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| Tata Motors net zooms 110% on robust Q2 sales |
| BS Reporter / Mumbai Oct 27, 2009, 00:30 IST |
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Tata Motors, India’s biggest vehicle maker, today posted a standalone net profit of Rs 729.1 crore, up by 110 per cent, largely due to a robust growth in receivables in vehicle sales during the second quarter ended September 30.
It had reported a profit Rs 347 crore during the same quarter a year ago. Sales volumes rose 17.4 per cent during the quarter to 158,575 units as compared to 135,037 units during the corresponding quarter a year earlier.
“Volume recovery, combined with improved realisations, contributed to growth in revenues, whilst stable material prices and accelerated cost reduction efforts continued to yield beneficial impact on margins,” stated the company.
Net sales of the company, which will soon announce its consolidated results, were Rs 7,924 crore, a growth of 12.7 per cent in the reporting quarter as against Rs 7,029 crore in the comparable period a year before.
The company also clarified that a profit on sale of Rs 236 crore was gained by it through sale of its stake in Tata Steel. A notional exchange loss on revaluation of foreign currency of Rs 245 crore, which had dented the company’s profits last year, was down to just Rs 15 crore in the reporting quarter.
The company also hinted that it may look at an upward revision of prices in coming months to partially offset the impact of rising raw material prices. Internally, the company will put into effect stringent cost reduction methods to contain costs.
C Ramakrishnan, CFO, Tata Motors, said: “We have seen strong revival in medium, heavy and light commercial vehicle sales during the period and expect the trend to continue, with the launch of new products in the passenger vehicle segment. However, we also expect margins to come under pressure in the coming quarters.”
The company has increased the Nano’s daily production at its Uttarakhand, facility to 150 units from the earlier 100 units and expects to have full production in another four to five months at the mother facility in Sanand, Gujarat.
The senior management also said today that in less than two days the company will complete the entire formalities of repayment for the full $3 billion debt it had taken to buy the two luxury auto brands, Jaguar and Land Rover.
“It is quite remarkable that we have been successfully able to repay the loan we had taken to finance JLR within the span of 15 months,” Ravi Kant, (non-executive) vice-chairman, said. The company raised the total Rs 13,600 crore required by way of rights issues, long-term rupee bonds, global depository shares and foreign currency convertible notes and divestments over the past many months.
To meet further capital requirements, the company will look to deleverage its balance sheet and unlock value, senior officials said.
Douses Nano fire reports
Tata Motors tried to play down the fire incidents in its small car, the Nano, which were reported from three separate cities. So far, it has dispatched more than 7,500 units of the Nano to its customers and is checking cars yet to be delivered.
Ravi Kant, (non-executive) vice-chairman, said: “We have identified the cause of fire and it’s only because of heat and smoke generated in the fire-retardant plastic used in the car. We have changed the supplier and are encouraging customers to check their cars (Nano) with us for any doubts they have.”
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