Tata Motors' net profit fell by 7% to Rs 3,291 crore in the second quarter on higher tax provisions and a steep decline in India sales, even as margins improved at its flagship British arm JLR. The auto major had posted a consolidated net profit of Rs 3,541.86 crore in the September quarter of the last fiscal.
Revenue from the company's British unit Jaguar Land Rover (JLR) went up by 7.34% to Rs 49,160.72 crore in the second quarter this fiscal, as against Rs 45,795 crore in the year-ago period. JLR reported a massive spike in margin to 19.4% from 15.3% in the year-ago period. However, JLR's net profit also declined to £450 million from £507 million on higher tax provisions and forex adjustments.
Consolidated tax expenses rose to Rs 2,364 crore from Rs 1,194 crore, while finance cost came down to Rs 927.2 crore from Rs 1,112.52 crore, Tata Motors Group Financial Officer C Ramakrishnan told reporters here this evening. Group net sales during the reporting quarter rose by 8.03% to Rs 60,163.99 crore from Rs 55,686.87 crore, Ramakrishnan said. Revenues from Tata and other brand vehicles and financing during the quarter were at Rs 11,146.50 crore, up 3.89%.
On a standalone basis, Tata Motors net sales declined 1.17% to Rs 8,657.85 crore from Rs 8,761.10 crore, he said, adding standalone sales volume dipped 15.70% to 1,27,220 units, including exports, from 1,50,930 units. As a result, in the passenger car market its Indian market share came down to 5.1% during the quarter. Its domestic car sales fell 32% to 73,137 vehicles in the six months of the fiscal, while for the industry, sales rose 4.1% to 890,755 units over the same period.
However, Tata Motors Car Division President Mayank Pareek expressed optimism going forward, saying the just launched passenger car Zest has been a "rocking" success with over 10,000 sales and a booking period of close to six months on an average for the petrol variant.
On JLR, which is facing labour unrest over wage hikes, its Chief Financial Officer Kenneth Gregor said it will be starting production from its newly set up China JV by this calendar year itself. "We will start assembly from the China plant with the rollout of the Land Rover Evoque this year and another model from next year," Gregor said, adding the Brazil plant will go onstream by 2016. Globally, the company will be launching a new Range Rover Evoque, Discovery Sports and JLR XE, he added.
On the strike call by the largest union at its five plants, which voted out a wage hike proposal yesterday, Gregor said the company is committed to resolve the wage issue with the union through dialogue. But when asked whether the management is prepared to ensure supply in the event of failure of talks, he evaded an answer.
As part of its new strategy christened HorizonNext, Tata plans to launch two new vehicles every year until 2020, starting with Zest, which it launched in August as its first new offering in four years. It will be launching the Bolt and a variant of its SUV Safari Storme in the fourth quarter of the current fiscal, Pareek said.
Ramakrishanan expressed the hope that truck and bus sales will pick up going ahead on improved economic sentiment and firm freight rates which is leading to replacement demand that supported the company growth of 14.1% this fiscal. This is in sharp contrast to the performance over the last 10 quarters.
Optimism on the bus sales come from rising demand from Government sector under JNNURM, the Centre's massive urban infrastructure modernisation scheme, he added.
Tata Motors shares closed 0.5 per cent down at Rs 523.80 on the BSE, whose main gauge hit a fresh high today, in anticipation of earnings announced after the market hours.
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