Tata Motors reported a net profit of Rs.433 crore for the second quarter of 2010-11 on a standalone basis, lower than the September 2009 figure of Rs.729 crore. However, the figure last year included a profit of Rs.370 crore on sale of investments. Excluding the profit from sale of investment, the company's net profit was up 21 per cent.
The company reported a 44 per cent growth in revenue at Rs.11,504 crore (Rs.7,978 crore). However, cost pressure, supply chain bottlenecks resulted in a dip in operating margins to 9.7 per cent resulting in an operating profit of Rs.1,118 crore (Rs.1,066 crore). The profit before tax was at Rs.537 crore (Rs.907 crore).
Favourable macroeconomic conditions, good monsoons and good finance availability led to robust domestic demand during the quarter resulting in volume growth across segments. In the domestic market, commercial vehicle sales grew 23.4 per cent at 1.11 lakh units and the market share to 61.1 per cent.
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Passenger vehicle sales, including Fiat and JLR vehicles, grew 35 per cent at 82,564 units. The market share in the passenger car segment is at 14.06 per cent (12.86 per cent).
The standalone net profit for the half year was at Rs.828 crore (Rs.1,243 crore in September 2009 which included profit of Rs.689 crore on sale of investments). Revenue for the half year was up 53 per cent at Rs.21,920 crore (Rs.14,382 crore).
The company has announced an increase in the price of its vehicles in October and according to Tata Motors CFO C. Ramakrishnan, there is pressure from commodities.
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“Also, in a climate of possible increase in interest rates, there could be an impact on liquidity and financing.'' On a consolidated basis, the Tata Motors Group reported a net profit of Rs.2,223 crore for the quarter against Rs.22 crore in the same period last year. The company's consolidated revenues for the quarter were up 36 per cent at Rs.28,782 crore (Rs.21,088 crore) with a strong volume growth in all major markets. The consolidated profit before tax was up at Rs.2,523 crore (Rs.287 crore). The Jaguar Land Rover business reported a net profit of 238 million pound (Rs.1,715 crore).
For the half year, on a consolidated basis, Tata Motors reported a net profit of Rs.4,212 crore (loss of Rs.307 crore) on consolidated revenues at Rs.55,838 crore (Rs.37,581 crore).
Speaking on the company's decision to continue with JLR's three plants in the U.K., Carl Peter Forster, Group Managing Director and CEO, Tata Motors, said “we never planned to go for lay-offs. Two of the plants are in close proximity and, in fact, we will be adding around 1,000 people in one of them.''
Ralph Speth, CEO, JLR, said, “we are setting up facilities to manage logistics and plan to export containers to China and India and so will need additional workforce.''
On Tata Motors' capital expenditure plans, Mr. Ramakrishnan said “for the next few years, we will see an annual investment of around Rs.3,000 crore in Tata Motors and an annual investment of 800 million to 1 billion pound in Jaguar Land Rover. The investments will be towards new product development and new technology.''