Tata Motors Revenue and Profits Take a Hit Due to Market Conditions

Tata Motors Net Revenue In 2008-09 Lower At Rs25,660.79 Crore, And Net Profit Lower At Rs1,001.26 Crore, Due To Market Upheaval

May 29, 2009 -- Tata Motors today reported gross revenue (stand-alone) of Rs28,599.27 crore (2007-08: Rs33,093.93 crore) in 2008-09, a year marked by severe demand contraction in the automobile industry.

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Revenues (net of excise) for the year were Rs25,660.79 crore compared to Rs28,739.41 crore in 2007-08, a decline of 10.7 per cent. The profit before tax was Rs1,013.76 crore compared to Rs2,576.47 crore in 2007-08, a decline of 60.7 per cent. The profit after tax for the year was Rs1,001.26 crore compared to Rs2,028.92 crore, a decline of 50.7 per cent.

The demand contraction was triggered by high interest rates and unavailability of finance throughout the year, particularly in the October-December quarter post the global financial market upheavals. The impact on heavy commercial vehicles was more severe, abetted by reduction in freight movement in different segments and customer concerns on economic conditions. Small commercial vehicles, like the Tata Ace and the Tata Magic, have continued to improve penetration.

Stimulus packages from the government in the last quarter of the year have to an extent helped regenerate overall sales, as in the automobile industry, but growth is yet to revive to earlier levels.

The fall in volumes combined with peak input prices and high interest rates brought margins under pressure. The company accelerated cost reduction measures and proactively managed working capital to contain the impact as best as it could.

The total 2008-09 sales volume (including exports) is 506,421 units, compared to 585,649 units in the previous year. The company retained its domestic leadership position in commercial vehicles, and continued to be amongst the top three in passenger vehicles. Domestic commercial vehicles sales amounted to 265,373 units (2007-08: 312,935 units). The company increased market share in commercial vehicles to 63.8 per cent (2007-08: 62.2 per cent), aided by its wide product offering. Domestic passenger vehicles sales amounted to 207,512 units (2007-08: 218,055 units).The launch of the second generation Tata Indica Vista and the continuing good run of the Tata Indigo CS has helped recover market share in passenger vehicles in the second half which stands at 13.1 per cent for the year (2007-08: 14 per cent) and a March exit share of 14.5 per cent. Tata Motors’ exports were 33,536 numbers (2007-08: 54,659 numbers), impacted by the worldwide downturn in the industry.

The launch of the Tata Indica Vista was augmented by the distribution of the Fiat 500 and Linea, both of which have been received well. In commercial vehicles too, new products, introduced during the year or the previous year, offering benefits like higher fuel efficiency, grew at a faster rate and helped enhance market share.

The landmark events of the year were the acquisition of Jaguar Land Rover on June 2, 2008, and the launch of the Tata Nano on March 23, 2009. Over 2.03 lakh fully paid bookings were received for the Tata Nano, the deliveries of which will begin from July 2009. The Pantnagar plant began producing the Tata Nano during the year, while the Sanand plant is rapidly progressing towards completion.

Dividend
The board of directors has recommended a dividend of Rs6 per ordinary share and Rs6.50 per ‘A’ ordinary share of Rs10 each for the financial year 2008-09 (2007-08: Rs15 for ordinary share). The dividend is subject to approval of shareholders; tax on the dividend will be borne by the company.

Source: Tata Motors