Tata Motors net doubles in Q2

Tata Motors' profit after tax for the quarter more than doubled to Rs 729.14 crore.

Tata Motors on Monday said its profit after tax for the quarter ended September 30 more than doubled to Rs 729.14 crore compared to Rs 346.99 crore in Q2 of FY 2008-09 on the back of better operating margins,volume recovery and cost reduction efforts. The better-than-expected results are on a standalone basis,excluding the financials of Jaguar Land Rover JLR,Tata Motors loss-making luxury car unit.

Indicating that the September quarter showcased healthy recovery of the automobile industry across the board,C Ramakrishnan,chief financial officer,Tata Motors,expressed concern about the strengthening raw material prices in the second half of the financial year 2009-10,which are likely to exert pressure on the margins of the company. We will be undertaking appropriate steps to mitigate the impact of the strengthening of raw material prices in the coming quarters, he said. He hinted that the company may look at increasing prices of its vehicles. He added that profits arising from the sale of Tata Steel shares has been factored in the Q1FY10 and Q2FY10 performance of the company. The value stands at Rs 200 crore each in the two quarters.

The total income for the September quarter Q2 FY10 stood at Rs 7,978.82 crore compared to Rs 7,078.85 crore in the corresponding quarter last year,representing a growth of 13.

In the first quarter ending June 30,the company posted a standalone net profit of Rs 513.76 crore compared to Rs 326.11 crore a year ago,a growth of 58. However,the company saw a net loss of Rs 328.78 crore for the first quarter ended June 30,after sales at its subsidiary Jaguar Land Rover JLR continued to plunge,shaving 52 off the previous quarter sales.

For the second quarter in a row,the company improved its operating margin to 13.4,an improvement of 580 basis points compared with the corresponding quarter of the previous year, the company said in a statement. 8220;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,8221; it added. The company also said it will repay the remaining 700 million around Rs 3,248 crore of the 3 billion around Rs 13,920 crore bridge loan raised for JLR in the next two to three days. The company shares closed at Rs 539.35,up 1.88 on Monday on the BSE.

Early this month,the company raised 750 million around Rs 3,480 crore through issue of global depository shares and convertible bonds. The amount raised will be used by the company to repay the outstanding debt of 700 million around Rs 3,248 crore on the JLR acquisition,and for meeting capital expenditure and working capital needs. The company has already paid 2.7 billion of the bridge loan through rights issue offering in October last year,issue of long term secured rated non-convertible rupee debentures in May this year and divestment of its investments. Another 150 million was repaid through proceeds received from its divestments. Tata Motors had bought JLR for 2.3 billion from Ford Motors. The company had raised a 3 billion around Rs 13,920 crore bridge loan for the JLR acquisition in June last year.