For the auto-manufacturers, financial year 2009 would be one to forget. The credit crunch and the subsequent slowing of the economy had a telling effect on the auto manufacturers. Almost all players reported poor numbers. However, in many ways the financial year was also a landmark, for the company for its acquisitions and the launch of the famous small car Nano.
Ratan Tata, chairman of Tata Motors reminisces about the financial year 2009, ?The collapse of the global financial sector, the consequent lack of access to credit and working capital, along with the meteoric rise in commodities and fossil fuel prices, have collectively had an unprecedented devastating effect on the global automotive sector.?
And while Tata Motors? standalone Indian operating profits declined by 51%, over the previous year, the company still managed to post a net profit of Rs 1,001.26 crore. This of course reflects a strong first half year, and a lower second half year with a particularly difficult third quarter, when the full impact of the collapse of the commercial vehicle sector was felt.
The global slowdown also had a significant impact on the Jaguar Land Rover company which Tata Motors acquired in June 2008. Sales of the Jaguar and Land Rover brands declined by 20% and 51% respectively from October 2008 ? March 2009 as compared to the corresponding period in the previous year as the
The deferment of infrastructure projects and the slowdown in the mining sector have resulted in a tremendous drop in demand for medium and heavy vehicles as the market for these vehicles declined by 33%. However, the company?s new below 1 tonne commercial vehicle Ace was a runaway success. However, Tata Motors, notwithstanding the downturn, increased its market share in trucks. It could also gain market share in the bus segment with newly developed vehicles from its facilities in Goa and its joint venture facility at Dharwad.
Noting this Tata says, ?The spirit, commitment and dedication of the whole Tata Motors team at all its locations and across all levels is truly phenomenal and this continues to be the company?s greatest asset. I feel confident that if we can sustain our operations through this difficult period, taking whatever steps we need to take to see the year through, we could overcome all the obstacles in our path.?
And indeed the company has bounced back and with the liquidity scenario improving and the stimulus package supporting growth Tata Motors reported revenues of Rs 8979.90 crore on a stand-alone basis for the quarter ended December 31, 2009, a growth of 88.7% compared to Rs 4758.62 crore in the corresponding quarter last year.
Low commodity costs and higher volumes saw the company?s operating margins come in at 12.8%, an improvement of 1092 basis points compared with the corresponding quarter of the previous year. Volume recovery and marginal price increase undertaken in October 2009 aided the company to maintain double digit margins. And the company managed a stellar net profit of Rs 400.14 crore in the December 2009 quarter as against a loss of Rs263.26 crore in the same quarter of the previous year.
Clearly, the company has depicted that it has the mettle to withstand economic storms and other turbulence as well. The company managed to shift its Nano operations out of Singur, West Bengal and has relocated to Gujarat. And, it still managed to launch the car on March 23, 2009, a landmark event for the company and even the Indian corporate sector.
Steadily, operations at the Jaguar Land Rover plants are improving and a recent dealer survey showed that they had optimism on the brands doing well. Also, the company is now looking at taking the Nano global. It has already started its study of the US four-wheeler market thoroughly and expected to launch the Nano there by 2012. Meeting the stringent safety standards and emission norms would pose a challenge for the company. But then going by its record, the company does manage to beat expectations.