MUMBAI/NEW DELHI (Reuters) - Tata Motors Ltd (TAMO.NS), India’s biggest carmaker by revenue, reported flat fourth-quarter net profit on Thursday, with strong sales of luxury Jaguar and Land Rover vehicles offsetting losses and a big sales drop in its sluggish home market.
But this month’s victory for Narendra Modi’s Bharatiya Janata Party in the general election has raised hopes that stalled economic reforms will get back on track and boost growth in Asia’s third-largest economy.
Tata is hopeful this will translate into higher sales of its trucks and buses in India, where it is the market leader for these vehicles.
“We believe the economic sentiment will improve ... in the first half, leading to more positive and direct impact on our industry and our sales in the second half of this year,” C. Ramakrishnan, Tata’s chief financial officer, told reporters.
Tata Motors’s luxury arm Jaguar Land Rover Ltd (JLR) has helped make up for weak sales in India where high car ownership costs and sluggish economic growth has deterred buyers of cars and commercial vehicles.
But in this fiscal year, India’s car sales are likely to rise marginally after two consecutive years of declines, spurred by more rapid economic expansion and tax cuts under a new government, an industry body said last month.
Tata Motors reported net profit of 39.18 billion rupees ($665.48 million) for the January-March quarter, compared with 39.45 billion rupees a year ago, due to a foreign exchange loss of 3.55 billion rupees. Net sales rose 16 percent to 647.16 billion rupees.
Analysts had on average expected a profit of 46.37 billion rupees, according to Thomson Reuters Starmine.
Quarterly losses at Tata’s Indian business widened to 8.17 billion rupees from 3.12 billion rupees a year ago, as sales of its vehicles plunged 33 percent due to high interest rates and inflation and rising fuel costs.
To try to revive sales in India, Tata will launch the Bolt hatchback and Zest entry-level sedan later this year to tap into the small car market that accounts for the bulk of passenger vehicle sales in India.
Tata’s luxury business in Britain, which it bought from Ford Motor Co (F.N) in 2008, has thrived by focusing on China, the world’s largest auto market.
Sales of its British-made Jaguar saloons and Land Rover sport utility vehicles (SUVs) rose 34 percent in China to 103,077 in the fiscal year ended March 31, more than it sold in North America and Europe over the same period, according to the company’s website. It sold a total of 434,311 cars in the last fiscal year, a 16 percent rise.
Net profit rose 19 percent in the January-March quarter to 449 million pounds ($750 million) compared with year ago period. Revenues rose 6 percent to 5.35 billion pounds.
The company, part of the $100 billion Tata conglomerate, expects to start operating a new manufacturing facility in China later this year which will reduce the strain on its plants in Britain and ensure it has the capacity to meet growing demand.
“We will continue to invest in more products and new technologies to meet consumer and regulatory requirements and build manufacturing capacities in the U.K. and internationally,” Ramakrishnan said.
($1 = 58.8750 rupees)
($1 = 0.5986 British Pounds)
Writing by Aditi Shah; Editing by Jane Merriman