MUMBAI (Bloomberg) -- Tata Motors posted a rise in quarterly profit despite slowing demand at its Jaguar Land Rover unit.
Second-quarter net income rose 11 percent to 20.8 billion rupees ($384 million) from 18.8 billion rupees a year earlier, Tata said on Wednesday. Profit at Jaguar Land Rover rose 77 percent to 305 million pounds ($488 million).
Jaguar deliveries declined for four straight months through September, while sales that month at Land Rover expanded at the slowest pace since December 2009.
This may increase the pressure on Jaguar Land Rover CEO Ralf Speth to revamp Jaguar's aging designs and boost the appeal of Land Rover models other than the Evoque.
"In this market all the luxury carmakers are facing pressure," said Mitul Shah, a Mumbai-based analyst with Karvy Stock Broking Ltd. "Going forward, we are not positive on the sales outlook for Jaguar Land Rover, particularly in Europe, China and the U.K."
Tata, which depends on Jaguar Land Rover for 90 percent of the group's profit, said the British brand's operating margin stood at 14.8 percent in July-September, down from 14.9 percent a year earlier.
Jaguar Land Rover revenue rose 12.8 percent to 3.29 billion pounds in the period, less than the 34.4 percent gain seen in the previous quarter.
Tata has grown dependent on JLR, which it bought from Ford Motor Co. for $2.3 billion in 2008, as domestic sales of its own models struggle.
Tata has said it plans to invest $12 billion in the unit over five years.
Jaguar showed its first two-seat sports car in almost four decades at the Paris Motor Show in Septembe and is targeting as much as 20 percent share of the full-size sports car market, Steven de Ploey, the marketing head for Jaguar, said Sept. 27.
The company will also begin deliveries next year of the new Range Rover SUV.
Jaguar Land Rover deliveries increased 14 percent to 77,442 vehicles in the three months ended Sept. 30. Land Rover's vehicle sales rose 24 percent to 67,610 as demand for the Evoque, introduced in September last year, surged.
The unit's deliveries in September fell 4.3 percent, the first decline in sales in 14 months, as a slowing global economy sapped demand for luxury vehicles. Sales of Jaguar branded cars fell 49 percent to 2,808 units, the steepest monthly drop since Tata Motors started reporting data in December 2009. Land Rover SUV sales increased 7 percent.
Jaguar Land Rover is turning to emerging markets such as China, Russia and South Africa to pursue growth. The luxury unit received written approval from China's main industry planner to form a venture with Chery Automobile Co. and begin making cars in the world's biggest auto market, Speth said on Wednesday.
"We continue to see demand for our vehicles in China," he said at a press conference in Mumbai. "So we remain cautiously optimistic that the growth will continue in future. Producing in China will give us additional opportunities."
The venture, to be based in the eastern city of Changshu in Jiangsu province will have a production capacity of 130,000 vehicles annually, according to a statement posted on China's Ministry of Environmental Protection's web site.
Land Rover will have 160 Chinese dealerships by 2020, John Edwards, who heads the car brand, said in September.
Reuters contributed to this report