30 Jan 2010, ET Bureau
MUMBAI: Tata motors, the nation’s largest truck-maker, turned in a profit for the December quarter boosted by soaring vehicle sales and lower excise duty but it warned of rising pressure on margins because of the soaring cost of steel and other inputs.
Net profit for the fiscal third quarter for its Indian operations was Rs 400 crore, compared with a loss of Rs 263 crore in the year earlier quarter, the company said in a statement. It does not include the operations of UK subsidiary Jaguar Land Rover.
“High input costs are expected to put pressure on margins in the coming months, “ said chief financial officer C Ramakrishnan.
Indian automobile companies, including Tata Motors, saw a surge in sales during the last quarter as lower taxes and the central bank’s record low interest rates lured customers. But with the economy recovering, inputs price also rising, shaving off margins.
Operating margin during the December quarter was 12.8%. Gross sales, including excise duty, jumped 83% to Rs 9,577.5 crore from Rs 5,246.3 crore a year earlier. However, excise duty payments rose less at a much slower pace, 22%, to Rs 647.7 crore.
“Introduction of new products and strong continued growth in the existing portfolio, along with government stimulus, a benign liquidity environment and overall economic recovery, have driven domestic demand revival during the current year,” Tata Motors said in a statement.
Vehicle sales in the quarter, including exports, rose 68% to 165,413 units. Sales of its mainstay trucks in the domestic market advanced 88.8% to 93,520 units. Cars and utility vehicle sales, including Fiat and Jaguar and Land Rover vehicles distributed in India, grew 46% to 61,593 units. The company sold 10,034 units of the world’s cheapest car, the Nano.
With the Reserve Bank of India (RBI) keeping interest rates at record lows, and the company’s plans to launch new models in the coming months, sales may climb further.
“Sales of vehicles are picking up again in India and we see recovery in all segments in the coming months,” said Ravi Kant, vice-chairman of the company.