The Hindu Business Line : Tata Motors net slips 30% on input cost rise, forex fluctuations

Mr Ravi Kant (left), Managing Director, Tata Motors, and Mr P.M. Telang, Executive Director-Commercial Vehicles, at a press conference in Mumbai on Wednesday.

Our Bureau

Mumbai July 30 Volatility in foreign exchange rates, inflationary pressures and a steep increase in input costs pulled down automobile major Tata Motors’ net profit for the quarter ended June 30, 2008 by 30.13 per cent as compared to the same period last fiscal.

The company reported a net profit of Rs 326.11 crore during the quarter, compared to Rs 466.76 crore in the year-ago quarter.

The company had a notional foreign exchange loss of Rs 199.88 crore, compared to a gain of Rs 205 crore in the corresponding quarter of last year, reflecting the volatility in forex rates impacting its long-term funds raised through issue of foreign currency convertible instruments.

Its consumption of raw materials and components increased sharply to Rs 5,025 crore from Rs 3,994 crore in the year-ago period, applying a further squeeze on its margins.

Its net revenues however rose 14.4 per cent to touch Rs 6,928.44 crore (Rs 6,056.82 crore).

While its sales volume for passenger cars and utility vehicles was flat at about 52,450 units, sales of commercial vehicles increased to 71,409 (61,633) during the quarter. Although exports fell from 13,889 to 9220 vehicles during the quarter, its total sales volume grew by 3.9 per cent to cross the 1.3 lakh mark.

Mr Ravi Kant, Managing Director, said the growth in its passenger car segment could not match that of the industry rate mostly on account of the delay in launch of the new Indica. “Yes there has been considerable delay in the launch of this product. But you have to understand that it is a whole new vehicle. However, most of the problems are behind us now and we are closer to its launch, although I cannot give you a time frame,” he told press persons after announcing the results.

Mr Kant admitted that the current fiscal would be challenging one not only for Tata Motors but for the entire automobile industry, with input costs rising and interest rates hardening.

Singur plant

On the recent disturbances at its up-coming Singur plant, Mr Kant the West Bengal authorities were seized of the matter and were taking action. “It is ultimately for the people of the State to decide whether they want industrialisation or not. Our (Rs one lakh car) Nano project has attracted world wide attention. People of West Bengal should feel proud that such a product is coming out of their State,” he said.

He added that Tata Motors had taken a “bold step” to set up the manufacturing facility at Singur, despite many advising against it. He, however, said the company was trying its best to meet the scheduled deadline for the Nano launch.

Asked how long would the company wait for things to settle down at Singur, he said “We will continue as long as our patience last.”

Tata Motors’ Rs 10 shares closed nearly 5 per cent up on the NSE at Rs 415.80 on Wednesday.