Tata Motors posts sharp fall in quarterly profit on demerger, labour-code charge

India’s top commercial vehicle maker Tata Motors reported a 60.4% decline in quarterly profit on Thursday, hurt by one-time charges related to demerger costs and new labour codes, while revenue grew 20% on tax-cut-driven demand.

The truck and bus manufacturer reported a profit of 5.61 billion Indian rupees ($61 million) for the quarter to December 31, down from 14.17 billion Indian rupees a year earlier.

The company took a one-time hit of 15.45 billion Indian rupees, with 9.62 billion Indian rupees tied to demerger costs and 5.74 billion Indian rupee impact from the labour codes.

Tata Motors split from the group’s passenger vehicles arm in October last year and made its trading debut as a separate entity in November.

Profit excluding taxes and the one-time charges jumped 45% to 23.18 billion Indian rupees.

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Sales get tax-cut boost

Sales of commercial vehicles got a shot in the arm after India in late September cut taxes on such vehicles to 18% from 28% earlier.

Commercial vehicles are used for a wide range of activities, from construction and freight to public transport and mining. Lower prices helped fleet operators go for long-delayed replacement of older vehicles, analysts have said.

The tax cuts helped boost domestic sales of commercial vehicles by 22% during the December quarter, with Tata’s rising 18%.

The company’s overall sales grew 21% in the October-December period, boosting revenue to 203.15 billion Indian rupees from 168.97 billion Indian rupees the year before.

Demand is expected to strengthen in the fourth quarter across most segments, the company said in a press release.

Shares of the company closed 0.5% higher before the results.