MUMBAI, OCT 20: Automobile major Tata Engineering & Locomotive Company Ltd (Telco) continued its disastrous performance as it declared a massive Rs 146.39 crore loss in the second quarter ending September 30 as against a profit of Rs 33.95 crore in the corresponding period of the previous year. During the first half (April-September) of this fiscal, the company reported a loss of Rs 220.73 crore as against a profit of Rs 42 lakhs in first half last year. Net sales/income from operations during the six-month period rose to Rs 3698.25 crore as against Rs 3,650.13 crore. Net sales during Q2 were also down by 8.18 per cent at Rs 900.58 crore as against Rs 2,070.03 crore in the same period last year, the company said in a statement. Total expenditure stood at Rs 1782.56 crore (Rs. 1,918.48 crore). Reacting to the negative results, Telco's scrip fell to a new record year low of Rs 72.25 on the BSE. The company blamed the slowdown in economy and increase in sales tax rates across the country as its falling profits which also contributed to a fall of 15 per cent in the sale of commercial vehicles in the current period. Other income during this period also declined to Rs 25.91 crore from Rs 95.94 crore, the company said adding that other income includes profit on sale of investments Rs 12.06 crore (Rs 73.26 crore in the previous year). The company claimed that the Indica project has achieved a cash break even in the first half of the current year through continuous improvement in operating efficiencies and reduction in direct costs. Commercial vehicle production was down from 23,755 in Q2 last year to 20,427 units while utility & passenger car production also declined from 23,344 to 17,532 units, the company said. Commercial vehicle sales fell from 22,641 (in Q2 last year) to 17,572 units while utility & passenger cars was down from 21,335 to 17,992 units. Exports increased from 3,019 to 4,697 units, it said. `Indica', the first passenger car from the house of the Tatas, is becoming a burden on the balance sheet of TELCO. Though the new venture has been successful in terms of topline, the bottomline has been dragged down due to the servicing of the debt. Now the company is desperately in search of panacea and as the first measure, a separate car division has been created within the company. It will operate as a separate profit centre and have its own financials which will enable the company to assess its performance. This can be perceived as the first step in the direction of hiving off the passenger car business into a separate car company and infusing funds into it through strategic partnership to retire the high cost debt. This will mean lower outgo in the form of depreciation. As and when that happens, it has the potential to turn the bottomline from red to black because the operating margins are not a problem for the company as can be seen from the available current results.
