Forex loss hits Tata Motors net

A foreign exchange loss of Rs 285 crore dented auto-major Tata Motors’s profits, down 34 per cent at Rs 347 crore for the June-September quarter.

The volatility in foreign exchange rates impacted the company’s long-term funds raised through issue of foreign currency convertible instruments, said C.Ramakrishnan, Tata Motor’s Chief Financial Officer.

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The company had a foreign exchange gain of Rs 30.85 crores during the corresponding quarter last year.

Tata Motors’ total vehicle sales too saw a decline of one per cent to 1.35 lakh units in the three-month period.

The volumes in passenger cars and utility vehicles slid from 51,618 units to 47870 units. “Phasing out of old models of Indica has affected our volumes in passenger cars.

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The launch of Indigo, Sumo Grande and Indica Vista helped us curtail the market share fall,” he explained. The shares closed on NSE on Friday at Rs 169.55.

In medium and heavy commercial vehicles, the company’s volumes declined 9 per cent. However an 18 per cent increase in light commercial vehicles helped the company post an overall 4 per cent growth in the commercial vehicles segment at 74,237 units. The cost of raw materials and components has gone up to Rs 434 crore for the period under review, as compared to Rs 415 crore during the same period last year.

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Challenges

“The situation continues to be challenging and a lot of liquidity problem is still there,” said Ravi Kant, Managing Director, Tata Motors. About reports on production cut, Kant said “Production continues to be moderated. We do not want to build up our inventories. Production will always be determined by demand. In some segments like LCVs demand is going up”. About job cuts, he said that the permanent work force would not be pruned while temporary work force would be reduced according to the situation.

Kant said the company’s focus on consumer finance through Tata Motors Finance has helped arrest the decline in sales. “Tata Finance traditionally used to finance 25 per cent of our vehicle sales. Now it has gone up to more than 30 per cent. We wouldn’t mind crossing 40 per cent to ensure that our sales are not affected,” he said.

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About the return of land in Singur, he said “Nothing has been decided as yet. Whatever has to be decided will be decided in mutual agreement between Tata Motors and the West Bengal state government.”