Slow sales pull down Tata Motors net by 3%

CORPORATE SCORECARD

Tata Motors Managing Director Ravi Kant on Thursday announced that the company had posted a 2.8 per cent decline in net profit to Rs 499.05 crore for the third quarter ended December 31, 2007, even as revenues increased 5.2 per cent to Rs 7,251.83 crore.

This was largely due to a slowdown in sales of medium and heavy commercial vehicles that declined by 3.8 per cent, on excess supply in the industry, higher interest rates and renewed overloading of trucks in some states.

On a consolidated basis (including subsidiaries), the country's largest vehicle manufacturer posted an 8.8 per cent increase in net profit at Rs 654.79 crore while net revenues grew 13 per cent to Rs 9238.48 crore.

Other income for the quarter included a profit of Rs 65 crore from the sale of a 11.11 per cent stake in HV Axles Limited to Tata Finance.

Ravi Kant said that the slowdown in commercial vehicles was likely to continue for some time, mainly due to high interest rates.

"The recovery will take quite a while," he said.

"There was acceleration in buying when interest rates were lower. Interest rates had gone up to 12 per cent, and are now at 10 per cent. We don't see any respite as banks are being selective in whom they lend to."

Rajiv Dube, president, passenger car unit, said car sales also shrunk 7.7 per cent to 48,658 units.

The company expects to arrest the decline with new launches in the next couple of years.