Net income from operations rises 37 pc

Our Bureau

Mumbai, Oct. 30

Tata Motors has posted 31 per cent increase in net profit for the second quarter to Rs 441.72 crore from Rs 337.87 crore in the corresponding previous period.

The company's performance, according to analysts, was below market expectations; its shares fell by 3.8 per cent to Rs 852.10 on the BSE on Monday in an overall buoyant market.

Net income from operations rose 37 per cent to Rs 6,571.79 crore (Rs 4,788.18 crore).

Sales in terms of number of vehicles increased by 30 per cent to 1.39 lakh units (1.07 lakh). Mr Praveen Kadle, Executive Director, said that though the volumes went up, margins were affected due to increase in raw material costs.

The company said in a statement that it continued to witness increases in input costs and interest rates, and also general inflationary pressures during the quarter, which are expected to continue during the rest of the year.

Mr Kadle said that commodity prices are expected to remain high due to the continuous demand-supply gap.

But infrastructure development and industrial production will be the key drivers for the company and for the growth of its commercial vehicles unit.

To offset the hike in raw material costs, the company has hiked vehicle prices across the board with effect from October 1.

Mr Ravi Kant, Managing Director, said that the company had to take into consideration various market dynamics - such as its long-term relationship with the customer - before introducing the hike.

Cautious introduction of a cost hike in a cost-competitive market is a tough task for the management, he added.

Sales growth mainly came from the commercial vehicles business.

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(This article was published in the Business Line print edition dated October 31, 2006)
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