Tata Motors - Macro Environment

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For financial year 2008, the TATA motors reported the consolidated revenues (net of excise) at Rs. 356.51 bn posted a growth of 10.2% over Rs. 323.61 bn in the previous year. The Consolidated Profit after tax (PAT) for the year was Rs. 21.67 bn, a marginal decrease over Rs. 21.69 bn in the previous year.

Standalone EBITDA impacted by 6.6% to Rs.30.92 bn in FY08 from Rs 33.12 bn in FY07; EBITDA margin stood at 10.76% in FY08 as compared to 12.06% in the previous financial year.

Following are the main macro environmental factors from FY08 that had direct bearing on the company’s revenue and profitability figures:

GDP Growth
Encouraged by the continuing thrust in investments which grew by 31.6%, the GDP growth in the third quarter of fiscal 2008 came in at 8.4% compared to 9.1% in the same quarter last year. A good kharif season supported growth of 3.2% in agriculture while Industry and services grew at a moderated level of 8.4% and 10.5% respectively. CSO’s advance estimates projects the overall GDP at 8.7% in the full year 2008. While the sequential decline in the GDP growth (9.3% and 8.9% in the first two quarters of the current year) indicates moderation of growth, it is expected that the growth momentum would continue, led by investments. Risk to growth going forward is expected to come from worsening inflation, increasing interest rates and weak global cues.

Infrastructure Index
The growth in the infrastructure industries for the period Apr – Feb’08 was subdued with all sectors, except coal , witnessed a lower growth on a y-o-y basis. Crude oil saw the least growth of 0.4% followed by Finished steel (5%), Coal (5.6%), Petroleum products (7.2%) and cement(7.5%) during this period.

Index of Industrial Production
IIP growth for the period Apr-Mar’08 is 8.1% over the corresponding period of last year. On a sectoral basis, manufacturing showed the largest decline in growth from 12.5% to 8.6% followed by electricity (7.2% to 6.4%) and mining (5.4%...
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