Tata Motors profit revs up 110% in Q2

Tata Motors' quarterly profit has more than doubled aided by a marked decline in raw material costs and strong demand for its Ace trucks

and Indica Vista cars, beating street estimates. India's leading auto company's net profit soared 110% to Rs 729 crore during the second quarter of 2009-10 on a revenue base of Rs 7,979 crore. The earnings don't include Tata Motors' overseas units: Jaguar and Land Rover and Tata Daewoo South Korea.

The company improved its market share across heavy and light commercials vehicles during the July to September period driven by revival in industrial activities. Tata Motors sold 89,655 vehicles during the second quarter of FY10, a growth of 21%.

Interestingly, volumes in its medium and heavy commercial turned positive for the first time since first quarter of FY09, company officials said. The company sold 52,723 cars during the quarter, a growth of 13%, helped by new products, finance availability and pre-festive buying. Exports, however, was down from 12,930 units to 8,003 during the period under review.

For the second quarter in a row, Tata Motors improved its operating margin to 13.4%. Volume recovery combined with improved realizations contributed to growth in revenues while stable material prices and accelerated cost reduction efforts continued to yield beneficial impact on margins, the company said.

Tata Motors declared the results after the stock exchanges trading hours. Its stock on Monday closed at Rs 539 on the BSE, up 1.9%. The company, over the last several months, has been tightening its belt, with an aim to bring down costs by Rs 1,000 crore in the next two years.

Tata Motors is in the midst of repaying the entire $3 billion short-term loan it took for the purchase of JLR. After this, its debt to equity ratio would improve to 1:34 from the earlier 1:6.

The company started selling the Nano during the quarter and has delivered 7,506 units manufactured from its Uttarakhand plant. The Nano, off late, has been in the news following incidents of fires being reported in three separate cases. Tata Motors MD Prakash Telang said that the company is doing safety checks on all the sold and unsold Nanos.