A combination of factors helped the company record a strong performance in the June quarter.
Tata Motors has several reasons to cheer its June quarter results. First, volume growth in almost all businesses, domestic as well as international. Second, management of costs, especially of raw materials. And, the favourable currency movement, which helped the Jaguar Land Rover business double its revenue and record a net profit of around £221 million.
The launch of Jaguar XJ has been a success and operations are working at around 80 per cent utilisation levels. A favourable currency movement has also aided profitability. Raw material consumption declined to 63 per cent of net revenue during the quarter, as compared with 68.3 per cent in the corresponding quarter of the previous year. On a consolidated basis, operating profit rose 563 per cent to Rs 3,900 crore and margins stood at 14.6 per cent, much better than the single-digit number in some of the earlier quarters. Standalone margins, however, remained flat at around 11.3 per cent.
Though the commercial vehicles market fell a bit sequentially, volume growth remained robust at 38 per cent, with more than a lakh vehicles sold in the quarter. The passenger car segment showed strong performance, as the company managed to sell around 77,751 cars and saw its overall market share jump to 14.3 per cent from 12.3 per cent a year ago. The success of Indica Manza is seen as a major contributor to this performance. The company’s share in the mid-sized car segment has grown from 25 per cent to around 39 per cent.
There are some concerns though. The management says rising commodity prices may impact margins in the second half of the financial year. The rise in prices of commercial vehicles after emission norms change in September is another concern. However, volume growth and streamlining of costs are positives. Details of fund-raising plans and the extent of equity dilution are going to be the next triggers.