TATA Motors today beat market estimates by reporting a 57.5 per cent increase in its net profits even though the companys revenues fell by 7.6 per cent in the April-June quarter of 2009-10.
Standalone income in the first quarter of the financial year was at Rs 6,723.99 crore against Rs 7,244.05 crore in the corresponding quarter previous year. Profit after tax was at Rs 513.76 crore against Rs 326.11 crore in the corresponding quarter last year. The company would report its consolidated results,with that of Jagauar and Land Rover,later in the year. It had posted a consolidated loss of Rs 2,505 crore for 2008-09,thanks to the JLR acquisition.
The company’s income and profit numbers were positively affected by a new accounting policy the company has adopted since March this year. Income was also influenced by cost efficiencies introduced in the quarter,the company said. The profit growth number reported by the company would have been considerably lower as under the new accounting rule in the April-June quarter of the previous year profits would have been higher by Rs 176 crore.
The companys domestic sales volume saw a marginal decrease of 1.4 per cent to 122,120 vehicles over the corresponding quarter of the previous year,while exports declined by 43 per cent. The company gained market share in commercial vehicles to 67.4 per cent against 61 per cent in the corresponding quarter of previous year. Tata passenger vehicle sales declined by 10 per cent in the domestic market.
Continued focus on cost efficiencies,coupled with reduction of raw material prices,inventory reduction and improvement in sales realisation,yielded considerable benefits resulting in the operating margin to 11.4 per cent (from 7.1 per cent in the previous year),with operating profits rising by 47.9 per cent at Rs 728 crore, Tata Motors said in a statement.
Owing to the good news,investors pushed up the shares of the company as it rose by 0.39 per cent at Rs 374.95 on the Bombay Stock Exchange.
It said improvement in liquidity,increased reach across the country and introduction of new products and variants improved the companys sales,except in the case of the heavy truck segment. The heavy truck segment is recovering,albeit slowly,in response to infrastructure development,government stimulus packages for the automobile industry and JNNURM initiatives.
The net interest cost was at Rs 253.45 crore for the quarter,an increase of 125.6 per cent,due to increased debt taken by the company during the previous year to support its product programmes,investments and working capital requirements, the company said.