Tata Motors 2008/09 net halves, cuts capex plans

By Janaki Krishnan

MUMBAI (Reuters) - Profit at Tata Motors Ltd fell less than expected in 2008/09 due to investment sales and accounting changes, and India's top vehicle maker said it expects an improvement in business towards the end of the year.

Rising borrowing costs and then an economic slowdown and tight credit put the brakes on auto sales in India for much of the fiscal year that ended March 31. Car sales have improved since February, but demand for trucks is yet to pick up.

"Once the industrial activity picks up there will also be a revival in demand for medium and heavy trucks," Chief Financial Officer C. Ramakrishnan told reporters.

India's economy grew 6.7 percent in 2008/09, a six-year low, data showed on Friday, but analysts said it was set for recovery from the second half of this fiscal year.

Tata Motors, with about 60 percent of the world's fifth-biggest truck and bus market, said it sold 506,421 vehicles during the year, down 14 percent from 585,649 a year earlier.

Tata Motors is far from alone in being hit by a slowdown in demand, but its difficulties were exacerbated by its 2008 purchase of the Jaguar and Land Rover brands from Ford Motor Co, just before the worst of the global credit crisis hit.

It said earlier this week it had refinanced the rest of a $3 billion bridge loan it had taken for the deal.

The company reported a 50.7 percent drop in full-year profit to 10.01 billion rupees ($212 million) in 2008/09 from 20.29 billion rupees year-ago. Revenues fell 10.7 percent to 256.6 billion rupees from 287.4 billion.