Tata Motors posts flat profit in June quarter

Increase in raw material costs and a drop in domestic sales coupled with shrinking margins impacted Tata Motors, which posted nearly flat (1.40 percent) growth in its standalone net profit for the June quarter at Rs 401 crore and warned that the pressure on margins will continue in the coming quarters.

The profit for the corresponding quarter last year was Rs 395.72 crore. For the reporting quarter, the sales rose 14 per cent to Rs 11,833.19 crore.

Attributing the flat numbers to rising input costs, Tata Motors Group chief financial officer C Ramakrishnan said, "Rising costs of steel, rubber and other raw materials have squeezed our margins. Higher interest rates too are a matter of concern. We will need to watch interest rates from consumers' point of view, since loan rates may go up. We expect pressure on our margins to continue."

However, Ramakrishnan said despite the negative climate the company would go ahead with the planned capital expenditure of Rs 3,000-3,500 crore for its domestic business this fiscal.

He also expressed the hope that sales from its JLR unit should continue to improve as it expands into growth markets such as India, China, Brazil and Russia.

Sales of commercial and passenger vehicles, including exports, stood at 1,97,606 units for the quarter, while the domestic commercial vehicles sales rose 13 per cent to 1,13,186 units in the domestic market. Domestic passenger vehicles sales declined by 11 per cent.

The consolidated net income rose even less with a paltry 0.55 percent increase to Rs 1,999.82 crore despite a robust 24.24 percent rise in net sales at Rs 33,391.78 crore.

The company's shares closed at Rs 845.60 today, up 0.20 per cent from the previous close on the Bombay Stock Exchange, which shed 0.30 per cent in a dull market.