Tata Motors Q1 net soars 57% at Rs 514 cr

Tata Motors today pinned hopes on new product launches and decline in raw material costs to stage better shows in the coming quarters, though sales in the first quarter dipped and exports nearly halved.

The auto major recorded a 57.54 per cent jump in net profit at Rs 513.76 for the quarter ended June 30, though sales declined by 7.6 per cent year-on-year.

"We expect the benefit from decline in raw material costs to continue in future quarters and new product launches to aid volumes and relative performance," company Chief Financial Officer C Ramakrishnan told reporters here.

Tata Motors is planning to launch a sport utility cross-over and a new version of Indigo in the second half of the current fiscal. In addition, it has plans to launch retailing of World Truck and variants of Ace during the fiscal.

Mainly decline in raw material costs and measures taken to increase cost efficiency improved the net profit of the company by 57.54 per cent over Rs 326.11 crore in the same quarter previous fiscal.

This was also reflected on the operating margin of the company which rose by 430 basis points to 11.4 per cent as compared to 7.1 per cent in the same period last fiscal.

Tata Motors' sales, however, declined to Rs 6,404.63 crore in the quarter under review as compared to Rs 6,928.44 crore in the same period last year.

Domestic sales at 1,22,120 vehicles was down by 1.4 per cent over the same period last fiscal. Exports were severely impacted at 5,220 units, a decline of 43 per cent over the corresponding period previous fiscal.

The company attributed the dip in exports to the weak financial conditions in the Middle East, South Africa, Russia, Turkey and Sri Lanka.

Tata Motors Vice Chairman Ravi Kant, however, hoped that there would be a recovery in the export markets and the operating margin, which was one of the highest in the reporting quarter, would be closer to that of the June quarter in the coming quarters as well.

The debt-equity ratio of the company increased to 1.56:1 for the reporting quarter from 0.99:1 in the previous quarter. The net debt of the company stood at Rs 16,954 crore as on June 30, 2009 as against Rs 12,409 crore in the corresponding quarter of the previous fiscal.

Tata Motors had raised Rs 4,200 crore though an NCD issue which went into repayment of the bridge loan taken by the company for financing the acquisition of the Jaguar Land Rover.

Ramakrishnan indicated that Tata Motors might go for additional fund raising during the fiscal, but declined to divulge both the routes and the amount.

"We will look at all options for raising capital. However, no decision has been taken yet by the Board. We will look at it at an appropriate time," he said.

Tata Motors divested stakes in group company Tata Steel for Rs 316 crore in the June quarter of the current fiscal.

The auto major might consider divesting stakes in other group companies and selling shares of its subsidiaries in the primary market for fund raising.