Mumbai: Carmaker Fiat Automobiles India Ltd, a joint venture between Tata Motors Ltd and Italy’s Fiat SpA, reported a loss of Rs305 crore for fiscal 2008-09 on higher expenses and costs, but expects to break even in 2011-12 on demand for new models.
In the previous year, the firm posted a loss of Rs44 crore, but only for the three months ended 31 March 2008.
Rajeev Kapoor, president and chief executive, Fiat Automobiles India, said the recent launch of the Grande Punto had ushered the company into the competitive compact car segment.
“After the launch of the Punto, we have moved into the high-volume segment. We are aiming at localising the car by 85% by December. This will enhance our profitability,” said Kapoor.
The joint venture was formed in December 2007 for making Fiat and Tata branded products, engines and gears.
It reported manufacturing and other expenses of Rs565.51 crore in fiscal 2009, against Rs44.66 crore in the previous year.
“What is worrisome is (the) company’s reserves and surplus that continues to be negative despite an infusion of Rs180 crore each by the partners,”said Mahantesh Sabarad, an analyst at Centrum Broking Ltd.
He expects Fiat Automobiles India to break even in another year, provided its revenue grows at double the pace of the Rs390 crore the company posted for 2008-09.
Fiat launched the Grande Punto in June and sold 1,500 units in its first month. Kapoor expects the volumes to have increased in July and sees it eventually stabilizing at 2,000 units a month.
Sales of the Linea, Fiat’s sedan, have declined to a monthly average of 1,000 units from at least 1,500 units when it launched in India earlier this year.
Kapoor said this was primarily because people prefer compact cars over sedans.
At least 75% of the cars sold in India are compact cars.