High JLR sales in China drive Tata Motors Q2 cons Net up 10.5%

High JLR sales in China drive Tata Motors Q2 cons Net up 10.5%

Healthy sales by its British brand Jaguar Land Rover (JLR), primarily in China, once again came to the rescue of Tata Motors which today reported a 10.5 per cent rise in consolidated net profit at Rs 2,075 crore for the second quarter ended September 30.

The net profit was impacted by squeezed margins due to rising costs, especially marketing, and slackening demand for commercial vehicles given the gloomy economic scenario, the company said here.

Robust sales in China helped the JLR report an overall 14 per cent higher sales in the quarter. China contributed over 21 per cent of the overall sales for the brand, Tata Motors Chief Financial Officer C Ramakrishnan told reporters.

Consolidated revenue rose 19.9 per cent to Rs 43,403 crore in the July-September period, he added.

The company plans to launch six new passenger and 25 commercial vehicles in the second half of the fiscal, Tata Motors Managing Director for India Operations Karl Slym said.

The CNG and diesel variants of its ultra-low cost car Nano are in the offing, which may happen as early as the next calender year, he said.

However, on a standalone basis, which represents its domestic operations, revenues dipped to Rs 12,481 crore in Q2 compared to Rs 12,954 crore a year ago, Tata Motors said.

The company's operating margin also slipped to 5.9 per cent from the 7.2 per cent a year ago.

"Weak macro-economic outlook and sluggish industrial demand coupled with diesel price hike, have impacted medium and heavy commercial vehicles sales," Ramakrishnan said.

A healthy jump in receipt of dividend from JLR and other subsidiaries (Rs 1,312 crore versus Rs 29 crore) resulted in the standalone net jumping nearly eightfold to Rs 867 crore from Rs 102 crore in the year ago period. This comes after four straight quarters of declines.
Commercial vehicle sales grew 4.8 per cent to 1,36,353 units during the quarter, while passenger vehicle sales rose 11.6 per cent to 72,603 units.

Tata Motors, which depends on JLR for 90 per cent of the group's profit, said the British brand's operating margin stood at 14.8 per cent down from 14.9 per cent a year earlier.

Revenue from JLR rose 12.8 per cent to 3.29 billion pounds in the period, less than the 34.4 per cent gain in Q1. Standalone net for the marquee brand jumped to 305 million pounds from 172 million pounds a year ago.

"Continued strong revenue and operating performance were supported by favourable market mix, exchange rate environment and was partially offset by the model mix," Ramakrishnan said.

The British company's sales (derived by adding sales of Jaguar sedans and Land Rover SUVs) grew 13.9 per cent to 77,442 units, while revenue was up 12.8 per cent at 3.288 billion pounds.

Going forward, the focus will be on growing the momentum with sales of new range Rover, Jaguar F-Type, Sportbrake, AWD and other smaller engine variants, he said.
Planned investments in new products and technologies to meet customer aspirations and regulatory environmental standards will be another focus area for JLR, he said.

Competitive intensity poses significant challenge to the passenger vehicle industry, with higher inflation, interest costs, fuel price increases dampening the demand with customer
preference expected to continue to move towards diesel vehicles, Ramakrishnan said.

The company has taken several initiatives to improve performance. Besides, Tata Motors will extend export potential for its products, he said, adding during Q2, sales in its largest export markets - Sri Lanka and Bangladesh declined.

The Tata Motors scrip closed with a 0.45 per cent gain to Rs 269.25 a piece at the BSE, whose 30-share benchmark Sensex was up 0.45 per cent.

The company announced the appointment of Group Chairman-designate Cyrus Mistry as Deputy Chairman. He will take over as Chairman after Ratan Tata retires next month.
Mistry has been on the company's board since May 2012 a statement said, adding its former Managing Director Ravi Kant has stepped down as Director of JLR.

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