Tata Motors, India’s biggest automobile manufacturer in terms of revenues, on Thursday reported a consolidated net profit of Rs 1,999.62 crore for the quarter ended June 30, a 0.5 per cent increase over the corresponding quarter a year ago.
The company’s financial performance missed analysts’ estimates, as slower-than-expected volume growth and steeper expenses dented margins. It had reported Rs 1,988.73 crore as net profit in the same quarter last year.
The vehicle maker clarified that expensive lending rates, higher fuel costs and inflation had impacted margins during the reporting quarter restricting it to passing on the costs to its customers.
“The company took an overall price increase of 2.5 per cent during the first quarter. However this did not fully offset the rise in prices. In addition, since last year, we have been talking about pressure on margins. Interest rate increase is a matter on concern,” Chief Financial Officer C Ramakrishnan said.
Tata Motors’ sales (including exports) of commercial and passenger vehicles for the quarter stood at 197,606, 3.8 per cent more than the same quarter last year.
Sales of Jaguar and Land Rover, which it bought from Ford Motor in 2008, grew 4.9 per cent to 62,090 units. Standalone profit of Tata Motors grew 1.52 per cent to Rs 401.28 crore during the quarter as compared to Rs 395.26 crore posted in the same quarter last year. Earnings before interest taxes depreciation and amortisation (Ebitda) in the reporting quarter dropped to 8.4 per cent from 11.3 per cent.
JLR net profit went down by three per cent to Rs 218.2 crore from Rs 226 crore, mainly on account of unfavourable tax structures in newer countries like China and higher interest payout on borrowings.
Net sales at the consolidated level stood at Rs 33,391 crore, a gain of 24 per cent as compared to Rs 26,876 crore in the corresponding quarter last year.
However, stand-alone net sales grew 13.6 per cent to Rs 11,833 crore as compared to Rs 10,416 crore.
An exceptional loss on revaluation of foreign currency borrowing stood at Rs 57 crore.
To counter the slide in consumer interest, Tata Motors is looking to launch more than half a dozen products in the domestic market in the passenger and commercial vehicle segment.
The company is preparing to launch variants of medium and heavy (Prima) and light commercial vehicles, Nano, besides a refreshed variant of Indica Vista and a limited edition of Indigo Manza this year.
The company, however, is expecting continued impact on its financials in the coming quarter. “The ability to pass on the hike will have to be done little more carefully in the future. At the same time, the company’s main thrust will be to control costs,” added Ramakrishnan.
Despite the downturn in demand in India and overseas, Tata Motors will not be cutting down on its planned expansion programme involving spends on capacity addition and new product development.
The company is spending 1.5 billion pounds (Rs 11,000 crore) as capital expenditure on JLR this year and another Rs 3,000-3,500 crore as capital expenditure at the stand-alone level.
With bus orders forming a part of the Jawaharlal Nehru National Urban Renewal Mission having been exhausted and no new big order expected, the company is expecting the segment to underperform.
However, with increased spending by the government on infrastructure demand for heavy and medium trucks is expected to grow, stated company officials.
