India’s leading automaker Tata Motors’s net profit for the first fiscal quarter of 2015-16 nearly halved to Rs 2,769 crore from Rs 5,398 crore in the corresponding period last year. The 49 percent decline in net profit for the quarter ended June 30 was mainly due to lower sales of its British brands Jaguar-Land Rover (JLR) in China region, where the automobile market is starting to slow down. Tata Motors’s consolidated net sales were down by 6.1 percent at Rs 61,020 crore.
JLR saw a 29 percent drop in net profit during the April to June quarter to 492 million pounds while revenues fell by 6.5 percent to 5 billion pounds against 5.35 billion pounds for the corresponding quarter last year.
Officials of Tata Motors said earnings were affected by lower sales in China which were, however, partially offset by strong performances in the UK, Europe and North America.
Tata Motors, which also makes the ultra-low-cost Nano car, bought Jaguar and Land Rover from Ford Motor in 2008 for $2.3 billion as part of its plans to expand its reach beyond Asia. The deal vaulted it from a commercial vehicle and small-car maker into a global player with luxury brands. JLR contributes the bulk of Tata Motors’s earnings.
“There was an impact of slowing down in sales and the ramp up of Evoque, the run out of the Freelander and the roll-out of the new Discovery Sport. There was a 5-6 percent realignment of the JV producing Evoque,” said C Ramakrishnan, Tata Motors’s chief financial officer. He said China continued to be a growing market for premium vehicles of JLR.
On a standalone basis, Tata Motors’s net profit for the June-ended quarter was at Rs 257.57 crore, down by 35 percent from Rs 393.65 crore in the same period last year. But it saw a 20 percent jump in net sales at Rs 9,917.62 crore.
Analysts said Tata Motors’s earnings were in line with expectations. “The results were in line with our estimates. Tata Motors’s topline remained under pressure mainly on account of a dip in JLR revenues. JLR volumes during the quarter were flat, but the realisation per vehicle dipped by six percent on account of unfavourable product mix and pricing cuts in the Chinese market,” said Bharat Gianani, senior research analyst (automobile) at Angel Broking.
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