Jaguar, Land Rover weigh on Tata Motors' earnings

• Source: Global Times
• [14:08 September 01 2009]
• Comments

Tata Motors, India's largest vehicle maker, posted a consolidated loss for its fiscal first quarter, but remained confident about the prospects of its loss-making Jaguar and Land Rover (JLR) unit.

The company, which controls about 60 percent of the world's fifth-biggest truck and bus market, said on Monday that increased borrowing to support investments and new product development caused an increase in depreciation and interest costs.

It said JLR unit's sales fell about 52 percent in the quarter from a year ago due to adverse global market conditions.

"When volumes are down so much, it is a challenge. We need a little bit of support from the market," Vice Chairman Ravi Kant said.

"I have no doubt that JLR will be a very profitable company when the market starts to revive," he said.

The unit was focused on aligning production with demand, reducing costs and working capital requirements, chief financial officer C. Ramakrishnan said.

"The improvement in margins at an operating level to 2.4 percent in the quarter from 1.7 percent (for the year ending March 2009) is encouraging; it shows that there is an uptick in performance. That gives some confidence," said Vaishali Jajoo, an analyst with Angel Broking.

The company reported a 3.29 billion rupees ($67.4 million) consolidated loss for April-June.

In the year-ago quarter, Tata Motors posted a net profit of 7.2 billion rupees, but said the figures were not comparable as the previous period contained JLR numbers only for June 2-30.

Tata said JLR made a loss before tax of 62 million pounds ($100 million) during the fiscal first quarter. JLR sold 35,900 units during the quarter, up from 32,600 in the March quarter.

(Reuters)