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Lower domestic car sales, margin pressures and higher raw material costs have led Tata Motors to post a marginal 1.4 per cent growth in its standalone net profit for the quarter ended June 30, 2011.
Net sales in the same period rose 14 per cent, even as the EBITDA margin fell in the three-month period to 8.4 per cent from 11.3 per cent last year.
“In the quarter, we were impacted by a rise in material costs and margin pressures. We gained market share in commercial vehicles where the light and medium and heavy segments grew. However, bus sales declined in the absence of the JNNURM scheme,” said Mr C. Ramakrishnan, CFO, Tata Motors.
“As for passenger vehicles, the high volume compact car segment – where we have a large presence, de-grew marginally. To further enhance Nano sales we are now focussing on marketing initiatives and will tap more export markets.”
Sales
Tata Motors' overall sales (including exports) for the quarter rose 4 per cent to 1.97 lakh units. In the domestic market, commercial vehicles (CVs) sales rose 13 per cent to 1.13 lakh units. Passenger vehicles (PVs) sales, including Fiat, Jaguar and Land Rover vehicles in India, declined by 11 per cent.
Global results
On a consolidated basis, the Group net profit for the quarter was flat at Rs 2,000 crore (Rs 1,989 crore last year). Group net sales in the quarter rose 24 per cent to Rs 33,392 crore.
“Jaguar Land Rover (JLR) continued its robust performance on 20 per cent revenue growth. We were impacted by adverse movement of both the dollar and pound on trade flows and borrowings. Interest costs rose in the quarter on refinancing of bonds and there were additional one time charge son them,” Mr Ramakrishnan said.
JLR global sales for the quarter were up 5 per cent at 62,090 units on the back of better product and market mix and because of with strong growth in China and Russia. Tata Motors shares at the BSE were up 0.20 per cent at Rs 845.60 on Thursday.
Outlook
The automaker said that it was “cautiously optimistic” on the growth outlook and expects further pressure on pricing and on sales due to rising interest rates.
“We expect slower growth in CVs, but expect an increase in infrastructure spending to spur demand for vehicles like tippers and trailers. For LCVs we continue to believe that we will see intensive growth.
“The competition has increased, but we are well poised. Our expansion projects are on track and the product line up in both CVs and PVs will see more models,” he said.
Tata Motors is investing around £1.5 billion on JLR annually over the next few years on new products, sustainable technology and fresh capacity. Around Rs 3,000-3,500 crore more is being invested in its domestic arm every year as capex.
“We do not see a major impact of interest rate increases in India or globally on us, but it will affect the demand. We have no major fund raising plans,” Mr Ramakrishnan said. Another senior official added, “We're on track with finding a suitable partner for JLR in China – we're investing in warehouses and other servicing capabilities in that country.”
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