YoY, the net sales of the company for Q2FY09 showed a marginal 6% rise at Rs.7078.85 crore. Tata Motors’ total vehicle sales saw a decline of one per cent to 1.35 lakh units in current Q2. Volumes in passenger cars and utility vehicles slid from 51,618 units to 47870 units and this was on account of phasing out of old models of Indica. Its other income shot up by over 5 times and this was because the company had sold part of its long term investments, on which it made a profit of Rs.358.81 crore and this forms the chunk of the other income component. Its operating expenses rose 16% and interest outgo rose by 54%. Net profit was down 34% at Rs.346.99 crore.
The coming quarters are expected to be tougher. After the September quarter, the going has only got tougher. Sales, which are usually at their peak during Diwali were no where near even normal. The pile of inventory had been so much that it had to shut down its commercial plant at Jamshedpur for 3 days and those in Pune and Lucknow for 6 days.
Over and above all this, the company is grappling with the huge bill of the Jaguar, Land Rover takeover. The vehicle maker's plans to raise Rs.4150 crore via two rights issues in October were hit by a stock market slump, with the promoters themselves covering for most of the issue. Now their stake stands raised to 42% from 33%. Post-rights, the public shareholding in the company has come down to 45.8% from 51.75%. Life Insurance Corporation, one of the large shareholders of Tata Motors, and Daimler did not participate in the rights issue. Post rights, LIC’s stake has come down to 9%, while Daimler’s has dipped to 4.5%.
There is also the issue of the shifting of the Nano from Kolkatta to Gujarat. Though the Gujarat Govt has bent over backwards to accommodate Tata Motors, the company itself will have to bear a huge cost on account of the shifting and the subsequent delay in launching the small car. The Tata group will invest Rs.2,000 crore to manufacture the Nano and its variants including an electric car and a CNG car. Naturally, the cost of all this will get reflected in the balance sheet on this fiscal.
The second half is not expected to be very good for the company. Q3 might infact be the worst quarter this fiscal.
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