Telco plunges into red in Q1

MUMBAI, July 28: Tata Engineering and Locomotive Company Ltd Telco, the country's largest automobile company, has suffered a severe set...

MUMBAI, July 28: Tata Engineering and Locomotive Company Ltd Telco, the country8217;s largest automobile company, has suffered a severe setback in its performance by posting a net loss of Rs 35.63 crore during the first quarter Q1 of the current financial year compared to a net profit of Rs 90.50 crore in the same period of last year.

This is the first time in many years that the truck giant has made losses. The profitability of the company for the period ended June 1998 was impacted by quot;the continuing downturn in overall market demand and particularly by the steep decline in demand in the more profitable medium/heavy commercial vehicle segment,quot; the management said. The company had made a net profit of Rs 294.66 crore in the previous financial year.

Moreover, the company8217;s total income at Rs 1,277.43 crore was 31.7 per cent lower from Rs 1,871.07 crore in the same period of last year. quot;The period witnessed a continued slowdown in industrial growth resulting in the worsening of demand for commercialvehicles,quot; the company said. The company8217;s sales of vehicles in the domestic market was down by 40.7 per cent to 23,601 vehicles from 39,798 vehicles in the previous period. However, exports for the period showed an increase of 13.2 per cent to Rs 78.88 crore.

The total expenditure of the company amounted to Rs 1173.96 crore Rs 1629.29 crore and operating profit dropped to Rs 103.47 crore from Rs 241.78 crore. Interest absorbed a higher amount of Rs 74.80 crore Rs 71.72 crore.

The company has earned a small gross profit of Rs 30.36 crore against Rs 170.19 crore in the same period of last year. Depreciation will absorb Rs 65.99 crore Rs 61.99 crore and nil for taxation against Rs 18 crore in the previous period of last year.

Company chairman, Ratan Tata, told shareholders at the 53rd annual general meeting here on Tuesday that it had been a difficult year for the commercial vehicle industry. This was compounded by low freight rates and the fact that the railways had been doing well. Tata alsoindicated that the poor performance was linked to the recent bout of political uncertainty which had seen demand for trucks taking a nosedive.

The company seems to be skeptical about the recovery in demand in the near future. quot;While traditionally the demand for commercial vehicles picks up towards the end of the second quarter, the present economic uncertainties make it difficult to determine whether there will be any meaningful recovery for commercial vehicles in the near term.quot; Ashok Leyland had on Monday reported a loss of Rs 33.20 crore during the first quarter of the current financial year. Tata Steel had already registered a 60 per cent drop in profits in the first quarter. quot;This indicates that the economy is yet to get back on the rails,quot; said a fund manager.

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quot;The first quarter showing has been very disappointing but this may not be indicative of what the whole year will be,quot; Tata said. What was worrying, he added, was that the government had not announced any agenda for revival. quot;It will requirevery firm policies to revive the economy,quot; he said.