Mumbai: A steep fall in sales of commercial vehicles took its toll on Tata Motors Ltd, which on Friday announced that profit had fallen by 50% for the fiscal year ended 31 March. Commercial vehicles account for almost 60% of the firm’s revenue.
The country’s largest auto maker by revenue said stand-alone net profit halved to Rs1,001.26 crore from a year ago. Revenue net of excise for the year declined 10.7% to Rs25,660.79 crore. Sales contracted 13.5% to 506,421 units.
The figures, though, beat analysts’ estimates.
New order: Tata Motors’ Ravi Kant (R) and Prakash M. Telang. Santosh Hirlekar / PTI
A Mint poll of nine brokerages on 25 April had estimated the company’s profit to decline 80% to Rs412 crore and revenue by 8%.
Tata Motors also announced a change of guard at the top. Managing director Ravi Kant will now be the company’s non-executive vice-chairman. He will be succeeded by 61-year-old Prakash M. Telang, who was until now the executive director of the commercial vehicles business.
“The October to December quarter was really bad. However, the worst is behind and barring the heavy duty segment, sales in most of the segments have sprung back,” Kant said.
However, the profit announced by the firm is largely because of a change in accounting rules.
The Union government in March allowed companies to change how they provide for mark-to-market losses on foreign currency loans to either the tenure of the debt, or up to 31 March 2011. The change enables companies such as Tata Motors to write back provisions already made.
Analysts refrained from commenting on the numbers, largely to figure out the savings from the accounting changes. “We have yet to interpret the numbers,” said an analyst with a Mumbai-based brokerage firm, who asked not to be identified.
Tata Motors’ shares rose 1.2% to end at Rs336.85 on the National Stock Exchange on Friday, after surging as much as 5.8% in intraday trading.
The fiscal year ended March 2009 was an eventful one for the company, as it had to relocate its plant in Singur (West Bengal) for the Nano, the world’s cheapest small car.
Despite the setback, the auto maker launched the car on 15 January.
Rajiv Dubey, president of the passenger car business, said the company has received nearly 203,000 fully paid bookings for the Nano and that almost 70% of potential customers have chosen to retain their bookings even if the car gets delivered only by end-2010.
The company has also completed refinancing a $3 billion (Rs14,190 crore) bridge loan for its purchase of British marquee brands Jaguar and Land Rover from Ford Motor Co.
It has repaid $1.16 billion, raised $840 million through the issue of rupee debentures, and rolled over this week $1 billion till 31 December 2010.
The company said the launch of new truck models and demand for buses from various state transport units under the Jawaharlal Nehru Urban Renewal Mission would push up sales in the current fiscal year.
Profitability will also likely be helped by the fall in commodity and raw material prices, which are expected to touch 2007-08 levels, as well as a drive to cut costs by Rs1,000 crore over three years, it said.
Bloomberg contributed to this story.