Tata Motors Profit Falls

Tata Motors Ltd. said its fiscal full-year net profit halved as lower vehicle sales outweighed 1x gains. The company, India's biggest auto maker by sales, cut its annual capital expenditure plan for the next 2 years by between 25% & 38% due to the slowdown in the auto market, CFO said. Tata Motors said net profit for the year ended March 31 slid 51% to 10.01B rupees ($210.6M) from 20.29B rupees a year earlier, while revenue slid 11% to 256.61B rupees from 287.39B. Annual earnings exclude that of British luxury car brands Jaguar & Land Rover, that Tata acquired in '08 from Ford. Income from sources other than the main business of making vehicles jumped 92% to 9.26B. This included a gain of 5.2B rupees from the sale of some long-term investments, including stake in group company Tata Steel. "Demand contraction was triggered by high interest rates & unavailability of finance throughout the year, particularly in the 4th-Q post the global financial market upheavals. "The impact on heavy commercial vehicles was more severe, abetted by a cut in freight movement in segments & customer concerns on economic conditions," it said. It said a slew of stimulus packages from the Indian government helped revive auto sales in the 1st-Q, but still lagged behind the previous year's levels. It sold 506,421 vehicles in the fiscal year, a 14% drop from the 2008. Local sales of trucks & buses fell 15% to 265,373 vehicles, while cars & SUVs fell 4.8% to 207,512. Exports fell 39% to 33,536. CFO C. Ramakrishnan said annual capital expenditure in the next 2 years has been cut to between 25B rupees & 30B rupees, from 40B previously. Tata Motors is introducing several new cars and commercial vehicles in an attempt to boost faltering demand in India and overseas. It introduced the Nano minicar in March, billed as the world's cheapest car, with the base model costing 123,360 rupees. Deliveries of the 624-cubic cm., rear-gas engine car will start in July. It was also set to introduce a new range of premium trucks to keep its leadership of the Indian market in competition from Volvo, Daimler & MAN AG. Tata Motors said it spent 162.19B rupees to buy steel and other raw materials in the just-ended financial year, 13% less than a year earlier.