MUMBAI—Robust sales of Jaguar and Land Rover luxury vehicles and foreign-exchange gains led Tata Motors Ltd. on Tuesday to report a higher quarterly profit.
India's largest auto maker by sales posted a fiscal second-quarter consolidated profit of 22.23 billion rupees ($502 million), up from 217.8 million rupees a year earlier.
Sales rose 37% to 285.73 billion rupees. Analysts on average had expected the auto maker to post a net profit of 18.87 billion rupees on sales of 274.02 billion rupees.
The maker of the Nano minicar and Aria crossover gained 1.28 billion rupees in foreign exchange during the quarter compared with a loss of 1.63 billion rupees last year.
Tata Motors Chief Financial Officer C. Ramakrishnan cited domestic volume growth and the turnaround in the Jaguar-Land Rover unit for the jump in earnings. The unit posted a profit of 238 million ($383.6 million). It didn't provide year-earlier numbers.
Apart from the U.K.-based luxury-car unit, Tata Motors consolidated earnings also include those of units such as Tata Technologies Ltd., Telco Construction Equipment Co. and Tata Daewoo Commercial Vehicle Co.
The global economic slowdown and demand for less-expensive and more-fuel-efficient cars had hit sales of luxury vehicles in 2008, soon after Tata Motors acquired Jaguar and Land Rover from Ford Motor Co. for $2.3 billion.
But the economic recovery has brought a gradual uptick in demand for premium vehicles. Encouraged by the turnaround, Jaguar-Land Rover October announced expansion plans for the two brands which include the creation of thousands of jobs over the next decade.
It also said it won't close one of its manufacturing plants in England's West Midlands, a step it had earlier planned as a cost cutting measure because of the economic downturn.
Mr. Ramakrishnan said the company plans to invest as much as ??1 billion annually in the unit over the next few years.
Meanwhile, Tata Motors said it continues to face constraints in production due to lower engine supplies for Jaguar-Land Rover.
"We are still facing some operational issues on Jaguar-Land Rover. We are handling all the bottlenecks one by one," said Carl-Peter Forster, chief executive and managing director of Tata Motors global operations.
Tata Motors said in August it is in talks with Ford to procure more engines to meet demand for its Jaguar-Land Rover luxury car brands as demand exceeded projections.
In the Indian market, Tata said favorable macroeconomic conditions, good monsoon rains and availability of easy and low-cost loans drove demand. The company said it sold 110,630 trucks and buses in the period, up 23% year-to-year. Local sales of cars and sport-utility vehicles, including Fiat vehicles that Tata distributes, rose 36% to 82,564 units during the quarter.
Mr. Ramakrishnan said that the company is, however, concerned with rising costs of raw material such as steel and aluminum and it may look at raising the prices of its vehicles if these costs continued to increase.
Tata Motors paid 170.16 billion rupees to buy raw material during the April to June quarter, up 34% from a year earlier.
