Tata Motors, the country's largest automobile manufacturer, has reported first quarter results, which are slightly below market expectations. Helped by strong volume growth in the commercial vehicles segment, Tata Motors has managed excellent growth in top line though the bottom line growth is lower than expected because of rising costs.

For the quarter ended 30 June, 2006, Tata Motors has reported a consolidated net profit of Rs381.67 crore - an increase of 45.95 per cent over the previous year quarter figure of Rs261.51 crore. Consolidated revenues increased 50.7 per cent to Rs6,770.94 crore from Rs4,493.11 crore for the prior year quarter.

Revenues from automotive sales increased 47.43 per cent to Rs6,252.41 crore from Rs4,240.96 crore for the previous year quarter. Revenues from sales of construction equipment, engineering solutions and software more than doubled to Rs591.13 crore from Rs289.77 crore.

Operating profits for the quarter rose 38.67 per cent as compared to the previous year quarter while operating margins declined 101 basis points. Operating margins as a percentage of net sales declined to 11.43 per cent during the quarter from 12.42 per cent for the previous year quarter.

Major factor affecting operating margins was a 52.99 per cent rise in cost of material and other inputs. Staff costs went up by 40.24 per cent while other operating costs were higher by 57.18 per cent.

Interest costs rose 45.77 per cent over the prior year quarter while depreciation charges went up by 11.75 per cent. Amortisation of product development expenses increased 40.22 per cent and tax provision went up 51.52 per cent over prior year quarter.

Other income for the quarter was higher by 68.22 per cent at Rs17.31 crore as against Rs10.29 crore for the previous year quarter.

Commercial vehicle sales of Tata Motors boomed during the quarter, with a growth rate of 69 per cent in the domestic market. Within commercial vehicles, sales of medium and heavy vehicles increased 59 per cent. Light commercial vehicle sales recorded a growth rate of 86 per cent, helped by the success of its mini-truck Ace.

Tata Motors improved its share in the domestic commercial vehicles market substantially to 65.8 per cent from 55.2 per cent for the previous year quarter. Market share in medium and heavy vehicles was 63.9 per cent while that in light commercial vehicles was 68.7 per cent.

Tata Motors managed a volume growth of 21.2 per cent in passenger vehicle sales, helped by a 32.7 per cent rise in Indica volumes. Sales of utility models like the Sumo and Safari increased by 14.6 per cent while sales of sedan model Indigo declined 6 per cent.

Overall market share of the company in the domestic passenger vehicles market increased marginally from 16.1 per cent to 16.2 per cent. Tata Motors had a 20-per cent market share in the compact car segment and a nearly one-third share in entry level sedan segment. Utility vehicles market share improved to 17.6 per cent from 16.6 per cent for the previous year quarter.

Exports of passenger vehicles increased 60 per cent over the previous year quarter while that of commercial vehicles went up by 36 per cent for an overall export growth of 45 per cent. Revenues from exports constituted 16 per cent of total revenues during the quarter.