Tata Motors reported a consolidated net profit of Rs 2,424 crore for the quarter ended December 31, 2010, beating market forecasts.
The company's net profit grew by about three and half times in the quarter. Net profit in the year-ago period stood at Rs 650 crore profit. Analysts had estimated a net profit of around Rs 2,100-2,200 crore. Tata Motors standalone net profit stood at Rs 410 crore, a growth of 2.5 per cent, against Rs 400 crore in the year-ago period.
Premium brands Jaguar and Land Rover pushed the overall margins, while the net profit growth at the stand-alone level remained subdued, and one of its subsidiaries posted a loss for the quarter. JLR net profit grew to £275 million(Rs 2,017 crore) during the quarter, compared with £55 million (Rs 403 crore) in the same quarter last year.
Consolidated net sales for the quarter grew to Rs 32,544 crore, an increase of 22 per cent over the Rs 26,678-crore net sales in the same quarter a year earlier. The higher sales were primarily due to strong demand and better realisations from JLR products. The company’s senior management also stated that raw material prices were hurting margins but an upward revision in retail prices helped soften the pressure from high input costs.
C R Ramakrishnan, chief financial officer, said, “The price increase was done to neutralise the steep increase in input costs. A better product mix and a favourable exchange rate pushed realisations from JLR. However, margins will be under pressure in the coming months and we are taking price control measures internally to reduce the pressure”.
“Our balance sheet was stretched a year ago and with continued efforts, the debt to equity ratio should strengthen further. We will look at opportunities for further fund raising”, added Ramakrishnan. During the quarter, the company raised a total of $750 million (Rs 3,351 crore) through qualified institutional placement, and this has brought down the net debt to equity ratio to 0.8. The company’s consolidated net debt stands at Rs 21,500 crore (including Rs 5,500 crore from the vehicle financing arm).
Tata Nano, which faced rough weather a couple of months ago, has seen a return in demand. The company produces 10,000 units of the car every month and plans to increase production to 12,000-15,000 units per month by March. The company will also start exporting the car to countries where the Indian version will be accepted.
Although most of the company’s subsidiaries posted positive growth, its Korean commercial vehicle manufacturer, Tata Daewoo Commercial Vehicle posted a net loss of Rs 4.4 crore on a drop in demand and cost pressures. Operating margins for JLR improved significantly to 17.4 per cent from 9.8 per cent, while those of Tata Motors dipped to 10.4 per cent from 12.8 per cent. Wholesale volumes at JLR grew 11 per cent to 63,155 units, compared with 56,726 units in the year-ago period. Tata Motors recorded a growth of 5 per cent for its passenger cars at to 64,501 units, while that of commercial vehicles grew by 21 per cent to 113,622 units.
