Tata Motors posts first quarterly loss in seven years

Tata Motors posted its first quarterly loss in seven years with tighter credit,slow economic growth and foreign exchange loss severly denting its results for the quarter ending December 2008. The company suffered a net loss of Rs2.63 billion as compared with the profit of Rs4.99 billion a year ago according to a statement issued by the company.

According to analysts global vehicle demand this year is expected to fall 14 per cent to 55 million units. They add that any slowdown in the economy impacts the automobile industry ahead of others as cheap finance is not available and consumer sentiment is low.

Included in the third-quarter result is a foreign exchange loss of Rs27 billion on account of revaluation of borrowings in foreign currency as per the company. The 2008 December quarter had a foreign exchange gain of Rs275 million.

The last time the company reported a quarterly loss was in December 2001.

Meanwhile the Reserve Bank has cut the growth forecast for the economy to 7 per cent from 9 per cent over the last three years. The Reserve Bank also asked banks to boost credit and reduce rates to stimulate growth.

The recession in the U.S., Europe and Japan has had severe impact on the demand for luxury vehicles there.