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Tata Motors posted a 2.5 per cent growth in profits for the quarter ending December 31, 2010, on the back of a 28 per cent rise in net sales. However on a consolidated basis, higher sales of the premium-end Jaguar Land Rover division boosted the company's net profit which rose almost four-fold to Rs 2,424 crore.
Net sales
Consolidated net sales in the three-month period rose 22 per cent to Rs 31,506 crore, while EBITDA margin for the period rose to 15.2 per cent (11.8 per cent).
The improved performance, especially of the European JLR operations, sent the Tata Motors' ADR by over nine per cent. The ADR was trading at $26.44, a gain of 9.2 per cent at 9.30 p.m. IST. The stock on the BSE closed at Rs 1,144.65, up 3.79 per cent higher from its previous close. “The JLR profits have improved on better product and regional mix, besides favourable foreign exchange movement. This is the fifth consecutive quarter of profit,” said Mr C. Ramakrishnan, CFO, Tata Motors.
With sales rising 11 per cent (63,155 units) and an EBITDA of 17.4 per cent, JLR recorded a profit of £275 million (£55 million ) in the quarter. The company's Korean arm, Tata Daewoo Commercial Vehicles Co Ltd, posted a loss of Rs 4.4 crore on lower volumes and cost pressures.
In the quarter, Tata Motors sold 17 per cent more vehicles at 1.94 lakh units (including exports). With commercial vehicle sales rising 21.5 per cent (1.13 lakh units), it held on to a 64 per cent market share in India. Passenger vehicle sales, including that of Fiat and JLR brands, rose 5 per cent to 64,501 units.
“Margins continue to be under pressure. Going forward we see continued volume growth since the freight rates are holding. Increased road building efforts should also boost CV sales. However, rising commodity prices and shortage of components like forgings and tyres are a matter of concern,” said Mr Ramakrishnan.
Mr Carl-Peter Forster, CEO and Managing Director, said the company is working on several measures to increase sales from the Fiat brand. “We would like to see sales improving from the Fiat joint venture and we have employed some new people. We're also looking at other measures,” he said, adding that the demand outlook for the immediate future is one of cautious optimism.
New plant
Tata Motors plans to start a new plant in South Africa in the first quarter of 2011-12, while also scaling up production to commercial levels at a new plant for small CVs in Dharwad, Karnataka, by the middle of next fiscal. It is also increasing the monthly production run for the Nano minicar to 15,000 units from March, from 10,000 units. The company added that it expects to invest more than £1 billion in JLR and up to Rs 3,000 crore annually on the Tata brand for product development.
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