UPDATE 2-Indian Tata Motors profit up 26 pct, beats forecasts


(Adds further details, quotes from the news conference)

MUMBAI, May 18 (Reuters) - India's top bus and truck maker Tata Motors Ltd. beat forecasts with a 26 percent rise in quarterly net profit on Friday, helped by sales of higher-margin trucks.

The New York-listed company , which has about 60 percent of India's $5 billion truck and bus market, said net profit rose to 5.77 billion rupees ($141 million) in its fiscal fourth-quarter to March, on net sales which grew 20.3 percent to 82.67 billion.

A Reuters poll of 11 analysts had forecast net profit at 5.51 billion rupees on sales of 80.36 billion.

Passenger vehicle sales in India hit 1.4 million units last year and are forecast to nearly double by 2010, but volatile raw material prices, firmer interest rates and fierce competition are affecting the profitability of vehicle makers.

"The interest rates have gone up significantly, inflation is a concern -- not just for the Reserve Bank of India and the government, but for all of us," Managing Director Ravi Kant told reporters at a news conference.

Tata Motors, which sold 172,355 vehicles in the January-March quarter, up 16.2 percent from a year earlier, expected rising raw material costs to continue to pressure profits.

"The cost pressures will continue, the commodity prices have not seen a decline," Praveen Kadle, executive director of finance and corporate affairs at Tata Motors, said.

Tata Motors, also India's third-biggest car maker after Maruti Udyog Ltd. and South Korea's Hyundai Motor Co. , has a joint venture with Italy's Fiat to make cars and engines in India and a separate venture to make pick-up trucks in Argentina.

Tata Motors makes the popular Indica hatchback and Indigo sedan. It is scheduled to roll out a low-cost small car in 2008.

Top car maker Maruti posted a better-than-expected 24 percent rise in quarterly profit last month.

Shares in Tata Motors, valued at $6.9 billion, closed 1.1 percent down at 742.75 rupees in a flat Mumbai market .

The shares had fallen 19.2 percent in the January-March quarter, compared with a nearly 12 percent decline in the BSE auto index and a 5.2 percent fall in the benchmark index.



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