The Telegraph
Friday , May 27 , 2011
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Tata Motors to split stock

Mumbai, May 26: Tata Motors today announced a five for one stock split even as it reported a spectacular 260 per cent leap in consolidated net profit at Rs 9,273.62 crore in the year ended March 31 compared with Rs 2,571 crore in the previous year.

Buoyed by strong sales of Jaguar Land Rover (JLR) vehicles in overseas markets and robust sales of trucks at home, the auto maker said it had sold more than 1 million units last year. Global sales of passenger vehicles stood at 568,263 units.

Total income from operations stood at Rs 1,23,133 crore, an increase of 33 per cent over Rs 92,519.25 crore a year ago.

The auto maker seemed to have taken a cue from group firm Tata Power, which had announced a 10 for 1 stock split exactly a week ago.

Several companies, including ONGC, Bhel, MMTC, Bajaj Corp and LIC Housing, have announced stock splits in the past 12 months after a sharp spurt in their share prices.

The stock split will have to be approved by the company’s shareholders.

The Tata Motor stock has jumped 64 per cent since May last year and closed today at Rs 1,161.25 on the BSE ahead of the results. A stock split will make the stock affordable and is likely to boost trading.

The board has announced a dividend of Rs 20 per ordinary share against Rs 15 last year.

The sharp turnaround at JLR was evident with the subsidiary posting a profit after tax of £1.04 billion on a net revenue of £9.9 billion. “Sales volumes improved to 243,621 from 193,982 a year ago, on the back of improved market conditions, better market mix with strong growth in China, strong response to product introduction, including the new XJ and Land Rover models and favourable exchange rates,” the company said.

The Tata Motors management warned of headwinds in the form of rising input costs and competitive pressures. Increased infrastructure spending in the country was, however, expected to boost demand for its trucks.

In India, Tata Motors’ sales (including exports) of commercial and passenger vehicles stood at 836,629 units, a growth of 25.2 per cent over last year. While commercial vehicle sales rose 22.7 per cent, passenger vehicles, including Fiat and JLR distributed in India, grew 23 per cent.

C. Ramkrishnan, chief financial officer, said sales of the Nano crossed 1,00,000 during the year.

Cost pressures, including rising commodity prices, have brought down the operating margins to 9.9 per cent and the earning before interest tax depreciation and amortisation of Rs 4,771 crore was 14 per cent higher than last year.

After Mamata Banerjee’s victory in the recent elections, the Bengal government has talked about taking back at least 400 acres of the 997 acres at Singur where the Tatas were originally supposed to set up the Nano plant. The company said it did not feel it was necessary to make a provision for the carrying cost of the building at Singur.

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