Tata Motors Q2 net up 11%, sees domestic pressures continue

Nachiket Kelkar
Moneycontrol.com

Tata Motors' second quarter consolidated net profit rose lower-than-expected 11 percent year-on-year at Rs 2,075 crore, as pressures continued in the domestic business. The India's top truck maker, which also owns, British luxury passenger vehicle brands Jaguar and Land Rover, reported consolidated revenue of Rs 43,403 crore in July-Sep, up 20 percent. Analysts on average were expecting Tata Motors to report a profit of Rs 2,200 crore on revenue of Rs 43,900 crore, according to a CNBC-TV18 poll. JLR continued to report strong growth, with net profit rising to GBP 305 million from GBP 172 million a year ago. Revenue was up 13 percent to GBP 3.3 billion. In its standalone business, profit jumped to Rs 867 crore from Rs 102 crore. It must be noted that the standalone profit was boosted by GBP 150 million dividend paid by JLR, without which it would have been a loss. Standalone revenue last quarter declined to Rs 12,481 crore from Rs 12,954 crore. "Weak macro-economic outlook and sluggish industrial demand, coupled with diesel price increases have impacted medium and heavy commercial vehicle sales. Further competitive pressures on pricing in certain segments and weak product mix, impacted operating margins," the company said. Its standalone margin in Q2 declined to 5.9 percent from 7.2 percent. SALES GROWTH Tata Motors sold 2.24 lakh units last quarter (domestic and exports), up 6 percent. Its CV sales in domestic market rose 5 percent to 1.36 lakh units, driven by LCV sales. Its CV market share was at 59.7 percent in the quarter. Tata Motors sold 72,603 passenger vehicles in Q2, up 12 percent and had a market share of 12.3 percent. Company officials say there has been a good response for new launches like Safari Storme and Indigo Club Class, but admit a lot more needs to be done to drive sales and gain market share. "There will be short, medium and long term activities. As far as product refresh is concerned, we already have a pipeline of product changes in play and that will include powertrains, refreshes to the vehicle itself and it will include all the segments. In the longer term, we will ensure our products are entering the segment where the volume growth is," said, Karl Slym, MD. Tata Motors plans to launch 6 passenger vehicles and 25 CVs in the second half, he said. It will launch the CNG version of the Nano in the first half of calendar 2013. The outlook for M&HCVs, however, remains weak, given that freight rates are under pressure, operator profitability is impacted, economic growth has slowed and therefore there is demand pressure, said C Ramakrishnan, CFO. It sold 77,442 units at JLR in Q2, up 14 percent. JLR will focus on profitable volume growth, and the new Range Rover, Sportbrake, Jaguar F-Type, Evoque among others are expected to drive sales. While JLR sales in Europe remain under pressure, its seeing good offtake in markets like China, which accounted for 21 percent of global sales, last quarter. Nachiket.kelkar@network18online.com