Tata Profit Plunges 52% As Sales Flatten

Tata Motors Ltd. posted revenue of 458.2 billion rupees ($8.5 billion) in the fiscal third quarter ended Dec. 31, up 1% from the same period in 2011.

But net earnings tumbled to 16.3 billion rupees ($303 million) in the October-December period from 34.1 billion rupees ($633 million) a year earlier.

In recent years the profitability of the Jaguar Land Rover unit has offset the losses of Tata's mass-market brand in India. But profit margins are tightening at JLR just as the Indian car market worsens.

Tata swung to a 4.6 billion-rupee ($85 million) net loss in India last quarter from a 1.7 billion-rupee profit ($32 million) a year earlier. Revenue slid 21% to 105.3 billion rupees ($1.96 billion).

The company's domestic volume fell 11% to 205,300 vehicles in the three-month period. Operating return on sales shrank to 2.2% from 6.7% in the same quarter of 2011.

Jaguar Land Rover earnings dropped 25% year on year to 296 million ($459 million) in the fiscal third quarter despite a 10% increase in deliveries to 94,800 vehicles. The company says rising demand for Land Rover's lower-priced Evoque SUV hurt the unit's mix.

JLR warns that its free cash flow could turn negative in the fiscal year beginning April 1 as the unit spends 2.8 billion ($4.3 billion) to develop new models and build a new factory in China.