India business is hit by overall slowdown

Tata Motors, on a consolidated basis, reported a 71 per cent jump in its net profit at Rs.3,542 crore for the second quarter ended September 30, 2013, against Rs.2,074 crore in the same period last year.

This was primarily due to a better-than-expected performance of the company’s Jaguar Land Rover (JLR) unit despite a setback in the company’s India business, which was hit by an overall slowdown, it said.

The company reported consolidated revenues of Rs.56,882 crore for the quarter as compared to Rs.43,403 crore, up 31 per cent.

The company said the weak operating environment in India was more than offset by increase in wholesale volumes, richer product and market mix at JLR where wholesale and retail volumes grew by 31.6 per cent and 21.1 per cent to 101,931 units and 102,644 units, respectively.

Standalone results

On a standalone basis, Tata Motors (India business) reported a net loss of Rs.804 crore during the quarter under review against a net profit of Rs.867 crore in the year-ago period.

Revenue (net of excise) has declined from Rs.12,481 crore for the quarter ended September 30, 2012 to Rs.8,868 crore for the second quarter this year.

Sales of commercial and passenger vehicles, including exports from the India business, declined by 32.5 per cent to 150, 930 units.

“Continued downturn in economic activity, low level of transport freight and infrastructure activity, frequent diesel price increase and tight financing environment have impacted the industry during the quarter,” the company said.

“The commercial vehicle industry declined in July-September quarter over the corresponding period last year, led by fall of 34 per cent in cyclical medium and heavy commercial vehicle truck segment. Further competitive pressure on pricing in certain segments impacted the operating margins,” the company said.

Initiatives

Tata Motors said despite this, its product and market initiatives enabled it to sustain its strong market share in the domestic market.

“We expect JLR performance to remain strong, led by product actions and continued growth in emerging markets, particularly China. Domestic business could bounce back strongly along with economic recovery, though we have not factored this in, given limited visibility,” said Rikesh Parikh Vice-President, Institution Corporate Broking, Motilal Oswal Securities Ltd.

Tata Motors shares closed with a gain of 1.29 per cent at Rs.385 on the BSE on Friday.

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