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Shock dip in Tata Motors net

Mumbai, Feb. 14: Tata Motors today reported a 52.2 per cent slump in net profit at Rs 1,627.5 crore in the third quarter ended December 31 its first profit decline in five quarters.

The car and truck maker had reported a net profit of Rs 3,405.6 crore in the year ago quarter.

The weak numbers accentuated the harrowing troubles that auto makers are facing at a time when the Indian economy is projected to grow at its slowest pace in a decade.

Net revenues rose by just 1.8 per cent to Rs 46,089.5 crore from Rs 45,260.3 crore in the same quarter a year ago.

Net profit was lower than the analysts’ consensus estimate of around Rs 2,890 crore for the third quarter.

Tata Motors domestic operations have been a drag on the performance for quite sometime. It suffered a loss of Rs 458.5 crore in the third quarter against a net profit of Rs 173.7 crore in the third quarter of last year.

The operating margin for the India business plunged to 2.2 per cent from 6.7 per cent in the third quarter of last year.

Net revenues of its India operations shrank 20.3 per cent to Rs 10,630.1 crore from Rs 13,337.9 crore in the year-ago quarter.

However, it reported a net profit of Rs 614 crore in the nine months of 2012 (April-December) against Rs 677 crore in the same period last year. Net revenues in the nine month period was down 11.1 per cent to Rs 33,697.9 crore from 37,915.8 crore last year.

Net debt at the domestic operations increased 16 per cent to Rs 18,162.2 crore from Rs 15,667.4 crore a year ago.

Commercial vehicle sales rose 5.9 per cent to 138,963 units in the quarter. However, passenger car sales plummeted 36.4 per cent to 54,675 units from 85,963 units in the same quarter a year ago.

The Tata Motors scrip fell 2.59 per cent to close at Rs 296.70 on the Bombay Stock Exchange ahead of the announcement.

Jaguar Land Rover — which has been very profitable over the past few quarters — saw net profits slide 24.7 per cent to 296.1 million from 393.2 million in the year-ago quarter.

Net revenues rose 1.5 per cent to 3,803.6 million from 3,749.1 million.

Nine-month profits at JLR, however, rose 6.6 per cent to 837.2 million from 785.2 million in the same period a year ago.

Rising investments seemed to be eating into the premium car maker’s cash pile. The car maker reported capital expenditure and spending on product development of 1.46 billion and a free cash flow of 90 million.

Operating margins fell to 14 per cent from 17 per cent a year ago.

JLR contributed around 90 per cent of Tata Motors’ net profit in the last financial year so investors closely watch the UK unit’s margins than those at its domestic operations. Tata has used JLR’s cash flows to service the debt raised to buy the British car maker for $2.3 billion in 2008.

In China, the world’s biggest automobile market, JLR’s sales jumped 71 per cent last year, making it the marque’s second biggest market after Europe. The company is investing $1.7 billion with local partner Chery Automotive to build a factory in China, where luxury car sales are expected to continue posting double-digit growth.

Jaguar sales fell 7.9 per cent during the quarter from 13,006 units in third quarter of 2011-12 to 11,980 units in the latest quarter. Land Rover sales, however, rose 17.4 per cent to 76,678 units from 65,287 units a year ago.

 
 
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