Tata Motors’ profit rises 11% in July-september quarter

MUMBAI— Tata Motors Ltd. posted an 11% increase in its consolidated quarterly net profit, but missed market expectations as weak demand for vehicles in India offset a strong performance by the company›s U.K.-based unit, Jaguar Land Rover PLC..

India’s biggest maker of vehicles by sales said its net profit rose to 20.75 billion rupees ($381.3million) for the JulySeptember quarter from 18.77 billion rupees a year earlier. Sales increased 19% to 428.19 billion rupees from 359.38 billion rupees.

The market had expected a net profit of 25.74 billion rupees on sales of 442.49 billion rupees, according to the average of estimates in a Dow Jones Newswires poll of 18 analysts.

Jaguar Land Rover posted a net profit of £305 million ($488 million), an increase of 77% from a year earlier.

“We have received dividends from JLR’s performance,” Tata Motors Chief Financial Officer C. Ramakrishnan told a news conference. But local margins were affected by “weak demand, sluggish market conditions, weaker product mix and increase in marketing cost,” he added.

Strong demand for Jaguar Land Rover’s luxury vehicles has helped Tata Motors post improved net profits in the past couple of years.

The Indian company bought Jaguar Land Rover from Ford Motor Co. in 2008 for $2.3 billion. The unit initially faced contracting demand in the U.S. and Europe, but eventually turned around its performance, helped by its enhanced focus on emerging markets such as China.

In India, Tata Motors› home market, vehicle demand has been hit by high interest rates and rising fuel prices.

Tata Motors said sales at Jaguar Land Rover rose 14% in the most recent quarter to 77,442 vehicles. Local sales of Tata Motors passenger vehicles rose 12% to 72,603 vehicles, while sales of the company›s trucks and buses increased 4.8% to 136,353.

The company›s consolidated earnings margin before interest, taxes and amortization expanded to 13.5% from 13.3% a year earlier. This was mainly due to an improvement in Jaguar Land Rover›s mar- gin, which rose to 14.8% from 14.4%. In India, the operating margin shrank to 5.9% from 7.2%, hurt in part by higher marketing costs to offset weak demand.

«We expect the JLR business to continue perform strongly, helped by new launches. Domestic operations, too, are expected to improve on a gradual note. Overall, the result were marginally disappointing, but we expect improvement going ahead,» said Arun Agarwal, an analyst with brokerage Kotak Securities.

Managing Director Karl Slym said Tata Motors plans to introduce six passenger vehicles and 25 commercial vehicles before March 31. He said some of these would be «refreshed versions» of the company›s existing models.