In the Indian market, if a company makes a profit of $100.7 million (4.58 billion rupees) then it should be considered to be very good profit. Well, most companies it is true but not for TATA Motors. In terms of quarterly net profit it was 17% higher but there was expectation of more profit. In fact, earlier, Reuters predicted that the profit will be 5.03 billion rupees. Thus it is a disappointing figure for TATA Motors. Increase in the raw material price has been indicated as the main reason behind TATA Motor's lack luster performance in the 4th quarter of the last fiscal year. There has been 24% increase in the cost of raw materials.
This event shows the volatile nature of today's world economy. Tata Motors' Finance Director Praveen Kadle said to Reuters, "We are living in uncertain times, and there are some question marks related to oil prices, interest rate movements and volatile input costs." Oil price is something that is closely related to TATA Motor's because India is a price sensitive market and if the price of oil is high then people will spend less money after buying bus and truck. TATA Motors is the largest player in bus and truck industry in India.
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Yes, apperantly $100.7 million is a big profit in any market. Inspite of the large profit Tata has not met with its expected amount even though the profit was 17% higher on the basis of quarterly net profit.
As a leading company in the indian market Tata could not make its goal possible due to the price hiking in the international oil market. Their motor industry plays a great role in their overall profit and for this price hiking of oil make people less interested to buy bus and truck.
Thank you for your well informed article.
Posted by: Biplob Kishore Deb | May 19, 2006 1:26 PM | Permalink to Comment