COMPANY HISTORY 

Tata Motors Limited is India's largest automobile company, with a revenue of Rs. 32,426 crores (USD 7.2 billion) in 2006-07. It is the leader by far in commercial vehicles in each segment, and the second largest in the passenger vehicles market with winning products in the compact, midsize car and utility vehicle segments. The company is the world's fifth largest medium and heavy commercial vehicle manufacturer, and the world's second largest medium and heavy bus manufacturer. Established in 1945 by JRD Tata, Tata Motors has a wide presence across the length and breadth of India. Over 4 million Tata vehicles ply on Indian roads, since the first one was rolled out in 1954. The company's manufacturing base is spread across India - Jamshedpur (Jharkhand) in the east, Pune (Maharashtra) in the west, and in the north in Lucknow (Uttar Pradesh) and Pantnagar (Uttarakhand). A new plant is being set up in Singur (close to Kolkata in West Bengal) to manufacture the company's small car. The nation-wide dealership, sales, services and spare parts network comprises over 2,000 touch points. The company also has a strong auto finance operation, TML Financial Services Limited, supporting customers to purchase Tata Motors vehicles.The company set up the Tata Motors European Technical Centre (TMETC) in 2005 in the UK. TMETC is engaged in design engineering and development of products, supporting Tata Motors' skill sets. Tata Daewoo Commercial Vehicle Company and Hispano Carrocera also have R&D establishments at Gunsan in South Korea and Zaragoza in Spain. The pace of new product development has quickened through an organization-wide structured New Product Introduction (NPI) process. The process with its formal structure for introducing new vehicles in the market brings in greater discipline in project execution. The NPI process helped Tata Motors create a new segment, in 2005, by launching the Tata Ace, India’s first indigenously developed mini-truck. The years to come will see the introduction of several other innovative vehicles, all rooted in emerging customer needs. Besides product development, R&D is also focusing on environment-friendly technologies in emissions and alternative fuels. 

FINANCIALS 

Tata Motors Ltd recently delivered its Q1 FY 09 results. These results are compared with the earlier quarterly results and are tabulated below. 

 Due to increase in the operating costs and heavy forex losses the net profit of the company for the quarter ended June 30 2008 declined by 30% to Rs.3261.1 Million from Rs.4661.6 Million reported in the same quarter a year ago. Revenues for the first quarter recorded a 21% growth to reach Rs.692 Billion compared to Rs.570.5 Billion for the last quarter ended March 31 2008. Total income surged by 17% on YoY basis. Due to the dollar appreciation the company faced foreign exchange loss of Rs.200 crore. Other income of the company for this quarter nearly quadruple to Rs.31.5 Billion from Rs.8.8 Billion derived in the same period a year ago. This income rise is due to the one time income by the sale of 24% stake in Tata Auto comp Systems Ltd to Tata Capital Ltd.  Operating profit declined by 28% and stood at Rs.5225.3 Million as against Rs.7328 Million posted in the corresponding quarter last year. The total expenditure of the company increased by 16% and it includes huge costs involved in the completion of Singur plant & launch of Nano. The $2.3 Billion acquisition deal to take over of jaguar and Land Rover also increased the expenditure level of the company. The consumption of raw materials of the company for this quarter surged to Rs.502.5 Billion as against Rs.399.4 Billion in the same period previous year. 

SALES

  Despite increase in the interest rates the sales volume for the quarter moved up by 3.9% to 133079 units on YoY basis. The launch of Indigo CS increased the market share of the company to 38% and also geared up the sales of the company. The company reported that the sales in the passenger vehicles segment remained flat due to delay in the launch of New Indica within the timeframe. Domestic sales of Commercial vehicles moved up by 15.9% to 71049 units. The launch of new products in entry Mid-size cars LCV passenger carriers and M&HCV segments strengthen market share of the company. The company reported a total sale of 40279 vehicles in the month of July, a decline of 3% as against 42098 vehicles sold in the same period a year ago.  

COMPANY OUTLOOK 

The increase in the price of raw material and increase in the interest rates for the Auto Loans will remain major concerns for the company in the forth coming quarters. The company reported that it will undertake aggressive cost cutting and planning to disinvest its current investments in the upcoming quarter. The company is planning to raise Rs.7200 Crore through rights issue to fund its recent Jaguar-Land rover acquisition deal. It would also raise 600 Million in the overseas market. The company is going to roll out the World’s cheapest car NANO in the month of October more likely at Durga Pooja festival.

As the completion of Singur plant is progressing slowly due to protests against the installation of the plant, the company will launch NANO from its satellite plant at Pant Nagar in Uttrakhand. As the demand for the NANO is expected to be very high the company, in addition to Singur plant which has the manufacturing capacity of making 250000 cars per annum, is also planning to manufacture NANO in the Uttaranchal plant. The company after the launch of NANO is expected to build an electric car. 

STOCK OUTLOOK

 The stock is trading at the level of Rs.425-450. The stock is sliding downwards since hitting Rs.668 in the last week of May. The JLR take over deal made an adverse impact in the market and the stock lost nearly 30% in the last two months. The stock hit a year high of Rs.840 in October 2007 and Year low of Rs.374 on July 8 2008. The stock has key support level at Rs.380 and near term resistance at Rs.490.

The short term investors may pick this stock at this level. Long term investors may pick this stock after the price gets stabilized at the level of Rs.450-475 and the launch of Tata Nano at the end of this quarter will favour them.