Tata Motors turns around loss

India (AP):

India's Tata Motors posted quarterly profit of 19.9 billion rupees (US$428.4 million) yesterday, turning around a loss as reviving global demand for its Jaguar and Land Rover brands made up for rising commodities costs.

The company returned to profitability on a consolidated basis for the April to June quarter from a loss of US$70.9 million during the same period last year.

Consolidated quarterly revenues grew 64.2 per cent, to US$5.8 billion.

The results far exceeded expectations and sent the stock to its highest in at least 20 years. Shares closed up 4.17 per cent at 957.3 rupees on the Bombay Stock Exchange, while the benchmark Sensex index slipped 0.37 per cent.

With the turnaround at Jaguar Land Rover well underway, Tata executives said they plan to ramp up hiring and foster in-house innovation. But sharply higher input costs, chiefly from rising commodities prices, and higher spending on employees, are forcing the company to search for cost savings.

Tata executives said yesterday they plan to start assembling Land Rovers in India for domestic sales. This cuts their import tariff from 110 per cent to 43 per cent. The company said it has no immediate plans to shift overall Land Rover production from the United Kingdom to India.

It is, however, talking with joint-venture partners about setting up an assembly plant in China, which is by far the fastest-growing market for Jaguar Land Rover sales.

"Commodity prices and cost pressures will continue to impact our business going forward," said chief financial officer C. Ramakrishnan.

The company said it sold 57,153 Jaguar and Land Rover vehicles during the period, up from 35,947 vehicles the same time last year, led by growth of 104 per cent in China.

Land rover sees profits

Its Jaguar Land Rover division reported a third-straight quarter of profitability, with June quarter profits at US$47.6 million, up from a loss of US$13.8 million this time last year.

Demand for Jaguar Land Rover has so exceeded expectations that the company is facing supply bottlenecks with engines, which are supplied by Ford Motor Co., executives said.

The company said it is working with Ford and Ford's suppliers to eliminate those bottlenecks and would also consider developing new engines in house.

Profit for Tata Motors' Indian automobile division, which does not include Jaguar Land Rover, fell 23 per cent to US$85.3 million because of higher input costs and a one-time revenue boost this time last year from asset sales.