India's biggest carmaker by revenue Tata Motors Ltd posted a smaller-than-expected drop in fourth-quarter net profit as Chinese demand for luxury motors helped to compensate for sliding domestic sales.
Tata, which bought the upmarket Jaguar Land Rover Ltd (JLR) for $2.3 billion in 2008, said yesterday JLR's profit margin rose to 16.9 per cent in the three months ended March 31st from 14.6 per cent in the same period the year before, helped by a favourable exchange rate and record quarterly sales.
Tata had previously announced that sales of Britain-made Jaguar saloons and Land Rover sport utility vehicles (SUV) rose 18 per cent to 115,504 units in the quarter.
Key to that was a 21 per cent rise in sales in China, JLR’s fastest growing market. JLR accounts for more than three quarters of Tata Motors’ group revenue.
The lacklustre performance at Tata Motors' India business, due to high interest rates and slowing economic growth, however, remains a worry for India's biggest truck manufacturer and the maker of the Nano, dubbed the world's cheapest car.
“We see the external environment and overall economic scenario very, very challenging and (it) will remain stressed,” said Tata Motors’ Chief Financial Officer C. Ramakrishnan, adding this would have an impact on demand for its products.
Car sales in India are forecast by the automakers’ association to grow by 3-5 per cent in this financial year, a rebound from the first drop in sales in a decade in 2012/13.
Tata Motors, part of the salt-to-steel Tata conglomerate, said net profit for the January-March quarter was 39.45 billion rupees ($705 million), down 36.7 per cent on the same time the year before, with revenue up 10 per cent to 560 billion rupees.
Reuters