Forex related losses, lower car sales and higher commodity and marketing costs have led to a 16 per cent dip in Tata Motors' consolidated net profits for the quarter ending September 30, 2011.
Even as consolidated net sales in the period went up 27 per cent, the EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortisation) margins in the quarter fell 140 bps to 13.3 per cent. Due to sudden depreciation of rupee (versus dollar) in the latter part of quarter by 11 per cent, exchange loss on revaluation of outstanding foreign currency borrowings as on September 30, 2011 stood at Rs 294 crore.
“There was an exceptional item in the quarter. We saw a very volatile and sudden drop in the dollar-rupee rate, after which we had to revalue our borrowings. Loan valuations and foreign currency outstanding had a negative impact on the balance sheet,” Tata Motors' Chief Financial Officer, Mr C. Ramakrishnan, said.
With the results coming in after markets closed on Monday, Tata Motors shares on the BSE were down 2.09 per cent at Rs 177.90.
“Commercial vehicles saw strong performance despite headwinds like fuel price increase, interest rates and the mining ban (in Karnataka). We have out-performed in the medium and heavy commercial vehicle segment,” Mr Ramakrishnan said.
He added, “The headwinds were more keenly felt in the passenger vehicle segment. We saw some good results fuelled by more fuel- efficient launches in the Indica range. We see good traction in retail sales.”
Jaguar Land Rover
The UK-based JLR subsidiary saw volumes going up 23 per cent, with sales in China doubling. Profits, however, dropped 2.4 per cent (£237.5 million), while revenues were up 30 per cent (£2,928 million)
“Higher tax provision, especially in China, led to a drop in PAT (profit after tax). We're also looking at more longer terms loans for JLR to replace the shorter term loans that we have,” Mr Ramakrishnan said.
Dr Ralf Speth, JLR chief executive, said: “The situation in Europe is very complex, no one can predict the economic and political situation. We will make the company fit to tackle this.”
JLR, which sold almost 900 units in India between April and September, has already assembled 300 units of the Freelander SUV at its new assembly plant in Pune. It is also considering the same for the higher volume models.