Financial Daily from THE HINDU group of publications
Friday, Jan 23, 2004
Corporate Results - HCV/LCV/Tractors
Tata Motors PAT zooms; to pay 40 pc interim
Mumbai , Jan. 22
TATA Motors Ltd on Thursday reported a 178.53-per cent rise in profit after tax (PAT) to Rs 210.88 crore for the third quarter ended December 31, 2003, as against the previous corresponding Rs 75.71 crore.
Net sales/income from operations was up 52.49 per cent to Rs 3,944.59 crore (Rs 2,586.68 crore for the year ago period). Export turnover (at f.o.b value) was Rs 320.10 crore (Rs 76.01 crore).
The board has announced a 40 per cent (Rs 4 per share) interim dividend, described as Tata Motors' response to shareholders' support particularly during difficult times with no dividend.
On the BSE, Tata Motors' results seemed washed out in the day's market slide; its scrip closed lower by Rs 41.65 at Rs 416.80.
Domestic commercial vehicles (CV) sales for the quarter touched 40,485 units (27,692) while sales of passenger cars and utility vehicles were at 30,244 units (21,903) with exports at 7,651 units (1,553).
Asked about fresh speculation on steel price revision, Mr Praveen Kadle, Executive Director, Tata Motors, said the company, which recently hiked prices, would keep a watch on the situation but passing on the costs would depend on the market. Despite prolonged input cost increase last year, the third quarter earnings before income, depreciation, tax, amortisation (EBIDTA) margin improved to 14.4 per cent (13.1 per cent).
Volume mix is now evenly divided between CVs and passenger vehicles, with the revenue mix being 65:35. Close to 5,000 City Rovers have been shipped to the UK, excluding which passenger vehicle export has grown near 100 per cent. Capacity utilisation at the Indica plant is above 90 per cent and the hatchback's domestic volumes - amidst good Indigo sales and planned introduction of the Indigo Marina - was constrained by production crunch.
No new car plant is planned, but there will be some capacity expansion respecting the scope for flexibility and de-bottlenecking, Dr V. Sumantran, Executive Director, said. Capacity at the Pune plant is 130,000-150,000 cars.
Robust CV sales is being driven by general improvement in the economy, reduced interest rates, fuel price stability over last one and a half years, infrastructure projects and replacement demand. Trends do surprise and
Mr Ravi Kant, Executive Director, said Tata Motors intended to sharpen its demand forecast model. While the company aspires to meet demand, it also needs to de-risk for a market trough. Hence the push for export and a plan to have franchisee manufacturers initially for buses and later specialised CVs. Required investment would rest on the franchisee, its size pegged to targeted sales volume and models picked, he said. Tata Motors will monitor quality, supply chassis and likely help in centralised component sourcing.
Abroad, this production style exists for Tata CVs in Senegal and Ukraine. Franchisee manufacturing cannot be copied to more sophisticated cars, but Dr Sumantran said the company would seek to outsource more in car manufacture, power-trains finding mention. At a 2,00,000-unit capacity and 75 per cent utilisation, further capacity expansion in CVs may be considered next year if market momentum sustains.
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