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India's Tata Motors profit up 71%

2013-11-09 08:32

PROPPING UP TATA: Sales of Land Rover and Range Rover - this is the Range Rover Sport just launched in South Africa - have helped Tata Motors to record figures. Image: JLR

NEW DELHI, India - Tata Motors' quarterly net profit surged by a surprise 71% as a robust performance by its British arm Jaguar Land Rover offset a dive in domestic sales.

India's top automaker has become heavily reliant on revenues from JLR which it bought for $2.3-billion from Ford in 2008 at the height of the global financial crisis but the purchase, seen by auto analysts at the time as a risky gamble for the Indian company, has paid off dramatically for Tata.

The auto giant, which also makes the super-budget Nano hatchback, reported that consolidated second-quarter net profit climbed to 35.42-billion rupees ($558-million) from 20.75-billion rupees a year earlier.

TOTAL REVENUE UP 31%

British unit Jaguar Land Rover's after-tax profit for the three months to September soared by 66.2% to 507 million pounds ($811 million).

A Tata statement said: "The weak operating environment in the India business was more than offset by the increase in wholesale volumes and richer product and market mix at Jaguar Land Rover."

The profit increase for the three months to September was the first in four financial quarters to be posted by Tata Motors. The profit far outstripped market consensus forecasts of around 25 billion-rupees.

Total revenues of Tata Motors, part of the giant steel-to-software Tata Group led by chairman Cyrus Mistry, jumped 31%t to 568.82 billion rupees.

Jaguar Land Rover's sales climbed an overall 21% to 102 644 units in the quarter, according to the statement. Jaguar deliveries climbed 56.5% to 20 024 units. Land Rover sales increased 14.8% 82 620.

In India, however, demand for new cars has slowed rapidly due to high borrowing costs, worries about a sharp slowdown in the economy and fuel prices.

On a standalone basis, Tata Motors' India operations swung to a net loss of 8.04-billion rupees in the second quarter compared with a net profit of 8.67-billion rupees in the same period a year earlier while sales slumped 29% to 8.76-billion rupees in the period.

Tata Motors said: "A continued slowdown in economic activity, low level of transport freight and infrastructure activity, frequent diesel price increases and a tight financing environment have affected the industry."

India's economy has been growing at a decade low of five percent, putting the brakes on the once red-hot domestic car market.
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