Tata Motors, Infosys

Tata Motors unleashes people's car

After several months of drama, controversy over the plant site and skepticism from industry rivals, Tata Motors finally presented the one-lakh 'people's car' at the Auto Expo in New Delhi. And, contrary to popular perception, Ratan Tata, Chairman of Tata Motors said the company would keep its promise, and would price the car - named the 'Nano' - at Rs1 lakh only at the dealer level. There would be extra costs in terms of local levies, taxes, insurance, transportation etc. Tata reiterated that the Nano would meet all international safety and emission standards. "The car will meet Bharat Stage III and Euro 4 emission standards," Tata said while launching one of the most awaited launches in the global auto industry.

People's Car brings the comfort and safety of a car within the reach of thousands of families, Tata Motors said. It is 8% smaller than Maruti 800, but 21% more spacious from inside. In terms of fuel efficiency, the Nano would cover over 20 kilometers per litre of petrol. There would also be a diesel version of the Nano sometime further down the line. The Nano would house a 624 cc engine and would pump out 33 horsepower. Tata also said the Nano would be initially available in variants - standard and two luxury models, and would be able to seat 4-5 people. Production will start in the second half of the year and deliveries will begin around the festival season, which generally starts in September-October.

The initial target production volume would be 250,000 cars per annum on two shifts, expandable to 350,000 per annum on three shifts. Tata has earlier talked about a one million production target by 2010. A similar indication has reportedly been given to component suppliers during price negotiations. Tata pointed out that while the Rs1 lakh price tag was given by the media, he decided to take on the challenge. But, he also hinted that inflation could make it difficult to maintain the price tag. "My greatest fear is inflation. With steel and tyre prices going up we can’t hold the price which we have held emotionally," he said.

Infosys beats street on tax reversal

Infosys Technologies has posted a better than expected sequential bottomline growth for the quarter ended December 31, 2007 while the topline has disappointed a bit vis-a-vis market expectations. The net profit for the October-December quarter of the current fiscal year stood at Rs12.31bn versus Rs11bn in the same quarter a year earlier. This translates into a sequential growth of nearly 12%. The net sales for the reporting quarter were Rs42.71bn as against Rs41.06bn in the third quarter of last year. This represents a 4% growth over the last quarter.

The improvement in the net profit growth was partly due to a tax reversal of Rs500mn. EPS for the October-December quarter stood at Rs21.54 as against Rs19.26 in the second quarter. Excluding the tax reversal, EPS for Q3 FY08 would have been Rs20.66. For the third quarter, Infosys had forecast revenue of Rs42.38-42.58bn and EPS of Rs20.11. So, the company has managed to do a little better than the guidance. Other income was flat over the previous quarter, but operating margin increased, from 31.27% in Q2 FY08 to 32.59%. Attrition was down to 13.7% from 14.2% in Q2 FY08. Infosys saw forex loss of Rs 140m as against a gain of Rs 30mn in Q2 FY08.

Infosys sees its Q4 FY08 revenue growing at about 5% QoQ to Rs44.77-45bn. Earnings Per Share (EPS) for the fourth quarter is expected at Rs21.38. For the full-year, Infosys now sees revenue of Rs166.27-166.51bn. FY08 EPS is pegged at Rs81.07. There was a gross addition of 11,683 employees and net addition of 8,100 employees. Total employees at the end of December 2007 stood at 88,601 compared to 80,501 as at September 2007 and 69,432 at the end of December 2006. Infosys and its subsidiaries added 47 new customers during the quarter.

In dollar terms, Q3 revenue missed analysts' expectations due to lower than expected volume growth. EBITDA margins at 32.6% surprised on the higher side primarily due on account of lower sales & marketing expenses. Infosys' hiring plans are strong at ~8100 employees (net) added in the third quarter. For the year, the hiring target is up by ~1000 employees. BFSI revenues grew ~7% QoQ. Also, Infosys won 5 new deals for its Finacle product, which is a positive given the mounting worries about the health of the industry.