* Q2 net profit up 10.5 pct, lags estimates
* Op margin at UK unit down at 14.8 pct y/y
MUMBAI Nov 7 India's Tata Motors Ltd
net profit fell short of expectations as rising marketing costs
hurt its margins and slowing economic growth curbed demand for
its commercial vehicles.
India's largest car maker by revenue said net profit rose to
20.75 billion rupees ($381 million) in July-September from 18.77
billion rupees a year ago, while revenue increased 20 percent to
434.03 billion rupees on rising demand at its key Jaguar Land
Analysts expected profit of 24.41 billion rupees on revenue
of 441.91 billion rupees, according to Thomson Reuters I/B/E/S.
The operating margin for its India business fell to 5.9
percent for the quarter down from 7.2 percent in the year ago
Tata Motors' Chief Financial Officer C. Ramakrishnan said
that the company expected to improve its India profit margins,
as it continues to focus on cutting operational costs, but the
demand outlook was clouded by the slowing economic growth.
"We continue to see sluggish economic activity," he said.
"We continue to see demand pressure in the market."
Tata Motors, which depends on JLR for 90 percent of the
group's profit, said the iconic British brand's operating margin
stood at 14.8 percent in July-September, down from 14.9 percent
a year earlier.
Revenue at the luxury British brand rose 12.8 percent to
3.29 billion pounds in the period, less than the 34.4 percent
gain seen in the previous quarter.
Tata has grown dependent on JLR, which it bought for $2.3
billion in 2008, as domestic sales of its own models struggle.
JLR's recent success has also driven Tata's stock price 50
percent higher over the past 12 months.
Profit from the company's Tata-branded Indian business,
which had fallen for four straight quarters, rose nearly
eight-fold to 8.67 billion rupees. That was mainly because the
company took an exceptional charge in the year-earlier quarter.
Domestic sales of Tata's own brand of cars and trucks have
sagged due to India's cooling economy.
Tata also faces strong competition in India from global
carmakers such as Ford Motor Co and Volkswagen AG
and truck manufacturers such as Daimler AG
as they scale up operations in the company's
Shares in Tata Motors ended 0.9 percent higher ahead of
earnings announcement at 269.35 rupees, while the main Mumbai
market index closed 0.5 percent higher.
($1 = 54.4350 Indian rupees)
(Reporting by Kaustubh Kulkarni; Editing by Louise Heavens)