UPDATE: Tata Motors net zooms 110% on robust Q2 sales

Tata Motors, India’s biggest vehicle maker today posted a stand alone net profit of Rs 729.14 crore, up by 110 per cent, largely due to a robust growth in receivables in vehicle sales during the second quarter ended September 30, 2009.
 
The company had reported a profit Rs 346.99 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, stood at Rs 7,924 crore, a growth of 12.73 per cent in the reporting quarter as against Rs 7,029 crore.
 
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 the coming months to partially off-set 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 also. However we also expect margins to come under pressure in the coming quarters.”
 
The company tried doused the fire on negative marketing its small car Nano has gained over the last few days when incidents of fire were reported in three separate cases. So far Tata Motors has dispatched more than 7,500 units of the Nano to its customers and is conducting audit checks on all units of the car, which are yet to be delivered.  
 
Ravi Kant, (non executive) Vice Chairman, Tata Motors, said, “We have identified the cause of fire and its only because of heat and smoke generated in the fire retardant plastic used in the car. We have infact changed the supplier and are encouraging customers to check their cars (Nano) with us for any doubts they have”.
 
The company has increased the daily production of the Nano at the Uttarakhand facility to 150 units per day from 100 units per day and expects to have a full ramp up in another 4-5 months at the mother facility in Sanand, Gujarat.
 
The senior management also said today that in less than two days the company will fully repay the $3 billion debt it had taken to buy the two luxury auto brand – 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”, Kant stated.
 
The company raised a total of Rs 13,600 crore by way of rights issue, long term rupee bonds, global despository shares and foreign currency convertible notes and divestments over the last many months.
 
However, to meet further capital requirements the company will look to deleverage its balance sheet and unlock value, senior officials said.