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Our Bureau

Mumbai, Oct. 26 Increased volumes, low raw material costs and better operating margins helped Tata Motors post a net profit of Rs 729 crore for the July-September quarter, more than twice the Rs 347 crore clocked last year.

Total income grew 13 per cent to Rs 7,979 crore, propelled by a 17 per cent increase in vehicle sales at 1.58 lakh units for the quarter.

Reacting to the financial performance, the Tata Motors ADR jumped 7 per cent to $12.256 at 8-45 p.m. Ahead of the result declaration, the stock gained 1.88 per cent at Rs 539.35.

The company has, incidentally, changed the supplier of the combination switch for the Nano. There have been three incidents of the car catching fire. The company has maintained that these were cases of melting caused by a short-circuit.

“We have taken corrective steps. We have changed the entire thing and also changed the supplier,” Mr Ravi Kant, Vice-Chairman, said at a press conference here on Monday. “It was caused by the melting of plastics. This was a vendor-related issue.”

Meanwhile, Tata Motors has fully repaid its $3-billion bridge loan taken to acquire Jaguar and Land Rover. “Tata Motors and Jaguar Land Rover have been facing tough challenges in the past few quarters. We managed to extinguish the burden of $3 billion aided by the turn in global liquidity,” said Mr Kant.

The company’s commercial vehicle segment grew 21 per cent to 89,655 units during the quarter while passenger vehicles, including Fiat and Jaguar Land Rover products, grew 27 per cent to 60,917 units

“A good revival in industrial activity and availability of finance led to increase in volume,” said Mr C. Ramakrishnan, Chief Financial Officer.

He said that a strong JNNURM order book — the company will deliver 5,000 buses under the scheme this fiscal — coupled with the World Truck range and new products would drive growth. “We expect the rise in commodity price to exert some pressure on our margins,” he cautioned.

Tata Motors has also embarked on a cost-cutting programme to reduce expenses by Rs 1,000 crore for the next couple of years. Its standalone outstanding debt as on September 30 was 18,600 crore.

Mr P. M. Telang, Managing Director, said the company was producing 100 Nanos daily at its Pantnagar plant; the production would soon be increased to 150 units. Over 7,500 cars have been despatched. The company declined to give profit margin in Nano sales.

More Stories on : Financial Performance | HCV/LCV/Tractors | Tata Motors Ltd

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