India's Tata Motors says profits up 57.5%

By BY ERIKA KINETZ THE ASSOCIATED PRESS

Posted: July 28, 2009 at 5:24 a.m.

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BOMBAY, India — India's Tata Motors, the company that bought Great Britain's famous Jaguar car brand last year, said Monday that its quarterly profit surged 57.5 percent. It said cost cutting, income from the sale of part of its stake in Tata Steel and lower raw-material prices made up for slumping sales.

Profits for the quarter that ended in June were $106.7 million, up from $67.7 million the same quarter last year.

India's largest commercial vehicle maker said revenue for the quarter fell 7.6 percent to $1.33 billion from $1.44 billion.

"The company's continued focus on cost efficiencies, coupled with reduction of raw material prices, inventory reduction and improvement in sales realization yielded considerable benefits," the company said in a statement.

Stabilizing domestic sales helped make up for a continuing slump in exports, as the global economic crisis swept through its main export markets of South Africa, Turkey and Russia.

Domestic sales for Tata slipped 1.4 percent, to 122,120 vehicles, beating an industry decline in India of 9.2 percent, chief financial officer C. Ramakrishnan told reporters Monday.

Exports plunged 43 percent,to 5,220 vehicles.

"Operating profit margins were slightly better than expectations," said Vaishali Jajoo, an analyst at Bombay's Angel Broking. "That's mainly on account of a decline in raw material costs."

Income from the sale of part of Tata's stake in sister company Tata Steel also boosted earnings, she said.

Tata Motors reported $66.3 million in other income, most of it from the stake sale, the proceeds of which helped fund the $2.3 billion acquisition of the Jaguar and Land Rover brands from Ford Motor Co. in 2008.

Tata has since spent an additional $1 billion to keep the two struggling brands afloat, executives said Monday.

Monday's figures do not include results for Jaguar and Land Rover, which are scheduled to be reported next month.

Executives again emphasized their commitment to controlling Tata Motors' burgeoning debt burden. Borrowings stood at $3.52 billion at the end of June, up from $2.58 billion at the end of March, mainly because of a bond issue used to finance Jaguar and Land Rover.

Business, Pages 20 on 07/28/2009

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