Tata Motors net grows 10.5% on JLR volumes

Last Updated: Wed, Nov 07, 2012 21:45 hrs

Tata Motors, India’s largest automotive company, on Wednesday posted a 10.5 per cent increase in consolidated net profit at Rs 2,074 crore for the quarter ended September 30, helped by strong volumes from Jaguar Land Rover which continued to boost its financials.

The company had posted a consolidated net profit of Rs 1,877 crore in the same period last year.

However, stand-alone performance of the company suffered during the quarter as slowdown in demand from the domestic market resulted in a degrowth in net sales and a net loss in the financial performance.

Income from operations at the consolidated level increased to Rs 44,105 crore in the reporting period, an increase of 19 per cent as against Rs 37,119 crore posted in the same period last year.

The Jaguar Land Rover subsidiary posted a 77 per cent increase in net profit at £305 million (Rs 2,650 crore) in the reporting quarter as against £172 million (Rs 1,500 crore) posted in the same quarter last year.

C R Ramakrishnan, chief financial officer, Tata Motors said, “We definitely hope to work on the margins which has come down and this we have indicated earlier that margins have been under pressure”.

Tata Motors stand-alone profit grew by more than eight times to Rs 867 crore during the reporting quarter as against Rs 102 crore posted in the same quarter last year.

However, the company received a Pound 150 million (Rs 1,300 crore) as dividend from the Jaguar Land Rover subsidiary, which has boosted its standalone profit.

“The Q2 profit for standalone is about Rs 900 crore which is after taking into account the dividend from JLR but without the dividend at the PAT level there is a loss and at the Ebitda level out margins have come by over two percentage points compared to same period last year”, added Ramakrishnan.

Though the company did not clarify the amount of net loss but analysts tracking the company say that the loss could be between Rs 250-260 crore without the dividend amount but after computing tax.

Operating margins at the standalone level stood at 5.9 per cent for the quarter as against 7.2 per cent. Gross sales came down to Rs 13,714 crore, a drop of 2.24 per cent as against Rs 14,029 crore.

Despite the dismal performance at the standalone level the Mumbai-based company said that it will launch six products in the passenger vehicle space and 25 products in the commercial vehicle space next financial year, including facelifts and new models.

“We have a product pipeline that will include powertrain changes and refreshes to the vehicles. And this will include all of the segments. In the longer term we will ensure that the product launches happen where there is growth. We have talked about six vehicles in the passenger car segment and 25 launches in the commercial vehicle segment in the next part of the financial year”, added Karl Slym, managing director, Tata Motors.

The new launches will include a diesel and CNG version of the Nano. “Nano CNG will come in the next half of calender year but the diesel is outside of the first half of next calender year so we are talking about towards the end (of the year)”, added Slym.

Further, the company completed the wage negotiation process at JLR and has agreed to hike the wages by 4.5 per cent in the first year. This will have an impact on the margins but the company did not quantify the impact

Meanwhile, China surpassed the UK in becoming the largest market for JLR with a share of 21 per cent. The company expects continued demand from the second biggest economy in the world.

The company further informed that Cyrus Mistry, who was inducted to the board of the company in May this year has been appointed as the deputy chairman of Tata Motors. He has also been appointed to the board o Jaguar Land Rover as Ravi Kant, vice-chairman of Tata Motors has stepped down from the JLR board.

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