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Tata Motors Ltd, India’s top vehicle maker, reported a smaller-than-expected 50.7% drop in full-year profit as sales picked up in the March quarter and raw material prices fell.
An economic slowdown combined with higher borrowing costs and lack of adequate financing had put the brakes on auto sales in India for much of the fiscal year ended March.
Car sales have showed an uptrend since February but demand for commercial vehicles are yet to pick up.
Tata Motors, which controls about 60% of the world’s fifth-biggest truck and bus market, said it sold 506,421 vehicles during the year, down 14% from 585,649 a year earlier.
The company said net profit fell to Rs1,001 crore ($212 million) in 2008-09 from 2,029 crore a year earlier.
This included Rs520 crore one-time profit on sale of investments, and gains of Rs418 crore from change in accounting policy. Revenues fell 10.7% to Rs25,660 crore from 2,8740 crore.
Reuters Estimates had forecast net profit at Rs267 crore on revenue of 25060 crore for the year.
Tata Motors is set to begin sales of the Nano, billed as the world’s cheapest car, in July. It had collected about Rs2,500 crore from more than 200,000 consumer bookings for the tiny car in April.
A senior official said the company has cut its expenditure plans to Rs2,500 crore to Rs3,000 crore for each of the next two years from 4,000 crore set earlier.
Maruti Suzuki, India’s top car maker, reported a surprising drop in March quarter profit and forecast a difficult year ahead.
Top carmakers in Asia are still downbeat on their prospects. Japan’s Toyota forecast a grim outlook after posting a bigger-than-expected annual loss, while Honda has forecast a small profit this year.
Japan’s Suzuki Motor posted a small quarterly profit, riding on the success of its Indian unit, but forecast an 87% drop in profit this year on slumping global demand and a stronger yen.
Korea’s Hyundai Motor Corp, whose quarterly profit exceeded market expectations, is however, expecting to make gains in the United States, where giants such Chrysler and General Motors have been driven to bankruptcy.
Tata Motors, which had bought Ford Motor’s Jaguar and Land Rover brands last year, said on Wednesday it had completed refinancing the remainder of a $3 billion bridge loan it had taken for the acquisition.
It had repaid $1.16 billion through a rights issue and divestments in group firms last year. Earlier this month it raised $840 million via a non-convertible rupee debenture issue and extended the final maturity of the remaining $1 billion by 18 months to 31 Dec 2010.