India’s top vehicle maker, Tata Motors, has posted a lower-than-expected 9.4% rise in quarterly net profit and forecast more pressure on margins due to high raw material costs.

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According to Reuters, Tata, with nearly 60% of India’s truck and bus market, said operating margin fell to 12.05% during the quarter from 12.5% a year earlier.


The company, also India’s third-biggest car maker, said margins would continue to be under pressure due to high steel and fuel prices, and forecast demand growth of 8-10%.


Net profit rose to INR3.38bn rupees ($US75 million) in July-September from 3.09 bn a year earlier. Revenue rose 15.3% to INR47.81bn.


Median forecasts in a Reuters poll of 13 analysts were for net profit of INR3.44bn on net sales of 47.43bn.

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The news agency noted that Tata had said earlier it expected only marginal first-half growth in its commercial vehicles business, and that the market may slow to 9-10% growth this fiscal year.


India’s $5bn truck and bus market, the world’s fifth largest, has enjoyed 30% annual growth in the past three years, driven by an improving network of highways and purchases to replace ageing trucks in Asia’s third-biggest economy, the report added.


But Reuters noted that vehicle makers have had to contend with record-high oil prices, firm steel and rubber prices and slowing demand as new emission rules pushed up product prices and delays bogged down construction of a national highway network.


Reuters said Tata Motors sold 107,470 vehicles in July-September, up 12% from a year ago, but lagging rival Ashok Leyland’s 15% rise in bus and truck sales. Ashok said on Saturday quarterly net profit rose 74% to INR750 million.


Full-year profit for Tata Motors, which has rebounded since posting losses in 2000/01 and 2001/02, is expected to rise 14% to 14.16bn rupees, according to Reuters Estimates.