JLR product mix has altered quite substantially" and variable marketing spending has been on the rise, Sabarad said.

Investors punished the stock. Tata Motors shares declined as much as 7% after the earnings announcement but recovered some ground to close down 3.68% at Rs486.80 on a day the BSE’s benchmark Sensex edged down 0.04% to 28,339.31 points on Tuesday.

The fall wiped off Rs5,993.23 crore from the company’s market value.

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On a standalone basis, the company said net loss widened to Rs1,046 crore in the December quarter from Rs137 crore a year ago. Revenues grew marginally to Rs10,167 crore from Rs10,019 crore.

“Standalone has been struggling, with the passenger vehicle business unit not really picking up pace, but this quarter has been one of the better ones," Sabarad said.

Passenger vehicle sales rose 25.4% on the back of a continued strong customer response to the Tiago hatchback, said the company. Exports grew by 34.6% year-on-year.

Managing director and chief executive officer Guenter Butschek, a former chief operating officer at European aircraft maker Airbus, has been tasked with turning around the fortunes of Tata Motors, whose domestic passenger car sales and market share have roughly halved in the past two years.

As the domestic business floundered, JLR has sustained Tata Motors. In the December quarter, total retail sales at the unit rose 8.5% to 149,288 units, led by higher demand in China, North America and Europe.

“What is it that we need to be a high-performance organization— being lean, it’s about being agile and it’s about having clearly addressed and delegated accountability," Butschek told a news conference on Tuesday.

The company expects to fare much better in the fourth quarter, chief financial officer C. Ramakrishnan told the conference.

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“JLR margins would definitely be better in the fourth quarter, hopefully on the back of the new launches that we have," Ramakrishnan said.

Other issues facing JLR include Britain’s Brexit vote and US President Donald Trump’s promised protectionist policies, according to a 20 January report by Mumbai-based IDFC Securities Ltd.

The US accounts for about 25% of JLR sales.

“Given this, JLR is in a more precarious position than its peers," IDFC Securities analyst Deepak Jain wrote in the report.

The JLR unit is vulnerable because it doesn’t have factories in the US and sells much of its UK output abroad.

The unit’s operating profit margin narrowed to 9.3% from 14.4% a year earlier.

To offset the impact of a border tax now being studied by the Trump administration, JLR would need to raise prices by more than $17,000 per vehicle, according to West Bloomfield, an analyst at Michigan-based Baum & Associates Llc.

Reuters and Bloomberg contributed to this story.

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