Tata Motors Q4 net jumps on Jaguar Land Rover boost

MUMBAI Tue May 29, 2012 10:28pm IST

1 of 2. A concept version of Land Rover's Defender is seen at the Jaguar-Land Rover exhibition booth during the International Motor Show (IAA) in Frankfurt, September 14, 2011.

Credit: Reuters/Alex Domanski/Files

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MUMBAI (Reuters) - Chinese demand for its luxury Jaguar Land Rover (JLR) models propelled fourth-quarter net profit at Tata Motors'(TAMO.NS), capping a bumper year for the automaker.

China's boost to JLR's bottom line comes as global automakers, hit by sluggish sales in established markets such as Europe, shift their focus towards developing economies to drive future growth.

A one-off tax gain also contributed to Tata's 139 percent quarterly profit leap, which came in spite of a lacklustre performance at its core domestic business.

It also reported a rise in net profit to 135 billion rupees for the year to March 31, from 92.7 billion the previous year.

JLR's growth in overseas markets - it sells imports in India and recently began assembling some Land Rover models there - has helped insulate Tata from a sluggish domestic car market which grew just 2.2 percent in the last financial year.

The British luxury brand, which Tata bought for $2.3 billion in 2008, brought in more than 95 percent of its profit in the quarter to March 31, as sales grew by 48 percent.

Tata is focusing on markets such as Russia and China, as its domestic arm struggles with high costs and sluggish sales growth.

"We see very strong growth in China. The demand for our vehicles, especially the Range Rover and Range Rover Sport, is very high. If the dynamic continues, China will be our number two market," this financial year, JLR Chief Executive Ralf Speth said.

Tata will invest 2 billion pounds in JLR this financial year, up from 1.5 billion last year.

In March it finalised a joint venture with China's Chery Automobile Co to make JLR vehicles in the world's largest car market.

China accounted for 17.3 percent of JLR sales in the year to end-March, its fourth-largest market. The UK - JLR's home market - brought in 19.7 percent of sales while North America accounted for 18.5 percent. Europe was its largest market at 22.8 percent.

For a graphic on Tata Motors sales, click: link.reuters.com/waw48s

Part of the software-to-hotels Tata Group, India's largest business by revenue, Tata Motors said net profit for the fourth quarter to end-March was 62.5 billion rupees, up from 26.2 billion.

The figure was boosted by 217 million pounds in deferred tax assets.

Consolidated net profit, after accounting for minority interest and share of associates, was 62.3 billion rupees. Consolidated revenue rose 44 percent to 509 billion rupees, from 353 billion a year ago.

India's biggest truck manufacturer and the maker of the Nano, dubbed the world's cheapest car, Tata sparked fears it had bitten off more than it could chew when it bought the loss-making JLR brands from Ford Motor Co (F.N), given its minimal experience in international manufacturing and luxury products.

Yet the acquisition has fast overshadowed its parent.

Boosted by runaway demand for the Range Rover Evoque compact SUV launched last year, JLR's revenue grew 51.5 percent to 4.14 billion pounds in the quarter to March.

The unit reported an operating profit margin of 14.6 percent in the quarter, against 9.5 percent for the domestic business.

The local arm, India's biggest truck and bus maker, has suffered as high interest rates and slowing economic growth dampen demand in Asia's third-largest economy.

Investment in the domestic arm will be 30 billion rupees this fiscal year, unchanged from last year, Tata Motors' managing director, P.M. Telang, said.

Shares in the automaker, Tata Group's second-most valuable listed company at $14 billion, have risen almost 48 percent in 2012 - quadruple the gains seen by the wider auto industry due to strong sales at the luxury brands.

Even so, the stock has slipped by about 10 percent since the company announced flat global sales for April, with investors worried the JLR sales boom may be subsiding.

(Editing by David Hulmes)

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