Tata Motors beats expectations - maintains loss in India business

Tata Motors beats expectations – maintains loss in India business

Ashish K Mishra
Updated: May 29, 2013 08:47:26 PM UTC
Men walk inside a Tata Motors showroom

Tata Motors, one of India’s largest auto companies, has reported a Q4 FY13 profit after tax (PAT) of Rs. 3, 945 crore. This was down 36.7%  from PAT of Rs 6, 234 crore reported in Q4 FY12. The company said that a one off tax gain contributed to a significantly higher net profit in the year-ago quarter. Tata Motor’s consolidated revenue grew 10 % to Rs 56, 002 crore in the period. In the India business (Jaguar Land Rover not included), Tata Motors reported a loss of Rs. 312 crore compared to a profit of Rs. 565 crore in Q4FY12. Tata Motor’s EBITDA margin in this business has dropped sharply from 9.5% in Q4FY12 to 3.6%  in Q4FY13.

Here are the key takeaways from the results-

-Tata Motor’s performance in the domestic car business continues to be bad. Karl Slym, the company’s managing director said that Tata Motors is a ‘products’ company. There are high growth segments in the market where the company currently does not have a product. The company will announce new launches and variants for the car business (which includes a refreshed version of the Nano) sometime by the end of June, 2013.

-The commercial vehicles (CV) business environment continues to look difficult. Ravi Pisharody, head of Tata’s CV business said that while the company has maintained its market share in the medium and heavy commercial vehicles space, he doesn’t see the demand picking up anytime soon. In FY 13, Tata Motors gained market share of about 2 percent in the light commercial vehicles business.

-Since the CV market continues to remain tough, Pisharody said that competitive intensity will result in higher marketing expenditure for Tata Motors.

-Jaguar Land Rover continues to be the cash cow for Tata Motors. JLR will launch eight new products next year. JLR’s sales for the year ended March 31 rose 22 percent to 374,669 vehicles. China continues to be the fastest growth market for the company.  Last year sales in China surged 48 percent to 77,075 units.

-Last year Tata Motors spent about Rs. 2, 900 crore for product development and capacity expansion of its plants. Slym says the split between passenger vehicles and commercial  vehicles should be about 50 percent each. Investment will continue at the current levels for the next year too.

-On the new announced Quadricyles segment, Slym said that the company already has products that will qualify for it but it will wait for some time to get clarity on safety and emission criteria. Slym added that India should look at mobility solutions for the next 10 years rather than select just one item and push it.

Shares in Tata Motors closed 2.7 per cent higher at Rs. 303.80 before the quarterly numbers were released.

The thoughts and opinions shared here are of the author.

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