India's Tata Motors posts sharp fall in quarterly profit

[BOMBAY] India’s top commercial vehicle maker Tata Motors reported a 60.4 per cent decline in quarterly profit on Thursday (Jan 29), hurt by one-time charges related to demerger costs and new labour codes, while revenue grew 20 per cent on tax-cut-driven demand.

The truck and bus manufacturer reported a profit of 5.61 billion rupees (S$77.1 million) for the quarter to December 31, down from 14.17 billion rupees a year earlier.

The company took a one-time hit of 15.45 billion rupees, with 9.62 billion rupees tied to demerger costs and 5.74 billion rupee impact from the labour codes.

Tata Motors split from the group’s passenger vehicles arm in October last year and made its trading debut as a separate entity in November.

Profit excluding taxes and the one-time charges jumped 45 per cent to 23.18 billion rupees.

Sales of commercial vehicles got a shot in the arm after India in late September cut taxes on such vehicles to 18 per cent from 28 per cent earlier.

Commercial vehicles are used for a wide range of activities, from construction and freight to public transport and mining. Lower prices helped fleet operators go for long-delayed replacement of older vehicles, analysts have said.

The tax cuts helped boost domestic sales of commercial vehicles by 22 per cent during the December quarter, with Tata’s rising 18 per cent.

The company’s overall sales grew 21 per cent in the October-December period, boosting revenue to 203.15 billion rupees from 168.97 billion rupees the year before.

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Demand is expected to strengthen in the fourth quarter across most segments, the company said in a press release.

Shares of the company closed 0.5 per cent higher before the results. REUTERS