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May 28, 2008

INDIA: Tata FY flat, Mahindra Q4 falls

Tata Motors has reported net profit of INR21.7bn for fiscal 2007/08, flat from the previous year, while Mahindra & Mahindra has posted an unexpected 6.4% fall in its fourth-quarter profit.

Tata Motors has reported net profit of INR21.7bn for fiscal 2007/08, flat from the previous year, while Mahindra & Mahindra has posted an unexpected 6.4% fall in its fourth-quarter profit.

Operating margins at Tata fell to 10.76% from 12.5% the previous year on sluggish sales, high raw material costs and firm interest rates, the automaker told Reuters . The price of steel has risen by almost 50% on global markets this year.

“It is very difficult to say what the impact of high oil prices and high steel prices will be on the automobile industry,” managing director Ravi Kant told Reuters , adding: “This is probably the most difficult environment for the auto industry that we have seen.”

Rival Mahindra & Mahindra, India’s biggest utility vehicle and tractor maker, posted an unexpected 6.4% fall in its fourth-quarter profit, and told Reuters it faced a challenging year ahead.

Mahindra said on Wednesday net profit fell to INR2.21bn ($51.6m) in its fiscal fourth quarter to end-March. Net sales rose to INR31.48bn from INR27.47bn.

That compared with an average forecast given in a Reuters poll of analysts of a net profit of INR2.53bn on net sales of INR30.54bn.

Operating profit margin fell to 10.9% in the March quarter from 11.5%, the automaker told Reuters .

“We cannot assume that we can hold margins at this level because of the tough market conditions,” Bharat Doshi, group chief financial officer, said.

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