A significant recovery in volumes, continued focus on cost cutting and judicious price increases to combat rising commodity prices during 2009-10 saw Tata Motors report a significantly improved performance for the year with a 124 per cent growth in net profit at Rs.2,240.08 crore on a standalone basis against Rs.1,001.26 crore in the previous year. The company's revenues were up 39 per cent at Rs.35,593 crore (Rs.25,630 crore). The board of directors has recommended a dividend of Rs.15 per ordinary share.
Tata Motors was also able to grow realisations and deliver a 138 per cent growth in operating profit at Rs.4,178 crore (Rs.1,752.44 crore) and an operating margin of 11.74 per cent. The profit before tax rose by 179 per cent to Rs.2,830 crore (Rs.1,014 crore). An overall economic recovery, a benign liquidity environment along with government stimulus had driven domestic demand revival during the year, said Tata Motors Chief Financial Officer C. Ramakrishnan.
In the domestic market, commercial vehicle (CV) sales were up 41 per cent at 3.74 lakh units, leading to a higher market share of 64.2 per cent (63.8 per cent). Sales of medium and heavy commercial vehicles and light commercial vehicles also grew 36.5 per cent and 44.4 per cent, respectively. Sales of passenger vehicles (PV), including Fiat and Jaguar and Land Rover (JLR), grew 25.3 per cent in the domestic market at 2.60 lakh units and the PV market share was at 12.4 per cent and along with Fiat at 13.7 per cent. The company ramped up Nano production at Uttarakhand and delivered 30,763 units.
Consolidated business
On a consolidated basis, Tata Motors reported a net profit of Rs.2,571 crore, a significant turnaround from the previous year's loss of Rs.2,505 crore. The consolidated revenues were up 31 per cent at Rs.92,519 crore (Rs.70,881 crore). There was strong volume growth at Tata Motors and JLR. The profit before tax was at Rs.3,522.44 crore (loss of Rs.2,129 crore). The company has divested its stake (20 per cent) in Telco Construction Equipment Co. for a profit of Rs 1058 crore, which was included in other income.
Mr. Ramakrishnan said the challenges ahead were the hardening commodity prices, currency volatility, the Eurozone crisis uncertainty and increased competition within the Indian market. On the other hand, Tata Motors, over the next three years, was “looking to strengthen leadership in the Indian market, exploit export opportunities, build competitiveness of the JLR business and focus on financial risk mitigation through divestments and appropriate capital raising programmes.''
Tata Motors Vice Chairman Ravi Kant said, “while all are watching the Eurozone crisis play out, any softening there is being more than made up by the U.S., the U.K. and China markets.''
On the capital expenditure plans, Mr. Ramakrishnan said, “directionally, JLR has been spending 600-700 million pounds on product development and new products annually and that will continue. While in Tata Motors' domestic operations, we were spending Rs.2,500-3,000 crore annually and will continue the same going forward.''
JLR business back in black
The JLR business turned profitable during the year, reporting revenues of 6,550 million pounds, a profit before tax of 32 million pounds and a net profit of 3 million pounds. Wholesale volumes for the year were 1.94 lakh units (1.67 lakh units in the ten-month period June 2008-March 2009).
With a positive market reception of the enhanced product range in an improved market environment as well as continued cost reduction, the business was able to grow quarter-on-quarter. During the year, the company put in place a long-term financing plan including the drawdown of 340-million pound EIB loan and syndication of inventory financing.
JLR CEO Ralph Speth said, “China is an important market where we see significant volume and margins. We are targeting to sell 20,000 Land Rovers and 5,000 Jaguars there this year.''
