* Q1 net 17.26 billion rupees vs forecast 22.34 billion
* Net sales up 8 percent to 467.51 billion rupees
* JLR margin for June qtr at 16.5 pct versus 14.5 pct
* Tata operating at 40-50 pct capacity for passenger cars
* Shares slide more than 5 pct, close 3 pct lower
By Aradhana Aravindan
MUMBAI, Aug 7 Tata Motors Ltd, India's
biggest truck and bus maker, expects lean times at home to run
into next year, after higher sales at its luxury cars unit
Jaguar Land Rover (JLR) failed to plug a sharp drop in
"The external environment is relatively weak particularly
for the automotive industry," said Chief Financial Officer C
Ramakrishnan. "Generally, margins will be under significant
pressure this year for all."
Tata Motors has been hurt by rising ownership costs and
sluggish economic growth over the last few quarters, making it
increasingly reliant on JLR sales overseas to offset
weak domestic demand.
The luxury-focused subsidiary has thrived by turning its
attention to China, now the largest auto market in the world,
where its sales have increased more than six-fold since its $2.3
billion acquisition from Ford Motor Co in 2008.
In the three months from April through June, JLR sold 20,427
vehicles in China, more than it sold in North America, Britain
or in Europe.
"We have got the ambitions of (selling) 100,000 cars in
China this year," JLR Chief Executive Ralf Speth said. The
company sold about 77,000 vehicles in China last year.
JLR has defied those sceptical of its future under Indian
ownership to roar back into profit over the past four years as
the main growth driver for its now-struggling parent.
Its parent Tata Motors also needs a new hit car in India to
regain its share of the local passenger vehicle market.
Karl Slym, who previously headed the India operations of
General Motors Co and became Tata Motors' managing
director last year, has been tight-lipped about new vehicle
plans, besides saying there is a product portfolio through 2020.
He has set about upgrading existing cars, improving service
offerings and is trying to breathe life into the underperforming
ultra-cheap Nano in a bid to revamp the company's staid image in
The company, part of the $100 billion Tata group, said net
profit for the quarter through June was 17.26 billion rupees
($281 million), compared with 22.45 billion a year ago. Net
sales rose 8 percent to 467.51 billion rupees.
Analysts had on average expected net profit of 22.34 billion
rupees, according to Thomson Reuters data.
"This year, it looks like Tata Motor's domestic business
will be making losses, unless we see a very sharp recovery in
the commercial vehicles market," said Jinesh Gandhi, analyst at
Mumbai-based brokerage Motilal Oswal, ahead of the results.
"It is definitely important for them to have a refreshed
portfolio in passenger vehicles ... which will help them to
re-gain consumers' interest and confidence."
Of the 51 Tata Motors analysts tracked by Thomson Reuters
StarMine, 39 have a positive recommendation on the stock, mainly
due to expectations of continued strong sales volumes at JLR,
which expects to see higher demand in China, its biggest market.
Tata said JLR's operating margin rose to 16.5 percent in the
three months ended June from 14.5 percent a year ago.
As demand stays weak, the company is operating at 60 percent
of its domestic plant capacity for commercial vehicles and
between 40 and 50 percent in passenger vehicles.
Shares in Tata Motors extended their slide to more than 5
percent after the results to end down 3 percent at 278.9 rupees.
The broader market index fell 0.4 percent. The stock is
down nearly 11 percent this year.