Tata Motors’ Net Profit Triples Driven by JLR’s Increased Margins

Tata Motors net profits have almost tripled in comparision to its previous net profit, driven largely be higher margins from its JLR brand. The company’s net profit increased from Rs.2,571 crore, to Rs.9,274 crore.

The main demand for its JLR brand was witnessed in overseas market, boosted by a recovering economy in its European and North American market, together with the launch of its new XJ model, which accounted for a fourth of the company’s sales to 246,621 units, beating the earnings projection by analysts.

The revenue of the company saw a growth of 33%, touching Rs.1,23,133 crore in comparision to a year earlier. The operating margins for their JLR brand increased to 16%, against last years 7%. A favourable exchange rate also helped boost the company’s EBITDA, which improved from 11.7% to 13.5% sequentially.

Around half of their JLR brand earnings were derived from dollar and euro denominations, with the major chunk being held by Euro. China also accounted for around 11% of JLR’s sales. The Chief Executive of JLR, Ralph Speth projected sales of JLR in China to increase to 40,000 models by 2012 fiscal year, from 27,000 models in the 2011 fiscal year. JLR will also be launching their new Land Rover Evoque before September.

The chief financial officer of Tata Motors, C. Ramakrishnan, said that said economic and external geopolitical factors including rates of exchange could affect their volumes and profitability. Tata’s profit from their Indian operations increased to Rs.1,811 crore, aided by robust bus and truck sales, against Rs.439 crore the year before.

The managing director of Tata Motor’s India operations, Prakash Telang, said that the spiraling input costs are a major concern for them. The rising cost of inputs affected the company’s standalone margins. The company’s total volumes, which includes exports increased to 836,000 units, a growth of 25%. Their margins were also pulled down by the Nano, which accounts for 10% of their quarterly sales volumes.

The JLR brand which was not performing well since Tata Motors purchased it, has seen a huge turnaround in its fortunes, also pushing the sales of its parent company. with the introduction of the new Land Rover Evoque and increasing demands from its China, Russia and Brazil emerging markets are projected to help push JLR’s volume growths, and subsequently Tata Motors’ in the future.

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