Higher marketing spends, overall cost pressure hit Indian operations

Tata Motors Group on Tuesday reported a 41 per cent rise in consolidated profit after tax at Rs.3,406 crore for the third quarter ended December 31, 2011, on the back of a stellar sales performance by Jaguar Land Rover.

Operating profit margins improved 70 basis points to 16 per cent. Consolidated revenues grew 44 per cent to Rs.45,260 crore.

Jaguar Land Rover (JLR) recorded strong sales growth of 36.7 per cent to 86,322 units following a favourable market mix. The net profit grew 57 per cent to 440 million pounds on 41 per cent higher revenues of 3,746 million pounds. Operating profit margins were up at 20.1 per cent (17.4 per cent).

JLR tied up revolving credit facility (RCF) with a consortium of banks for committed 3-5 year credit lines of 610 million pounds which has been upsized to 710 million pounds and this will enable access to such funding as and when required. JLR earlier said it would spend 1.5 billion pounds as capex annually.

Ralph Speth, CEO, JLR, said, JLR was well on track with its China plans but it was too early to comment on local partners. “Our order books were full and U.S. sales have picked up with the economy stabilising but one cannot say about Europe yet.”

For the nine months ended December 31, 2011, Tata Motors Group reported a net profit of Rs.7,283 crores (Rs.6,636 crores) on a 32 per cent higher consolidated revenue of Rs.114,747 crore. Operating profit margins were 14.4 per cent.

On a standalone basis, Tata Motors' India operations reported a significant drop in net profit at Rs.174 crore (Rs.410 crore) on an 18.2 per cent higher net revenue of Rs.13,338 crore. Higher marketing spends and overall cost pressures, resulted in lower operating margins of 6.7 per cent and operating profit declined 26.3 per cent to Rs.897 crore. Commercial vehicle sales in India grew 15.5 per cent to 1.31 lakh units.

For the nine months ended December 31, 2011, Tata Motors (standalone) reported a lower net profit of Rs.677 crore (Rs.1,239 crore) on 15.7 per cent higher revenues of Rs.37,916 crore. The figures include an exchange loss of Rs.375 crore.

C. V. Ramakrishnan, CFO, Tata Motors, said the company hoped to improve its performance “going forward with improved volumes and margins.”

P. M. Telang, Managing Director, Tata Motors, said, “Passenger car market has not grown as we wanted and the first-half of the year was not particularly good but now there is good market traction that is being seen.”

The company was considering nearby ASEAN (Association of South-East Asian Nations) countries as options to make Tata Motors vehicles. The company's Nano sales which average 7,000 a month, “will cross 10,000 a month in 1-2 months,” he said.

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