World Business
Tata turns to profit on Jaguar
By Vipin Nair (China Daily)
Updated: 2010-05-29 09:38
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A worker wipes the hood of a Jaguar at a dealership in Wellesly, Massachusetts. Jaguar Land Rover had a pretax profit of 32 million pounds ($46 million) in the year as the global economy began to recover from the worst recession since World War II. [Bloomberg] |
MUMBAI - Tata Motors Ltd, India's largest truckmaker and the owner of Jaguar Land Rover, turned to full-year net income after the luxury unit had a pretax profit and sales gained amid economic growth.
Consolidated net income in the year ended March totaled 25.7 billion rupees ($543 million), compared with a loss of 25.1 billion rupees a year earlier, Mumbai-based Tata Motors said. That beat the 15.6 billion rupee average of 14 analyst estimates compiled by Bloomberg.
Jaguar Land Rover had a pretax profit of 32 million pounds ($46 million) in the year as the global economy began to recover from the worst recession since World War II. Tata reduced its workforce and cut costs at its luxury vehicle unit and will next week open a new factory to boost production of the Nano, the world's cheapest car, as demand surges in the world's fastest-growing major economy after China.
"They have taken many steps in the right direction," said Juergen Maier, who helps manage 1.1 billion euros ($1.4 billion) of assets at Raiffeisen Capital Management in Vienna. "With their local sales also picking up, Tata Motors can continue to surprise on the upside."
Tata Motors shares closed at 749.5 rupees in Mumbai. American depositary receipts of the automaker gained 8.7 percent to $17.05 in New York on Thursday.
Jaguar Land Rover, which Tata purchased from Ford for $2.5 billion in 2008, sold 193,982 vehicles last fiscal year compared with 167,348 in the 10 months ended March 2009, the company said in the statement.
Sales of trucks, buses, Nano cars, and sport-utility vehicles in the year gained 32 percent to 667,971 units as expansion in Asia's third-largest economy spurred demand.
"Overall economic recovery, a benign liquidity environment along with government stimulus has driven domestic demand revival this year," Tata Motors said in the statement.
India's economy may grow 8.5 percent this year and the nation is aiming to achieve an annual gross domestic product expansion of 10 percent in the "medium term", Prime Minister Manmohan Singh said on May 24.
Economic growth and higher auto sales have brought in new competition for Tata. Toyota Motor Corp, Volkswagen AG and Honda Motor Co were among carmakers that introduced 10 passenger vehicles at the Delhi Auto Show in January. Daimler AG, MAN AG and Navistar Inc are also expanding their truck operations in India.
Jaguar Land Rover reduced expenses by firing 2,200 workers and increased sales by introducing new models. Chairman Ratan Tata also hired Carl-Peter Forster, the former head of General Motor Co's European unit, as the chief executive officer. Ralf Speth took over as the CEO of Jaguar Land Rover.
Tata Motors had 1.91 billion rupees in employee separation costs at Jaguar Land Rover during the year and wrote off 1.05 billion rupees on prepayment of a bridge loan taken to buy the UK-based units, according to the statement.
The earnings were inflated by a foreign exchange gain of 844.7 million rupees, it said. Tata Motors also benefited by selling a 20 percent stake in its construction equipment venture to partner Hitachi Construction Machinery Co for 11.6 billion rupees.
Bloomberg News