[jag-news-discussion] TATA Jag Profit 11/10

Jaguar, Land Rover Drive Tata Motors Profit
By Erika Kinetz, AP Business Writer

Manufacturing.Net - November 09, 2010

MUMBAI, India (AP) – Tata Motors’ consolidated profits surged on
robust global demand for Jaguar and Land Rover as the once-troubled
luxury brands enjoyed their fourth straight quarter of
profitability, despite supply constraints and rising commodity
prices, the company said Tuesday.

Consolidated net profit for the June-September quarter was 22.2
billion rupees ($502.7 million), up from 217.8 million rupees ($4.9
million) during the same period last year. Total sales rose 37.2
percent to 296.2 billion rupees ($6.7 billion).

‘‘The numbers are substantially better than expected, especially on
the JLR front,’’ said Angel Broking analyst Vaishali Jajoo. She said
her chief concern is whether the company can sustain margins in the
face of rising input costs and spending for new product launches.

The bulk of profits – 17.2 billion rupees ($387.8 million) – came
from Jaguar and Land Rover, which Tata Motors bought from Ford
Motor Co. in 2008.

China and Russia led sales of the brands, growing 72 percent and 52
percent over the same quarter last year. Jaguar Land Rover chief
executive Ralf Speth said Tata is negotiating with potential
partners to open an assembly plant in China. Speth, who was elected
to the board Tuesday, said the company plans to begin assembling a
Land Rover model in India next year and if that goes well may start
assembling Jaguars in India as well.

Executives said Tata is hiring at its U.K. plants and the expansion
into China and India would only increase the need for U.K. workers,
to package the car kits for shipment overseas.

Rising commodities prices and supply chain bottlenecks hurt
margins, the company said.

Tata has had trouble getting enough Jaguar Land Rover engines from
Ford to meet demand, and India’s car boom has strained suppliers,
who are now investing to expand capacity, executives said.

Tata Motors has been raising prices, by 2.5 percent since April,
and did not rule out further hikes.

Profits for Tata Motors, India’s largest commercial vehicle maker,
on a stand alone basis slid 40.6 percent, to 4.3 billion rupees
($97.9 million) from 7.3 billion rupees ($164.9 million) during the
same period last year. Chief financial officer C. Ramakrishnan said
that subtracting earnings from a share sale during the year-ago
period, profits grew 21 percent, on the back of strong domestic

Sales of the ultra-cheap Nano car have been slow, with about 70,000
delivered since its March 2009 launch.

Initial bookings, made in the first rush of publicity about the
snub-nosed car, have been filled. Now Tata Motors is embarking on
the arduous process of reaching its true target customers: first-
time car buyers with limited buying power and often-questionable

Group chief executive Carl-Peter Forster said the biggest challenge
is arranging for affordable financing.

‘‘We have to break new ground in how we market it and how we make
financing accessible,’’ he said. ‘‘We see good underlying demand,
which will convert into sales.’’

The company has yet to ramp up to full production and only
distributes the Nano in five of India’s 35 states and territories.

The groundbreaking car – which at a 100,000 rupee ($2,261.4)
factory price has been billed as the world’s cheapest – no longer
comes so cheap. Tata Motors has raised the price twice, by a total
of 8,000 rupees ($180.9), executives said.

A series of mysterious fires, in which the Nano seemed to
spontaneously burst into flames, alarmed some customers. Forster
said the company has completed its second safety review and found
no underlying design flaws, but did identify some ‘‘unusual
circumstances,’’ which it will correct.

Tata Motors will offer Nano owners a cover for the catalytic
converter, which when it heats up can ignite a newspaper. It will
also install a fuse in the electrical system to prevent short
circuiting, which can happen if customers install post-sales
electrical equipment.

‘‘We have to make the vehicle even more robust,’’ Forster said.–
48 Saloon
Charlotte, NC, United States
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