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Tata Motors tanks 15% as Brexit shock raises UK biz concerns

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tata

Mumbai: Tata Motors and Tata Motors DVR shares crashed as much as 15 and 12 per cent each respectively after Britain voted to leave European Union in a referendum vote held on Thursday.

Analysts had earlier warned that profitability of Tata Motors' UK subsidiary Jaguar Land Rover would take a hit in an event of Britain exits from European Union which is now a reality.

Reuters citing sources on Tuesday reported that Jaguar Land Rover, Britain's largest carmaker, estimated that its annual profit could be cut by 1 billion pounds ($1.47 billion) by the end of the decade if Britain leaves the European Union.

Goods exported from the UK to countries that are part of the European Union, are not taxed as EU is a single market, allowing the free movement of goods, services, capital and persons. But after Brexit, Jaguar Land Rover will have to pay a 10 per cent export duty and 4 per cent import duty on components, which will hit the luxury carmaker's bottom line.

Europe is the largest market for Jaguar Land Rover. The company sold almost a quarter of its over 520,000 cars in Europe last year.

Sharp depreciation in pound-sterling which slumped over 10 per cent following Brexit also impacted the shares of Tata Motors.

Meanwhile, Jaguar Land Rover today said it is "business as usual" and will manage the long-term impact and implications of the decision, insisting "nothing will change" overnight for it and the automotive industry.

"For Jaguar Land Rover, today is just business as usual. We are a British business with a strong manufacturing base in this country, we call Britain home and we remain committed to all our manufacturing sites and investment decisions," a JLR spokesperson said in a statement.

Tata Motors was the top Nifty loser, the stock closed 8 per cent lower at Rs 449.40.

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