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Tata Motors annual profit at $550m on JLR recovery

Tata Motors annual profit at $550m on JLR recovery

Tata Motors reported higher-than-expected consolidated annual profits of $549.7 million Thursday thanks to a turnaround in its Jaguar Land Rover business, stoking the global ambitions of India's largest vehicle maker despite uncertainties from Europe's debt crisis.
Net profit for the fiscal year ending in March was 25.7 billion rupees ($549.7 million), after a loss of 25.1 billion rupees ($536.7 million) the prior year.
Revenues grew 30.5 percent, to 925.2 billion rupees ($2.0 billion) for the year.
Tata Motors did not break out quarterly results.
Executives said volume growth as well as cost cutting helped profits. So did the divestment of its stake in Telco Construction Equipment Company Ltd., which boosted income by 10.6 billion rupees ($22.6 million), and Jaguar Land Rover's return to profitability.
"The Jaguar Land Rover business has shown consistent improvement," said Chief Financial Officer C. Ramakrishnan. He cautioned that rising commodities prices, currency fluctuations, uncertainty in Europe and increasing competition in India remain challenges.
Jaguar Land Rover, which had been losing money since its June 2008 acquisition from Ford Motor Co., started making money in the October to December 2009 quarter, thanks to improved market conditions and cost-cutting.
Wholesale volumes of Jaguar Land Rover were 193,982 vehicles for the fiscal year that ended in March, compared with 167,348 vehicles sold from June 2008 through March 2009.
Overall, in the year that ended in March, Tata Motors sold 373,000 commercial vehicles, 41 percent more than the prior year, and 373,000 cars, an increase of 25 percent.
Executives said they plan an aggressive expansion of Jaguar Land Rover's product portfolio, which they believe they can fund internally.
Economic uncertainty in Europe has caused slower showroom traffic in continental Europe over the last few weeks, which has been outweighed so far by growth in the U.S. and Britain, executives said.
"Obviously we are all concerned. Are we heading into the famous double dip recession or not?" said Carl-Peter Forster, the new group chief executive officer of Tata Motors.
Angel Broking auto analyst Vaishali Jajoo said the results were better than expected but cautioned that Europe's doldrums could make the Jaguar Land Rover turnaround short lived.
"Right now the picture is quite OK," she said. "It depends on volumes going forward. The European concerns are there."
Executives said they are planning to ramp up exports from India, and would like to expand their presence in China.
Overall, about 60 percent of revenue come from outside India, thanks to Jaguar Land Rover, but Tata Motors itself gets just 10 percent of sales overseas.
That's not enough, executives said.
"We have made tremendous progress on our product portfolio," Forster said. "The foundation has been laid. The opportunity is there to go massively into export."
He revealed few plans, except to say that China was a keen focus for expansion.
"We are seeing significant growth in China," he said. "We should think about our future footprint in China."
Tata Motors plans to start commercial production of the Nano, its ultracheap microcar, at a new factory in the business-friendly state of Gujarat next week.
So far, the company has delivered 30,763 Nanos.
Executives shrugged off two incidents of brand-new Nanos catching fire in recent weeks. An investigation showed the incidents were unrelated and revealed no underlying design flaws, executives said.
"We see continued interest in the vehicle," Forster said. "The vehicle is safe."
On a stand-alone basis, Tata Motors profits for the fiscal year surged 123.7 percent off a low base to 22.4 billion rupees ($47.9 million), while revenues were up 38.9 percent at 355.9 billion rupees ($761 million).


Updated : 2021-02-28 06:26 GMT+08:00